Attachment 1 - Design to Fully Private Sector Model.pdf

RFI Attachment 1: Private Sector Opportunities to a Fully Private Care and Treatment

USAID/ Kenya and East Africa’s (USAID/KEA) through the Health, Population, and Nutrition (HPN) Office supports the Government of Kenya in procurement and supply of health commodities and equipment for priority public health programs. These include commodities and equipment for HIV/AIDS, Malaria, and Family Health programs. However, this support has been through the public health systems with limited private supply chain partnerships for procurement, warehousing, distribution, and reporting and targeting the public health facilities. A number of private health providers (Mainly faith-based facilities) have been able to tap into the public health commodities kitty in exchange for a reduction in the cost of quality health care and an increase in access for patients. However, simply providing them with free commodities has not yielded significant costs reduction to near/at par with the public sector across the board.

USAID/ Kenya and East Africa’s (USAID/KEA) Health, Population and Nutrition (HPN) Office has realized the need to expand their approach to private sector engagement, and the paradigm of our relationships to be more transformational and private sector-led. In line with USAID’s new Private Sector Policy, USAID/KEA’s office has prioritized the following areas to engage the private sector to reshape the healthcare supply in Kenya using market-based approaches that will increase access and contribute to a sustainable health system.

1. Expand and strengthen supply chain partnerships

2. Increase the availability of small-scale private sector health providers

3. Increase access to financing for private health sector firms

4. Harness ICT/digital health private sector opportunities to scale up health delivery

Engagement with the private sector can occur across three levels:

● Policy formulation: Engaging the private sector as part of the TWGs for policy and guidelines;

● Private sector service delivery - training, capacity building, adherence to treatment guidelines, and reporting;

● Advocacy for co-financing: co-funding of activities and community engagement to generate demand for private sector services and to increase access to capital within the private health sector.

Demand for private sector healthcare is growing in Kenya for both rural and urban populations. In 2013, 52 percent of the urban population in Kenya visited a private provider for an outpatient visit, as did 32 percent of the population in rural areas, where the ability to pay is lower.1 These visits included providers at for-profit, non-profit, pharmacies, and retail shop locations. Ministry of

1 Dutta, A., T. Maina, M. Ginivan, and S. Koseki. 2018. Kenya Health Financing System Assessment, 2018: Time to Pick the Best Path. Washington, DC: Palladium, Health Policy Plus

Health findings (2017) also show the private sector delivers the lion’s share of specialty care, including optometry, dentistry, and long-term care.

The overall size of the private health market in Kenya is estimated to be 20.7 billion Ksh (approximately $206M USD) as of 2010 (the most recent data available). Two-thirds of the money spent in the private health sector is spent on services delivered in hospital settings,2 and the private sector (FBO/NGO and for-profit) operates approximately one-half of the health facilities in Kenya.3

Further, in-country experience with specific diseases and conditions points to an increase in health seeking behavior in the private sector and the need to provide prompt, high quality services in those settings. For example, objective 2 of The Kenya Malaria Strategy 2019-23 underscores the importance of prompt diagnosis and effective treatment of all suspected malaria cases including those that seek services in the private sector. The KMIS 2015 indicated that 25% of the population seek treatment in the private sector.

Opportunity The opportunity exists to expand access to affordable patient-centric quality health services, to Kenyans with the ability and willingness to pay to fully private sources of care, financed by out-of-pocket payments and private insurance. Linking these patients to private sector opportunities contributes to optimizing the current market by providing a viable alternative to public sector care that also responds to an identified, unmet demand by those willing and able to pay for their care in the private sector.

Conceptual Approach The approach focuses on a segment of the market seeking health services, who are willing and able to fully finance their care in the private sector. Focusing on this population will ensure that the infrastructure is in place to expand the program to include a segment of the population who are willing and able to finance a portion of their care in the private sector.

There are three primary activities to build the foundation to expand access to quality and affordable private care and treatment. First, sustainably shift significant patient volumes to private-sector care. Second, reduce the cost of care in the private sector to be at or near parity with care in the public sector. And third, mobilize domestic resources to ensure sustainability and scale.

1. Sustainably shift patient volumes to private-sector care.

2 Barnes, J., et al. Private Health Sector Assessment in Kenya. 2010. Washington, DC: World Bank Group.

3 Dutta, A., T. Maina, M. Ginivan, and S. Koseki. 2018. Kenya Health Financing System Assessment, 2018: Time to Pick the Best Path. Washington, DC: Palladium, Health Policy Plus.

