Six Reasons to Make Health Markets Work Now

By Nicolas Gloeckl, Manager of Survey & Advisory Services at Devex 

SINCE ITS INCEPTION, international development assistance has always been intended to aid, not replace, the private and public sector by addressing acute market failures. As President Barack Obama puts it: “Foreign assistance is not an end in itself. The purpose of aid must be to create the conditions where it is no longer needed.” A critical question for development is therefore how can we make markets work better?

While current models have helped millions, health data worldwide shows that we need new innovations to help us reach the one-third of the world that still doesn’t have access to quality health products and services. In partnership with PSI, the Abraaj Group, and Philips, Devex set out to find some answers. Through in-depth interviews, we tapped the minds of over 40 health market experts working at UN and donor agencies, private foundations, corporations and NGOs. Interviews were supplemented by an online survey of nearly 900 senior development professionals.

Here is what they have to say:

One. Markets “versus” aid or markets “with” aid?

“It is important to leverage the impact we get from aid funding with private sector resources. They are not competing forces but a way to enhance the tool of aid funding.”

-Amy Lin (@AmyHLin), USAID’s Center for Accelerating Innovation and Impact (@CIIImpact)

Integrating market-driven approaches is growing in prominence in global development. As traditional sources of funding dwindle and health gaps in developing countries remain unaddressed, donors and private sector actors are diversifying their approaches. Functioning health markets are perceived as critical catalysts towards closing these gaps.

 

Two. Market failures are risks.

In many low-income countries, health economies are beset by distortions, policy issues, and inefficiencies, all of which lead to market failure. Unsurprisingly:

The vast majority of development professionals — 98 percent — perceive well-functioning markets as important in addressing the health challenges of developing countries.

“The incentives have to be figured out beyond subsidy. You can create impact with money but you can’t create investment or sustainability.”

-Ron Ashkin, Team Lead at the Private Sector Innovation Programme for Health (PSP4H)

Three. New concepts: Revolutionary or more of the same?

There is a growing appreciation of the role of market approaches for improving healthcare and health systems. Novel concepts — such as market shaping, market dynamics, and making markets work for poor (M4P) — reflect a renewed interest in improving the relationship of health systems to functioning markets.

Our health market experts explain why these new concepts are seen by many as game changers:

“[Social enterprises] are great for innovations but they are very hard to scale. [These] can really do great experimentation that large organizations struggle to do.”

-Greg Widmyer, Deputy Director of Vaccine Delivery at the Bill & Melinda Gates Foundation

Four. Promoting public-private synergy

By engaging the private sector in improving health outcomes in low-income countries, the social enterprise approach helps meet the needs of underserved communities.

About 88% of health market experts agree that social enterprises hold promise for addressing much of the challenges in developing countries in a manner that is sustainable. They reason that:

“The use of social franchising to ensure inclusion of private providers in the delivery of quality health services should be an important element to reach universal health coverage. All actors of health  markets should work in a coordinated manner by taking into consideration the government’s stewardship role.”

-Ezizgeldi Hellenov, Deputy Representative to Yemen at United Nations Population Fund (UNFPA)

Five. Consumer power, now!

Both health markets experts and development professionals agree that understanding and empowering consumers is critical for improving product and service delivery in health markets.

“Improving the function of markets is important, but in order to reach major goals like the SDGs, you have to acknowledge the role of aid and need for innovative financing to mobilize and catalyze additional resources for health.”

-Priya Sharma, Policy and Innovative Financing Advisor at USAID’s Center for Accelerating Innovation and Impact

Six. Multi-stakeholder collaboration is key

Across the board, health market experts emphasized the importance of collaboration. Only through purposeful and strategic multi-stakeholder partnerships, they argue, can we make markets work more effectively. Initiating greater dialogue and engagement among stakeholders is critical for achieving for UHC and ensuring better access to quality health products and services.

When asked how to make quality health products and services more accessible to poor consumers, health market experts’ top answers are:

“There’s a substantial unfinished agenda in public health. This requires more funding but we can also work more effectively, including helping markets work  better.”

-Janet Ginnard, Team Lead, Strategy at UNITAID

This article is part of an ongoing conversation about #MakingMarketsWork in Impact Magazine No. 22 “Are We Thinking Big Enough” issue. Join in the conversation with @PSIImpact.

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