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Sustaining improved health outcomes requires a sustainably financed healthcare system. A country must build a reliable funding mechanism—a stable taxpayer base is usually desirable—and maintain the public’s commitment to underwriting that stream. While this is challenging enough in democracies with advanced economies, it is particularly challenging in lower-income, developing nations where budget deficits can constrict long-term fiscal plans.

One rapidly growing economy, Kenya, is committed to changing how its healthcare system is financed. The 2010 approval of a new constitution shifted responsibility for healthcare from national to subnational county governments. As part of the transition, the national government will retain control of policymaking, but primary healthcare delivery will be assigned to county governments. The hope is that by devolving responsibility for healthcare provision to local county structures, the government will be able to improve access to care for the country’s large rural population.

Some counties lack the experience necessary to manage the inflow of new funds. Furthermore, Kenya’s ability to spend on healthcare is limited. In 2013, the government spent 1.9% of its GDP on healthcare. This pales in comparison to the 8.1% spent on public health in the United States and 7.5% in the United Kingdom.

This rings true for most of the region—many sub-Saharan countries spend little public money on healthcare infrastructure. By 2011 only Rwanda and South Africa had met the requirements set out in the 2001 Abuja Declaration, which committed African governments to spend at least 15% of their annual budgets on health. Still, Kenya’s spending has been particularly low: During the same period in Kenya, health expenditures made up only 6.5% of the budget, compared to 14% in Tanzania, 10.4% in Uganda and 13% in Ghana.

But Kenya’s working to bolster their funding sources. In Kenya, donor funding made up 31% of health spending in 2011-12, with only 24% from tax revenue. Because reliance on donor funds is unsustainable—the source of funding might disappear—this limits long-term planning. To counter that, Kenya is working to put in place reliable local revenue tools to help reduce its dependence on aid. Estimates suggest that those improvements could help Kenya raise $2.86 billion dollars a year. That’s without raising taxes.

How can Kenya turn this around further? For one, the private sector can serve as a leader in local healthcare markets. Currently, 60% of all primary healthcare facilities in Kenya are private, while 40% are government-run. Because weak governance at public facilities leads to high rates of staff absences and gaps in knowledge, studies have shown that 33% of public hospitals have an efficiency score of less than 50% compared to only 1% among their private counterparts.

Room for improvement in the public sector suggests that efficiency might be driven by the private sector. But despite the important role private actors can play in providing efficient, quality care, their share in the market is decreasing. This is probably due to the high cost of entry into healthcare market, which is worsened by the lack of local credit available to purchase specialty medical and diagnostic imaging equipment.

As part of the response Kenya Commercial Bank, USAID and GE have committed to providing $10M in financing for the development of small to medium private health facilities. These include doctor partnerships, clinics, diagnostic centers and hospitals. This is a significant commitment—access to competitive financing in Africa will be crucial to securing increased investment in the sector.

Perhaps more exciting, Kenya has developed an innovative & sustainable funding model that could prove to be a game-changer for modernizing health systems. The new Managed Equipment Services (MES) model allows the the Kenyan Ministry of Health (MOH) to enter into a multi-year contract so that the MOH benefits immediately from the latest medical technology, and can sustainably budget costs over several years instead of huge capital outlays upfront. As part of the MES, GE—selected as the radiology technology partner for the Kenya mega-modernization—will also train the technicians and biomedical engineers to handle the equipment, supporting capacity building as a priority for overall health sector development.

Ultimately, this gives Kenyans immediate access to state-of-the-art machines. The Kenyan government only needs to pay when outcomes are good and the equipment functions, and rather than spending years and scarce resources on transforming facilities, the MOH will have greater budget flexibility over time.

Clearly, financing a sustainable healthcare system in Kenya will require a mix of strategies. And as counties scale their operations, it’s clear that more can and should be done to increase the involvement of the private sector in the healthcare market. Kenya’s constitutional experiment in devolution will have lasting ramifications, but not only for its citizens: Around the globe, the Kenyan example will stand as a touchstone for burgeoning, rural economies looking to improve health outcomes for hard-to-reach communities.

This article was produced on behalf of GE by the Quartz marketing team and not by the Quartz editorial staff.

 

 

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