A Digital Finance Prescription for Universal Health Coverage

Children born into poverty are almost twice as likely to die before the age of five as those from wealthier families. Access to health care can prevent many of these and other deaths, and features prominently in the Sustainable Development Goal for health. But health care can be costly. So what role can financial services play in improving access to life-saving services, and what’s holding them back from having a bigger impact?

There are some obvious opportunities for financial services to play a role in achieving universal health coverage. Savings accounts can help people plan for health expenses, access to credit can mean the difference between getting needed care and not, and insurance can help mitigate against health shocks that too often push people deeper into poverty. Offering these products to low-income customers is traditionally risky and expensive, but that picture is quickly changing with the growth of digital financial services (DFS), which leverage digital channels to reach more remote customers at lower cost.  

DFS can contribute to the goal of universal coverage in a number of ways beyond helping households afford care. Health care systems are complex webs of patients, public- and private-sector providers, insurers, pharmacies, donors, financial service providers and more. Financial transactions between these actors typically take place in cash or through bank transfers. Cash transactions are expensive, risky, subject to theft and leakage, and hard to track. Payments through bank accounts often require health workers to travel significant distances to cash paychecks due limited reach of bank branches. Introducing DFS can alleviate these pain points. Research by the USAID-funded Health Finance & Governance (HFG) project reveals that digital finance offers promising solutions to not only reduce risk and improve accountability of funds, but also contribute to health care coverage and efficiency of service delivery.

For example, DNET’s Aponjon MAMA program in Bangladesh created financial incentives for agents to enroll new customers in the program’s maternal health information service. Before switching from cash to mobile money, Aponjon spent 30 days processing the monthly incentive payments. After switching, that same process took just eight days, and the cost of processing payments fell by 85 percent. Agents receiving the incentive payments also saved time, and because they no longer had to travel to collect their payments, the cost to receive their payments dropped by 69 percent. The pilot program is now being spun off and is expected to grow into a sustainable business with digital payments as a core part of its operating model.

Digitizing payments can also enable pay-for-performance schemes for health workers and incentive payments for individuals. Pathfinder Kenya’s mHMtaani program, for example, uses an app to monitor the activities of community health workers and pays them using mobile money based on their performance. Pathfinder reports that this scheme not only reduced leakage, improved efficiency and reduced costs, but generated more and better data and improved access to health services.

In Tanzania, Comprehensive Community-Based Rehabilitation in Tanzania (CCBRT) helps women suffering from obstetric fistula, an easily treatable condition but one which often goes unaddressed due to lack of awareness and funds for treatment. CCBRT trained a network of ambassadors to identify obstetric fistula cases and arrange the patient’s transport to a hospital with facilities to treat the condition. CCBRT sends mobile money to the ambassador to cover the cost of the patient’s transport plus an incentive payment of $6 for handling the case. As a result of this initiative, fistula surgeries increased by 337 percent, saving thousands of women from physical and emotional suffering and isolation. CCBRT has expanded the program's scope to include other conditions, including cleft lip/palate and cervical cancer.

In several countries, large-scale applications of DFS have also emerged as a result of humanitarian disasters. Life-saving resources for food and medicine can be quickly dispersed via digital channels to provide funds to those most in need. This was the case in West Africa, when the Ebola epidemic generated urgent demand for a more reliable salary payment system for frontline health workers. In Sierra Leone, DFS stakeholders rapidly mobilized to develop a digital payment platform that ended the health worker strike by speeding timeliness of payments. This example illustrates the potential for rapid development of DFS when development partners bring urgency to overcoming traditional bottlenecks.

These examples, while promising, have yet to be widely replicated. So why has DFS uptake been more measured in health than in other development sectors? A new HFG publication indicates one reason may be that payment distribution channels do not pose the highest priority pain points for health programs. For example, in Senegal, HFG explored the costs and benefits of transitioning the government’s performance-based incentive program to DFS. The analysis found that structural changes to approval and verification processes were needed prior to introducing more efficient processes for transmitting payments. Introduction of DFS in health clinics, hospitals and pharmacies may be most effective when sequenced following or in conjunction with broader digitization of operations.

DFS bottlenecks, such as lack of available agents in rural areas and limited consumer literacy and numeracy, are not unique to the health sector but do pose significant challenges in extending DFS for health. Unsurprisingly, health programs are active users of DFS in countries where the financial infrastructure is more mature, such as in East Africa. As of yet, there has been limited collaboration among stakeholders across sectors to aggregate demand and share DFS start-up costs, in spite of overlap in constituencies. Where investment in DFS infrastructure and consumer education is needed, health-sector stakeholders should join forces with agriculture, energy and education sector efforts. A common goal of improving service delivery models while optimizing limited resources could create the push needed to extend the infrastructure for DFS.  

The role of DFS in health is still nascent, but as these examples demonstrate, the health sector provides diverse opportunities to both serve as an anchor platform to expand financial inclusion and as a test bed for innovative uses of DFS to improve lives. In future blogs, we will explore emerging business models enabled by digital savings, credit and remittance products for health. And we will feature one of the most promising applications in this space: the use of mobile channels to expand access to health insurance, a critical pathway to universal health coverage.