CORE Group Global Health Practitioner Conference 2019

1. Mobilizing Private Capital for Health
Lessons from the Utkrisht
Development Impact Bond
In India
1 May 2019

2. Blended finance is key to achieving sustainable development goals
Ambitious set of 17 sustainable
development goals and 169 targets requires
a new level of global cooperation
$2.5 trillion annual SDG investment gap
Blended finance is the use of catalytic
capital from public or philanthropic sources
to increase private sector investment in
sustainable development.
Private capital is mobilized by lowering
investment risk.
Source: Convergence 2019. https://www.convergence.finance/blended-finance
© Palladium 2019

3. Illustrative Instruments from USAID’s Blended Finance Roadmap

4. STRATIGOSCONSULTING.COM
Impact Bonds
Private investors provide working capital for a set of interventions and are
repaid with a return by outcome funders if pre-agreed results are achieved
Investors
Provide upfront
working capital.
Receive returns if pre-
agreed outcomes are
achieved.
Service Providers
Often supported by
intermediaries
providing project,
contract and fund
management, deliver
social intervention to
improve community
outcomes.
Outcome Payers Make
payments to investors
if pre-agreed, clearly
articulated and
measurable outcomes
are delivered.
Verified
Outcomes
Impact Bonds wrap the
pay-for-results concept into
public-private partnerships
and impact investing. They
have the potential to drive
participation by private and
institutional investors and
create greater efficiency
and results in the delivery
of development projects.
Implementation
manager
Social impact bond =
Government in role of
Outcome Funder
Development impact bond
= Donor in role of Outcome
Funder
Outcome funder incentive:
Outcome payment amount
is still less expensive than
cost of no or late action
© Palladium 2019

5. SECTO
RS:
IMPA
CT
BON
DS
CONTRAC
TED
GLOBA
LLY
Source: Brookings Global Impact Bond Database, Feb 2019
EDUCATIONSOCIAL WELFARE
ENVIRONMENT
&
AGRICULTURE
CRIMINAL
JUSTICE
HEALTHEMPLOYMENT
© Palladium 2019

7. Addressing maternal and newborn mortality in Rajasthan State
• Maternal mortality in Rajasthan is 47% higher than in the rest of India, as is
newborn mortality (14%)
• An increasing percentage of births (17%) occur in private sector facilities
• Cash transfer and other schemes have not succeeded as planned in bringing
down MMR and NMR and government investment is skewed to the public sector
• Government interest (at the time) to improve quality in private sector as well as
addressing public sector weaknesses
• Multiple partners interested in addressing PS quality of care as a response to
stubborn MMR/NMR
• These same partners were interested in testing the use of new mechanisms to
address enduring problems
• Building on success of the DFID-funded Ujjwal RBF project
7
© Palladium 2019

8. The Utkrisht Impact Bond at a Glance
8
Launch date May 2018
Implementation Manager Palladium
Outcome Funders Merck for Mothers & USAID
Service Providers Hindustan Latex Family Planning Foundation
Promotion Trust (HLFPPT) & PSI
Investors UBS Optimus Foundation
Co-Investment from service providers:
Palladium, HLFPPT, PSI
Verification Mathematica Policy Research
Beneficiaries Base case of 360 private health care facilities
in Rajasthan, India; up to 440 facilities
Intervention Support for facilities to prepare for accreditation
under national accreditations schemes (NABH &
Manyata) for maternal and newborn health care
Use of outcome funds Up to USD 8M for investors and service providers on
delivery of results. USD 1M for verification
Payment metric Verification that facility is accreditation ready
Duration of impact bond 3 years
Investment return rate 7.1% expected IRR for UBSOF, capped at 8%
Expected impact Approximately 600,000 pregnant women impacted;
up to 10,000 lives saved over a five year period
© Palladium 2019

9. Theory of Change
oThe link between quality-based accreditation and eligibility for third
party reimbursement of cost incentivizes PS facilities to improve
quality of care
oIf successful, by 2021 there will be a core group of quality assured PS
facilities where women can access maternity care, reducing the
burden on public sector facilities
oUse of existing standards promotes standardization across states and
facilitates eventual scale-up
© Palladium 2019

10. Programming flow
10
ImpactOutcomesVerification - √Activities - QIInputs - $$
Geographic division of
state territory across 2
service providers
Mapping of private
sector facilities in
Rajasthan, including key
data collection
Selection of eligible
facilities; enrolment
discussion and signing
of MOU
Phased QI activities
undertaken by SPs
6 rounds of
verification, every 6
months
Outcome targets
agreed in advance
Verifiers visit a sub-
set of verification
ready pool
Verification result
triggers outcome
payment (or not)
Between 360 (base
case) and 440
(stretch case) private
sector facilities
verified as
accreditation ready
6 outcome payments
made to investor
Implementation
manager and SPs
receive payment for
results
Increased interest
and engagement of
the GoR and GoI in
private sector quality
and outcomes
Maternal and
newborn mortality
reduced through
quality improvements
Investor up-front
capital
Implementation
manager & SP
co-investment
(20%)
Outcome funder
payments based
on verification
results
© Palladium 2019

11. 11
Lessons to date – Private sector quality improvement
Growing body of experience indicates that private sector facility owners are inclined to invest in and
maintain quality improvements if:
They understand the positive impact to their client base (perceived as helping them grow their
market)
They receive assistance in understanding and reaching quality standards specifically related to
maternal and newborn outcomes
This DIB represents a unique opportunity to collect, analyse and use labor and delivery outcome data
from the private sector, however lack of standardized HMIS and other data limitations must be taken
into consideration
There is still considerable work to be done to define, promote, and implement a systems approach to
improving and maintaining quality in private sector health facilities
Still to come: findings related to the cost of quality improvement and private provider investment
© Palladium 2019

12. 12
Lessons to date – DIB design and implementation
The DIB instrument provides a fit-for-purpose setting for active risk management and continuous
improvement
Select partners who are ready to actively engage over the life-of-project
Simple is better – avoid unnecessarily complex partnering, financial model, contracts
Contracts are the final word – guard against loopholes in interpretation
Project governance serves as your north star – supports and optimizes diversity of partner roles,
priorities and incentives
There will inevitably be a need for additional analysis around unanticipated events that may impact
the design and outcomes
The role and engagement of government depends on intervention priorities; if government should be
engaged, then do it early
DIBs are still experimental – no design blueprint & we learn something new every day
© Palladium 2019

13. © Palladium 2019 www.thepalladiumgroup.com
Dr Christine Sow
Senior Director
The Palladium Group
Christine.sow@thepalladiumgroup.com