Innovative Finance

Research tells us what works. It separates intentions from results. We know Living Goods saves lives because independent research has demonstrated this to be true.

Our Approach

Community health services have tremendous potential to reduce maternal, newborn, and child mortality—central outcomes of the United Nation’s Sustainable Development Agenda. However, despite its critical role in driving the attainment of universal health coverage and a positive impact on other essential development indicators, funding for community health remains low.

Living Goods is working on trialing and mainstreaming innovative financing mechanisms that generate additional development funds beyond traditional funding from established donors, enhance the efficiency of financial flows by reducing delivery time and/or costs, and make financial flows more results-oriented, by linking funding flows to measurable performance. We work to support governments bi/multilateral donors to develop sustainable financial structures that can enable them to effectively advocate for and structure and finance community health programs for the long term.

Government Contracting

Living Goods believes true success in financing community health systems will be achieved when governments own and pay for their own community health program. As such, we work closely with governments to facilitate a shift in this direction, recognizing that even small wins are significant.

We’re working to better understand the current flow of government funds for primary health care (and community health, more specifically); advocate for increased investment in community health; build governments’ capacities to spend, direct, and attract funds towards community health; and pioneer new contracting mechanisms for community health with the support of local governments ranging from co-financing agreements with governments, to results-based financing mechanisms.  

At the end of 2018, Isiolo County in Kenya became the first government to directly contract Living Goods through a co-financing arrangement, to manage all of their community health services for the next four years, covering 720 CHWs across Isiolo, Merti, and Garbatulla sub-counties for the next four years. Starting with an equal cost-share, the county government will shoulder an increasingly larger share of the price tag for community health throughout the life of the partnership. And, to ensure that community health has the long-term dedicated funding needed to enable government ownership, we will concurrently support the government to draft and implement supportive policies for community health. 

Isiolo Governor Dr. Mohammed Kuti & other members of his executive team pose for a group photo with Living Goods Kenya Country Director Thomas Onyango & Deputy Country Director Ruth Ngechu.

Given Kenya’s devolved system of governance, it has not been an easy task to figure out the nuances of how to structure the finances and operationalize a new way of funding community health led by an international organization like Living Goods. The Kenyan Senate became involved after exercising its oversight role to hear a number of petitions, and ultimately gave the partnership, its blessing.

We believe that changing new paradigms and working in partnership with governments is essential for ensuring true sustainability for community health and the Isiolo County Government has been fully engaged in this learning journey. We will document and share our learnings so that we can support future government partnerships involving contracting.

Our work in Isiolo will provide residents with universal health coverage (UHC) through the Kenyan government’s pilot initiative in four counties.  The county’s vision for strengthening its community health systems as an enabler for delivering sustainable UHC is extremely strategic, and we are grateful for the support and leadership of Isiolo’s Governor, Dr. Mohammed Kuti, for leading the way.

We began training the first 360 CHWs in Isiolo in May 2019 and held a prominent graduation ceremony on July 11, 2019. 

The Latest in Government Contracting

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Nearly 350 CHWs Graduate through Innovative Partnership in Isiolo County

On July 11th, Isiolo County celebrated a major milestone in the delivery of community health services with the graduation of nearly 350 community health workers (CHWs during the formal launch of the county’s community health partnership with Living Goods.

Results-Based Financing

Results-based financing (RBF) is a mechanism that links financing to pre-determined results, with payment made upon verification that the results have been delivered. When well designed, RBFs can significantly improve desired development outcomes by creating accountability and incentivizing cost-effectiveness. RBF mechanisms can help crowd in more community health resources from risk-averse government, bilateral, and multilateral donors, driving progress toward universal health coverage.

In June 2018, in partnership with the Government of Uganda (GOU) and other key stakeholders, Living Goods co-designed the country’s first RBF mechanism for community health, a pilot funded by the Deerfield Foundation. Through this RBF, Living Goods is only paid for results that have been independently verified by Innovations for Poverty Action (IPA).

The experiment aims to demonstrate a scalable approach for contracting high-impact, cost-effective community health services that Uganda’s Ministry of Health (MOH), donors, and other partners can adopt in the future.

Unlike most other RBF programs that tie a portion of payments to achieving outcome and impact targets, Living Goods’ RBF ties 100 percent of funding to results. Thus, the RBF pilot acts much like an impact bond, except Living Goods, rather than an investor, bears the responsibility of raising working capital to deliver results.

By drawing attention to key health results, creating accountability in the system, and allowing community health implementers the flexibility to continue to innovate and improve, this mechanism buys down risk in community health investments for bilateral and multilateral donors. It may also facilitate local governments to more effectively finance or contract out the implementation of community health programs.

Updates on our RBF Mechanism

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Payment Metrics

For this program, payment metrics were informed by key criteria related to: impact on child mortality, alignment with GOU objectives, minimization of perverse incentives, objectivity and ease of measurement, and the ability to ensure manageable control.