Expanding access to quality and affordable services for a segment of the population who are willing and able to pay for care in the private sector and are willing to shift from the public sector. This shift creates key incentives for providers and creates cost efficiencies in the private sector. Initial identification of patients will be based on willingness and ability to pay. Identification of providers will be based on increases in projected patient volumes tied to increased profits, the ability of providers to meet quality standards, ability and willingness to support existing public reporting systems, and staff capacity to provide quality and affordable services. For example, providers could be paid a fixed amount per patient (e.g. capitation), with sufficient room to tailor their services and drive cost reduction.

2. Reduce the cost of care in the private sector to be at or near parity with the public sector.

To make the decanting effort viable, the cost of care in the private sector will need to reach parity with the public sector to make the effort workable. Additional levers will be applied to bring the cost of private sector care to at or near parity with the cost of care in the public sector. Based on partner modeling, a costs reductions could be achievable in the private sector by applying the four levers:

1. Allow the private sector to access the lowest procurement price for generic commodities and increase efficiencies in distribution. Two actions potentially enable this lever: 1) form a private sector procurement pooling entity to negotiate and manage purchasing, and 2) partner to create a digitally-enabled decentralized distribution model that serves patients directly, in addition to private pharmacies, hospitals, and clinics.

2. Optimize lab capacity to reduce viral load test costs. There are two options to achieve this: 1) allow the private sector to use public sector labs to pool tests; or, 2) centralize lab capacity to enable reagent rental models, use of newer, high-throughout machines, and improve machine utilization by running three shifts per day instead of two.

3. Implement a package of differentiated care services. Most private providers charge patients on a fee-for-service basis as there is little incentive to control costs of treatment in the private sector. A standard package of differentiated services will ensure continuity and quality of care and enables a capitation-based model as a cost control mechanism.

4. Implement a digitally-enabled, managed care model based on capitation to operationalize differentiated care and control costs. A capitation model will be a cost control mechanism and ensure delivery of differentiated services that meet patient needs. This model should be enabled by a digital platform, that includes an e-wallet that can accept funds from a variety of sources, targeted patient marketing and enrollment, provider invoicing and claims adjudication, patient tracking and referral across network of providers, labs, and pharmacies, and patient support including appointment setting and reminders.

3. Mobilize private domestic resources to ensure sustainability and scale.

This will begin with patients who are willing and able to pay for the full cost of their care through out-of-pocket payments, thus resulting in full private domestic resource mobilization from the outset and eliminating the need for donor funding. A second phase of this effort will focus on patients who are willing and able to pay for a portion of the cost of their care through out-of-pocket payments. The remaining portion of their cost of care would be paid through new private health insurance schemes or through expanded coverage of services under NHIF.

The target geography should include the following characteristics, and within three counties (Nairobi, Kisumu, and Mombasa):

● County level

● Large population

● Growing middle class

● Large number of private providers, including FBOs and small private clinics, who meet quality standards

● Strong supply chain links

● Robust networks of private sector physicians and pharmacists

RFI & Private Sector Approaches USAID/KEA would like to explore the role of the private sector more broadly in Kenya’s health system, using a co-creation framework. Kenya is uniquely positioned to explore private sector options given its relatively positive economic outlook and the government’s “Big Four Agenda,” including universal health coverage and industrialization of the health sector.4 In light of the COVID-19 pandemic, adopting market-based approaches will be critical to sustainably finance and expand access to health services in Kenya.

USAID would like to see feedback from interested private sector actors on the feasibility of the approach outlined above, in whole or in part, and what may be required to actualize a more fully private sector health care model to decongest the public sector. Responses may address any aspect of the approach outlined above.

In addition to the following;

1. What are the most efficient models for providing financing and integrated prevention, care and treatment interventions for HIV, Malaria and Family Health programs?

2. What are the guiding principles that will inform costing?

4 https://www.afdb.org/en/countries-east-africa-kenya/kenya-economic-outlook

3. What private sector solutions are available and can be adapted to improve public sector supply chains

4. What private sector solutions/opportunities are available and can be adapted/adopted to improve access to and expand quality essential services

5. What additional efficiencies do private sector solutions bring to the public sector?

6. How can these solutions be adapted and what approaches can be used? What are the costs?

What funding models can be utilized

7. How can these solutions be sustained?

8. What opportunities exist for local manufacturing at county level and would such opportunities make business sense for the private sector? If so, what needs to happen?

9. Digital health provides an opportunity for enhancing efficiencies in health systems. What areas would be of interest to the private sector and how can counties engage?

10. How should private sector associations engage in supporting county efforts to engage the private sector?

11. How to most effectively integrate in electronic reporting and linkage to the KHIS

12. Issues on QA, accreditation and what are the private sector solutions?