World’s First Healthcare Development Impact Bond Takes a Business Approach in India
By Peter Vanderwal and Hannah Rubenstein | March 8, 2018
(Photos by Palladium)
Palladium has launched the world’s first maternal and newborn health impact bond in Rajasthan, India—known as the “Utkrisht Impact Bond,” taken from the Hindi for “Excellence.” A development impact bond is an innovative method of financing international development that could have a transformative impact on the achievement of development goals. Utkrisht was conceived, designed, and will be managed by Palladium. This initiative is part of Palladium’s ongoing commitment to exploring new ways to achieve Positive Impact—the intentional creation of enduring social and economic value.
Rajasthan’s maternal and newborn health crisis, and a brand-new solution
In the northern Indian state of Rajasthan, maternal and newborn mortality rates are staggeringly high. The Utkrisht Impact Bond aims to save the lives of more than 10,000 mothers and babies over a five-year period by strengthening India’s health system and improving the quality of care among private maternal healthcare providers.
An estimated 80,000 babies die each year in Rajasthan due to inadequate medical care. Urban and rural communities lack access to quality neonatal and maternal services. The Utkrisht Impact Bond will support government efforts to reduce infant and maternal mortality by improving access to, and the quality of care in, as many as 440 private facilities in the state. It is estimated that this enhanced service will impact 600,000 deliveries over the next five years. Although this initiative is ambitious and far-reaching, what is most significant is the unique way in which it is structured. Utkrisht is a results-based financing mechanism that brings together public and private sector capital to finance development goals.
How does it work?
One or more private investors provide initial risk capital—in this case, the philanthropic arm of Swiss Bank UBS, the UBS Optimus Foundation, is channeling up to US$3.5 million of UBS’s private High Net Worth Individuals (HNWI) client investments for initial working capital.
Interventions are carried out by the implementation partnership: Palladium will act as the implementation manager; the service providers are Population Services International (PSI) and the Hindustan Latex Family Planning Promotion Trust, or HLFPPT. Palladium, PSI, and HLFPPT are also co-investors, contributing more than 20 percent of the required capital for the venture.
In the development impact bond model, government, donor, private, or philanthropic organizations repay investors the principal in addition to a return that is determined by whether or not targets are achieved. In the case of Utkrisht, the U.S. Agency for International Development (USAID) and MSD for Mothers have committed up to US$8 million in outcome funding if the most ambitious targets are met.
The potential of a ‘business approach’
Mark Green, Administrator at USAID, explained the significance of the Utkrisht Impact Bond during its launch in November. “This results-based financing mechanism is ground-breaking in that it takes a business approach to development, while still targeting basic needs like improving the quality of care and private facilities,” he said. “By leveraging the assets and skills of a diverse group of partners across the public and private sectors, we are stretching our investments further while saving more lives.”
Palladium CEO Kim Bredhauer echoed this sentiment. Impact bonds ensure accountability and transparency, he explained. “This new results-based financing mechanism, which in effect is a public private partnership, is bringing a commercial approach to international development and ultimately will save lives and taxpayer money.”
The success of the Utkrisht Impact Bond will be judged on whether private healthcare facilities reach two sets of certification standards: the first, developed by the National Accreditation Board of Hospitals and Healthcare Providers, measures the quality of infrastructure and process; the second, developed by the Federation of Obstetric and Gynaecological Societies of India, measures clinical behaviors. If the initiative is successful in reaching these standards, the government of India is planning to scale up the approach throughout Rajasthan. This will bring certified, transparent, quality maternal and neonatal care to private facilities, and improve the lives and futures of mothers and children across the state.
The Utkrisht Impact Bond represents a new and exciting approach to maternal and newborn health. Its success will demonstrate the power of a business approach to the world’s greatest health challenges.