Seizing Health Investment Opportunities
The global burden of serious chronic diseases is escalating
rapidly. Worldwide, more than 540 million adults live with diabetes,
and over 90% have type 2 diabetes. Some regions, particularly low-
and middle-income countries, face an urgent challenge, with
approximately 80% of individuals with diabetes residing there. Asif
Saleh, Executive Director at BRAC Bangladesh, spoke about how
non-communicable diseases are responsible for 70% of all deaths in
Bangladesh and that an aging population and climate change are only
going to make the problem worse. The recommended WHO target for
health-related spending in Bangladesh is 7.5% of GDP but is
currently only receiving 2.63%. On the African continent,
diabetes-related health expenditures are set to soar from $13
billion in 2021 to $43 billion in 2023. These numbers show that
there is a great investment gap that needs to be addressed.
Investing in Prevention and Care: High Returns
We understand the root causes that contribute to the surge of
chronic diseases: unhealthy diets, physical inactivity, and limited
healthcare access. Implementing recommended strategies that combat
non-communicable diseases (NCDs) yields an impressive average return
of €7 for every €1 invested, according to the WHO. Preventing minor
diabetes-related complications can save approximately €7,000 per
person annually, while averting major complications costs about
€15,000 per year. While these facts were widely known to the
roundtable participants, the question of why health resources are
still predominately spent on treatment still stands. So, what's
preventing us from taking the leap?
Unlocking Health Investments through Outcome-Based Financing
As we confront the challenge of addressing non-communicable
diseases, unlocking investments in health becomes paramount.
Innovative financing mechanisms, with outcome-based financing (OBF) at
the forefront, hold the potential to both attract further investments
in health and deploy current invested resources more efficiently.
Outcome-based financing is a broader term, encompassing financial
instruments such as impact bonds and results-based contracts, and
hinges on multi-sector partnerships between governments, service
providers, and investors to achieve predefined outcomes. During the
roundtable conversation, Jeff Cyr, CEO of Raven Capital Partners, also
noted the strategic role of the intermediary in bridging pathways
between communities in need, outcome purchasers, and impact investors.
While introducing and deploying new finance models can be tricky,
all participants agreed that outcome-based financing mechanisms hold
real potential for reducing the health burden.