ARV medications in Kenya are mainly bought through donor funds.
Having navigated the precarious intersections
of donor dependency, fragile healthcare systems, and the unrelenting burden of
disease in LMICs, we should view healthcare financing not merely as a matter of
numbers but as a litmus test of political will, strategic foresight, and
institutional courage. The arc of innovation in healthcare financing in LMICs
is neither sudden nor smooth; it has been nudged forward by necessity, refined
by trial, and often hobbled by inertia.
When donor aid began to plateau around 2010
and decline by 2015, it was not a surprise; it was a long-anticipated funeral
guest wailing in grief, “build sustainable systems or be left to patchwork
solutions.”
Healthcare leaders and well-fed technocrats shrugged it off, hoping
the next Gavi window or PEPFAR tranche would buy more time. LMICs found
themselves in a crisis with no blueprint. The assistance taps, once flowing
through disease-specific vertical programs and other support, started
sputtering.
The real tragedy was not the retreat of donor money, but the
hesitance to confront it with courage, creativity, and homegrown solutions.
LMICs had become structurally dependent on external funding, and donor dependency
had become a comfort zone, breeding stagnation.
As funding dried up, we began to see the
roll-out of what the funders euphemistically called innovative financing
mechanisms. The term sounded promising, bold, modern, and disruptive, but
behind the buzzwords, these models were neither new nor particularly tailored
to local realities.
Performance-Based Financing (PBF), for
example, took off in countries like Rwanda and Burundi. In some contexts, it
aligned incentives and sparked improvements, while in others, it became a rigid
metrics game for chasing indicators instead of outcomes.
Then came sin taxes,
impact bonds, matching funds, health insurance expansions, Public Private
Partnerships (PPPs) and blended finance facilities. Some looked promising,
others suspiciously privatised risk disguised as a public good.
The Lesotho PPP
hospital, despite its controversies, at least dared to ask, “Can the private
sector help us leapfrog into modern health infrastructure?”. Similarly, the
India cataract surgery Development Impact Bond (DIB) brought Wall Street logic
into community eye care, a spectacle, quite literally. Sin taxes on alcohol,
tobacco, and sugary drinks have the dual benefit of saving lives and collecting
revenue.
But in countries where sugar is political capital and alcohol sponsors
national sports, implementing them is like asking a lion to go vegan-the more
the tax, the more the sinning! Blended finance, though conceptually elegant,
too often blends the public’s risk with private gains.
Health insurance schemes
were launched with political fanfare, but lacked the actuarial depth or
institutional trust to thrive. But herein lies the sustainability paradox:
innovation was often externally conceptualised, donor-driven, and
elite-designed, then parachuted into LMICs like software updates never
requested. In many cases, the risk remained public while the returns stayed
private. When hospitals become investment portfolios, the patient often becomes
a line item, not a life.
True innovation in LMICs’ healthcare financing
requires local, frugal solutions tailored to context, driven by necessity, and
sustained by community ownership.
As LMICs leap into these “innovative” futures
and scramble to fund Universal Health Coverage (UHC) and pandemic preparedness,
the core questions are: who bears the risk, and who reaps the reward? Are they
shifting burdens to already overstretched citizens? Are they asking the poor to
prepay for care they may never receive, while investors demand guaranteed
returns?
In many LMICs, “innovation” often means the poor are asked to prepay
for care they never received, while the financiers get guaranteed returns for
outcomes they barely understand.
That’s not innovation, that’s injustice. Healthcare financing justice means recognising that systems are only
sustainable when they are also equitable.
It’s not just about finding money,
but ensuring the money flows in a way that centres dignity, access, and
accountability while reimagining responsibility, redistributing risk,
strategically purchasing, and ensuring that every dollar buys not just services,
but sovereignty, dignity, and sustainability. It is time for LMICs to move
beyond fiscal dependency and policy mimicry.
Starved of donor aid in 2025, LMICs must
invest in domestic resource mobilisation without crushing the vulnerable,
embracing RBF, but measure what matters to people, not just donors, partner with
the private sector on terms that prioritise public good and build robust public
financial management systems that can track, protect, and direct funds where
they are most needed.
Innovation must no longer be an import; it must be
forged in the heat of LMICs’ struggles, led by their own thinkers, and funded
by strategies they can sustain morally, politically, and economically.
Dr. Mugambi is a healthcare leadership
scholar at the University of Oxford’s prestigious Saïd Business School and the
Nuffield Department of Primary Care Health Sciences. He is reachable at
[email protected].