Innovative Financing: Public-Private Cooperation and Noncommunicable Diseases

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1 Innovative Financing: Public-Private Cooperation and Noncommunicable Diseases Vanessa Candeias Head of Health Promotion and Disease Prevention World Economic Forum

2 Overview Public private collaboration for Non-communicable diseases - What is going on? The costs of inaction Complexity of the eco-system and barriers for public-private collaborations Return on Investment for the prevention of NCDs 5 Examples of successful collaborations 2

3 Public private collaboration for NCDs Proportion of member states collaborating with other stakeholders in NCD prevention and control Collaborations with private sector 59% 70% upper-middle and high income countries 37% low income countries Collaborations with UN agencies 68% Collaborations with academia 72% Collaborations with other, nonhealth government ministries Collaborations with communitybased organizations and civil society 80% 82% Source: WHO

4 Inaction will cost too much to both public sector and private sector Economies in transition will be heavily affected if we don t change the course of action Source: World Economic Forum/ Harvard School of Public Health,

5 Complexity of the eco-system and barriers for public-private collaborations Source: World Economic Forum, Bain

6 Re-thinking the ROI of healthy populations will change the direction of discourse and help to fuel investments into healthy populations Why is there a need for rethinking? Beneficiary stakeholders of healthy populations have very different lenses: Understanding and capturing those very different benefits is on top of the agenda but has not been solved to date The status quo of the debate does not facilitate investments does not address the specifics of multi-stakeholder investments does not provide a concept to assess investment opportunities will force the debate about the value of healthy populations A discussion on the ROI concept will assess investment opportunities in the eco-system of healthy populations will help to change the discourse to shift from investments into care to investments into prevention 6

7 Additional aspects to consider when thinking about the ROI of healthy populations What are the benefits? Who benefits? What investment horizon? Creating alignment about key parameter to facilitate decision making Who invests? Which calculation methodology? How to assess non HC sector investments? Identification of investment opportunities and interdependencies important to identify and convince investors 7

8 Concepts for quantification KPI Various methodologies do exist to quantify cost and benefits of healthy populations NOT EXHAUSTIVE NPV RoI IRR Costs Used by Bloom et al. for WEF India report Benefits Direct costs of the program Flat (e.g.,$10) / capita / year Cost-Of-Illness (COI) approach / Avoided medical cost Value of statistical life (VSL) approach Value of Lost Output: The economic growth approach Full Income approach Used in Prevention for a Healthier America study Longevity ** Improved health status Used in Lancet Commission report Lower health care expenditures Used in Australia Public Health study 8

9 High level methodology structure for economic arguments Investment required (costs) Cost for intervention - Preventative/ therapeutic - Once off and annual Required intervention dose rate (ie. how many interventions are required) Intervention effectiveness rate* Diagnosis rate (if relevant)* Average adherence rate (if relevant)* Population size Benefits realized (financial return) DALY impact INPUTS (Avg) GDP contribution per person per year, representing: - Productivity (Private sector benefits) - Employment (Individual benefits) - (Taxes not included in this metric as considered a transfer of money within the economy) WACC (i.e., discount rate) Expected rate of return (tbc) Timeframe ASSUMPTIONS / CALCULATIONS OUTPUT Total investment value Total benefit value *May need to be tailored or defined for the specific target population; Note: For handbrake-type interventions, may need additional elements 9

10 The multiplier effect of engaging in public-private collaboration Curbing pollution Hypertension control Prevention of heart attack & stroke Return on Investment 90% 3700% Micro-subsidies for healthy food Healthy pregnancy Addressing malnutrition Source: WEF, Maximizing Healthy Life Years: Investments that Pay Off 10

11 Example: Prevention of heart attack and stroke Situation CVDs are a leading cause of death CVD related mortality is influenced by: - Population-level factors (e.g., physical and cultural environment) - Individual-level behaviours (e.g., smoking, diet, and exercise) - Preventive medical services, and acute interventions Intervention Treatment of 350,000 high risk CVD patients with a simple medication bundle, including aspirin, a statin, and an ACE inhibitor Partnerships with community-based health systems which further extended the intervention to their patient populations Investment Direct costs per participating patient for medication, laboratory and physician visits of $205 annually Total investment of $205,000 per 1000 participating patients Results Prevention of 19 heart attacks or strokes per 1000 participating patients Prevention averts 147 DALYs (i.e., creating 147 healthy life years) per 1000 participating patients Cost-neutral to the health care system, and created socio-economic benefits of $7.8M 1 per 1,000 participating patients Return on Investment ROI: 3700% 1 Assuming economic benefit of $53,143 (PPP) per DALY, Based only on socio-economic benefits, not including avoided healthcare costs Source: Kaiser Permanente 11

12 Example: Hypertension control Situation Hypertension is second leading health risk factor in Moldova, contributes to high rates of strokes (8.4% of total DALYs) and ischemic heart disease (17.9% of total DALYs) Fewer than one in three patients with hypertension is taking medication daily Intervention Support for a financial protection scheme to increase hypertension control in adults Goal to increase reimbursement of antihypertensive drugs from 50% to 70% Investment World Bank to invest together with the Government of Moldova Present value of combined investment totals $34M for and $73M for period Results Intervention expected to avert 18,300 DALYs for and 100,800 DALYs for period respectively 1 Expected NPV from economic benefits totals $13M and $210M respectively 2 Return on Investment ROI ( ): 40% ROI ( ): 290% 1 Based on the 2010 Global Burden of Disease Study led by IHME; 2 Estimate based on one per capita income of $5 935 adj. by an annual real growth rate of 4% Note: Theoretical cases by building on active lending operations of the World Bank in Moldova; Source: World Bank 12

13 Example: CHD prevention through Micro-subsidies for healthy food Situation High consumption of saturated fat through meals outside of home Need to reduce coronary heart disease incidence Intervention Public intervention with micro-subsidies to reduce saturated fat intake by replacing regular oil with healthier oil in meals outside of home Investment Investment of SGD 8M 1 in saturated fat intake reduction program through micro-subsidies To cover the average costs of price differences between the healthier and regular ingredient targeting 500,000 meals daily by 2020 Results 2-3% reduction in coronary heart disease incidence averting 1,860 unhealthy life years in 2020 Economic benefits of SGD 102M 2 Return on Investment ROI: >1100% 1 Assumed subsidy of S$0.045 per meal 2 Assumed value/daly equals annual gross median income with SGD for Singapore in 2020 Note: Example to build up the logic model for HPB s strategy development in obesity control from 2014 to 2020; Source: Health Promotion Board of Singapore 13

14 4 Key for successful collaborations Clear objectives, monitoring and evaluation Building trust & fostering transparency Effective governance structures Accountability Secured resources Continuous and solution oriented dialogue across sectors and stakeholders with sharing of data Leadership in identifying priorities and the common action agenda Metrics: Health, socio & economic outcomes, ROI for all stakeholders involved 14

15 4 Examples of other successful collaborations 15

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