The metrics are:

  1. Number of visits CHWs make to pregnant women.
  2. Number of antenatal clinic visits completed by pregnant women in facilities following CHW visits.
  3. Number of women delivering at health facilities following CHW visits.
  4. Number of postnatal visits by a CHW within 48 hours of birth.
  5. Number of postnatal visits by a CHW between 48 hours and one week after birth.
  6. Number of immunization and nutrition assessments for children under one.
  7. Number of assessments for malaria, pneumonia, and diarrhea for children under five.
  8. Number of follow-up visits by CHWs in person or via phone after referral to a health facility.

“Uganda’s Ministry of Health is implementing the Health Facility RBF. We look forward to the learnings from Living Goods’ community-based RBF and specifically how it links with and complements the health facility RBF.”

Dr. Sarah Byakika, Commissioner Planning, Ministry of Health

Scope and structure of the program

The Deerfield Foundation committed $400,000 in funding to Living Goods for results achieved in delivering community health services in Kyotera and Masaka districts in partnership with the GOU. Performance tracking is collected through real-time data via the Smart Health app, co-developed with Medic Mobile.

Guided by eight metrics, IPA selects a random sample of results every two weeks for verification through phone calls and household visits for beneficiaries who cannot be reached via phone. Approximately half the verifications are completed remotely, which helps keep verification costs low and ensures scalability. IPA also conducts a client satisfaction survey that may serve as a payment metric in the future.

Every quarter, IPA adjusts the performance reports to reflect only verified results and payments are made to Living Goods based on pre-determined prices assigned to each result. This incentivizes the cost-effective delivery of results as well as accurate reporting.

Instiglio, a non-profit consulting firm, acts as a trustee for the RBF pilot and is responsible for receiving, holding in escrow, and disbursing payments hinged on implementation results as reported by IPA. An advisory committee chaired by the MOH, with participation from key donor and partner organizations, provides strategic guidance on the RBF design and implementation. A Steering Committee, composed of independent experts, provides project governance and acts as an advisor and mediator for dispute resolution.

Currently, there are no upside incentives for over-achieving targets or penalties for unverified data, and the program does not include payments for some health areas such as family planning. Living Goods is looking at adding these aspects to future iterations of the design.

The Latest in Results-Based Financing

Kenya Investment Case

To surmount the challenges many local governments face in financing community health, we work to provide the evidence and support needed to shift budgets and priorities. To that end, we work closely with governments and key partners to build investment cases that demonstrate the intrinsic value and savings community health creates.

Developing an investment case for community health in Kenya

In 2017, Kenya’s Ministry of Health and Living Goods partnered to make the case for community health in Kenya. Using the UNICEF Costing Tool and the Lives Saved Tool (LiST) to estimate the benefits and costs of scaling up community health in Kenya, the study defined ROI as the difference between the economic benefit and cost of scaling up community health between 2017 and 2026. The study also used key informant interviews, focus group discussions, and stakeholder engagement meetings to assess the benefits of community health. Emerging data was instrumental in contextualizing the costs and benefits of community health in different settings—that is, rural/urban and county/national—identifying enabling and constraining factors for community health in Kenya, and documenting value not otherwise apparent from quantitative data.

The Return on Investment (ROI)

The joint study on community health in Kenya estimates a 1:9.4 economic return on investment in terms of lives saved and increased economic productivity for every shilling invested in community health.

Short-term benefits (five-year period)

With a focus on increased adoption of preventive health care, community health can help detect and address illness before more expensive and advanced interventions are required. For instance, averting advanced-stage HIV/AIDS, malaria, and tuberculosis (TB) is expected to save an estimated US$107.8 Million (KES10.8 Billion) over five years.

Long-term benefits (10-year period)

  • Increased productivity: Estimates indicate that deploying community health nationwide could increase productivity in Kenya by US$24.5 billion (KES2.4 trillion) over a 10-year period from 2017-2026. It is expected these savings will exist through reduced hospital visits and shorter periods of illness, due to increased use of preventive health care measures, decreased maternal and child ailments, and averted cases of stunting.
  • Insurance against future health crises: This refers to the value of community health in avoiding the high cost of global health crises, including pandemic preparedness and rapid response. The total economic value of a fully scaled community health system in preventing health crises in Kenya is as high as US$330 million (KES33 billion) in the long-term.
  • Employment: This refers to the overall multiplier increase in employment as a result of government investment in community health. The total economic value is as high as US$2.5 billion (KES 250 billion) over 10 years.

Indirect benefits: impact of community health on the wider health system

Indirect benefits of health care interventions refer to gains that go beyond the immediate outcomes of community health interventions that positively influence the wider health care system. Investment in community health in Kenya is poised to generate several indirect benefits, among them:

  • Improved data on community health and other health indicators since community health workers (CHWs) collect demographic and other data at the household level.
  • Enhanced opportunities to provide a first-line crisis response for outbreaks such as cholera as well as for addressing emerging illnesses such as non-communicable diseases.
  • Improved linkages providing an interface between communities and health facilities to ease referrals and delivery of health messages conveniently at the household level.

Broad-based benefits

Investing in community health will generate many broad-based benefits including:

  • Increased data on indicators not necessarily linked to health such as economic development and sanitation.
  • Youth and women empowerment, especially notable at the community level through the selection of CHWs.
  • Community empowerment, especially among low-income populations.

Explore the Kenya Investment Case

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