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Analysis: How can healthcare development bonds help

The world’s first healthcare development impact bond aimed at reducing the number of maternal and newborn deaths in Rajasthan, India, launched last week.

Rajasthan has one of the highest maternal and newborn mortality rates in the country, with 244 maternal deaths per 100,000 births and 47 infant deaths per 1000 live births. The Maternal and Newborn Health DIB – known as the Utkrisht bond from the Hindi for “excellence” – will support government efforts to reduce maternal and newborn deaths by improving access to, and the quality of care in, up to 440 private healthcare facilities in Rajasthan.

For this impact bond, the upfront funder, UBS Optimus Foundation will provide up to US$3.5 million initial working capital so service providers can begin their work with private facilities in Rajasthan. It is the foundation’s second DIB in Rajasthan. It is currently running a three-year pilot DIB aimed at improving the education of girls.

Interventions will be delivered by NGOs Population Services International (PSI) and Indian non-profit organisation HLFPPT and will reach up to 600,000 pregnant women with improved care during delivery and could lead to up to 10,000 maternal and newborn lives being saved over a five year period. The impact bond was designed by advisory group Palladium, which will also manage implementation throughout the three-year term.

USAID and MSD for Mothers have committed US$8 million in outcome funding, provided a set of independently evaluated targets are met. The return on the bond is likely to be around 8%.

“This results-based financing mechanism is ground-breaking in that it takes a business approach to development, while still targeting basic needs like improving the quality of care and private facilities,” said administrator Mark Green, US Agency for International Development, at the launch of the impact bond. “By leveraging the assets and skills of a diverse group of partners across the public and private sectors, we are stretching our investments further while saving more lives. This mechanism is just one example of how USAID is doing business differently.”

Of course the success of the Utkrisht bond will be judged on whether healthcare facilities are able to achieve new certification standards, but this could pave the way for other impact bonds across southeast Asia.

“We need innovative and sustainable financing models to help solve some of development’s most vexing challenges,” said Karl Hofmann, president and CEO of Population Services International.

Posted on: 04/12/2017 UTC+08:00


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