09/15/2021 | Press release | Distributed by Public on 09/15/2021 09:01
We already know that primary care can strengthen health systems, and, more importantly, improve people's health. According to the World Bank, primary care can manage 90% of healthcare demands. This makes it the most cost-effective way to address comprehensive health needs close to people's homes and communities. In addition, well-designed primary healthcare has the potential to help flatten the curve during a health crisis like COVID-19. There is broad consensus that primary care is foundational to achieving universal health coverage (UHC) and creating a resilient healthcare system. Countries closest to achieving UHC have been the most resilient during the COVID crisis. Therefore, to build resilient and sustainable health systems, we must find ways to unlock investments in primary healthcare.
However, financing is the biggest bottleneck in expanding primary care, especially in emerging countries. Traditional funding models - grants and loans - are inadequate, while commercial loans are too expensive. And only a fraction of social impact investments goes toward funding primary care due to risk aversion of the investors.
The question is how to create financing vehicles that unlock long-term investments in primary healthcare and ensure an acceptable return to the investors. The challenge is that primary healthcare is free in most emerging countries, so how would investments yield returns when patients don't pay anything? Payment systems are generally run by governments who often reimburse at rates that are too low. Narrow returns, high initial costs, and reliance on government support can cause investors to see primary care as too high-risk.
We need to find additional and reliable returns to lower investor risk. If investments have their return from system-sustaining funds - like reimbursement payments or insurance premiums - 'topped up' with alternative revenues, it could make primary care business models more viable and sustainable.
An innovative financing vision called 'double blended' financing, which Philips developed together with Total Impact Capital, could help unlock much needed investments by strengthening both the investment and the revenue side (returns) of investments. A double blended approach involves using investment blending to cushion an investment and reduce early-stage risk, as well as revenue blending to minimize long-term risk and increase cash-flow sustainability. Philips and Total Impact Capital are partnering with the Health Finance Coalition to convert that vision into an initial double blended investment vehicle. The ambition is to make quality primary healthcare affordable and accessible across Africa by making it investable.