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Patient Capital for Sustainable Health Care of BoP in India

Harasankar Adhikari

The end of the twentieth and the beginning of the 21st century has been characterized by an unprecedented rate of growth and rise in wealth in the world. This changing economic landscape has exacerbated and increased the divide between rich and poor, half of the world’s population, to not share in the economic benefits of the global economy. The bottom of the pyramid (BoP) refers to the world’s poorest population who are often neglected from the aid policies and initiatives undertaken by global development institutions. This global imbalance is worrisome for many reasons and it is becoming more apparent that innovation and alternatives to the current aid architecture are imperative for establishing more inclusive aid policies that do not omit the world’s most needy populations.

The world community has pledged to support large investments in infrastructure to meet the Millennium Development Goals. At the same time, investors, operators and lenders – local as well as international – have become more risk-averse than before. The usual sources of development finance are unlikely to expand enough to cover the large sums involved, and will need to be supplemented by non-conventional means. Successful approaches rely on community management, inclusive institutions that pay particular attention to disadvantaged groups, and cross-cutting approaches that coordinate budgets and mechanisms across government agencies and development partners. Our world system has not provided the support and possibility for growth that so many low-income people require to sustain their livelihoods and India is not its exception.

The failure of neo-liberalism to address structural problems of poverty and social exclusion has led many governments to look closely to civil society initiatives in the social economy as solutions to these challenges. In many cases, these initiatives are rooted in their societies. Now, more than ever, there is a call from these local actors, often called social entrepreneurs, for alternatives. These alternatives can be understood in the ways development projects are organized, funded, and managed in order to transform the development landscape into one of greater social impact. Today, most agree a step in the right direction has been taken as we see a shift towards more sustainable development and the establishment of projects emerging at the grassroots level, as opposed to a top down approach.

Good health is one of the most valued possessions of any individual, rich or poor, and is a state that most people attach great value to gaining and keeping. Health has an impact on every component of an individual’s everyday life: family life, ability to earn an income, leisure, and much more. Sadly, whether or not an individual has accessed to adequate to healthcare is largely determined by where he or she has had the fate of being born. India is faced with extreme challenges in providing healthcare services through their national systems. Moreover, increased strains on these healthcare systems persist due to high rates of long-term diseases and infections. The status of one’s health generates externalities for many other aspects of one’s life and thus, is the basis for living a valuable and productive life. There is a desperate need to expand healthcare infrastructure in both urban and rural settings. The investments that India makes in its healthcare system are very expensive and usually only “pay off” in the long term with the economic development that stems from a healthy, productive work force. However, in the short term, it prevents from budget ceiling. The disadvantaged people might ensure their long-term health care through health insurance. It has been seen that the scenario of health insurance coverage is poor and it is basically covering the middle and upper class population. The BOP population is ignorant about this due to multifarious cause’s i.e. proper knowledge, poor economy and threat of claim settlement, etc. But health insurance might act as patient capital to provide sustainable health care facilities to the BOP population.

Patient capital is a funding mechanism used in international development that has shown to deliver real results, with greater and more efficient social impact than traditional development financing. The challenges of traditional financing become more apparent when we witness some of the ignorance of fundamental components of any successful funding initiative. When an investor undertakes a development project, three critical mechanisms are needed in order to ensure its success: (1) assessment of the ongoing social program; (2) prediction of the return on the mission investment; and (3) planning long-term program strategies. These mechanisms have often been set aside in the traditional framework, as fast results were the ultimate goal. Many traditional development programs are characterized by short-term horizons. A renewed focus on accountability among bi- and multi-laterals has led to the proliferation of some targeted years of funding cycles for many development projects, including project ramp-up, wind-down, and evaluation. This short time frame is the exact opposite of what is needed to create long-term sustainable solutions to poverty. Furthermore, one of the greatest issues India faces in furthering its own social development is the budget ceiling. This is one of the greatest impediments to proper social and economic development, and while there is rationale for these ceilings, these types of policies illustrate the need for alternative financing tools that work outside of the traditional development framework. This is especially true in the health sector.  It can be understood as an investment that places social impact at the center of its approach. It is a long-term, thus, a ‘patient investment’, that expects below-market returns. Patient capital is a new method of funding and investment in development projects and has proved to yield positive results when measuring widespread social impact. It has been used in a variety of sectors in the developing world and has proved that it is an innovative and effective mechanism in a new era of development. More specifically, it is particularly useful in the health sector. Due to its affinity to long timelines, and its focus on long-term sustainability and social impact, patient capital is an appropriate social financing mechanism for health sector initiatives.

There are many questions that remain unanswered in the practice of development, and there are no easy answers. The past has seen many successes in bringing aid to the world’s most vulnerable populations, and it is important to focus on what worked within these solutions. However, many of the India’s poorest people are not reached by important aid initiatives due to the lack of sustainable solutions and the political agendas witnessed. Within a new era of social entrepreneurship and the social economy, individuals all over the India are motivated to increase social impact and provide a more equitable future for all. An inclusionary market-based approach may prove to yield more sustainable and inclusive development results for communities at the BoP. Thus, innovative social financing, including the patient capital framework, is worthy of examination as it seeks to provide the long-lasting solutions needed to sustainably cover the health of lower strata of Indian society.

Jan 04, 2018


Harasankar Adhikari [email protected]

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