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Why a Banker Is Good for the Global Fund
January 30, 2012
For a long time, the Global Fund focused on disbursing money, and disbursing as quickly as possible. The philosophy was something like: move the money and the recipient knows what to do. Yet several studies showed that funds were not allocated in a manner that maximized health results. And over the last year, in the wake of audits detecting misuse of a modest amount of resources, the emphasis shifted to fiduciary controls and oversight mechanisms.
Yet the Fund -like other global health funders- faces a final frontier: how can the organization invest its resources to obtain the highest health return possible?
Answering this question requires a fundamental rethink of the organization’s role as a commissioner of or payer for health services and, ultimately, health outcomes. Instead of a passive cashier, the Fund can become an active and strategic investor in the shared enterprise of producing health results. And that is a banker’s business.
To move from cashier to investor, the Fund needs new information, competencies and organizational arrangements that allow it to commission or purchase care, outputs and outcomes effectively and responsibly.
The Fund has led on these issues in the past, and is a leader in transparency and providing information to the public, as well as collecting prices and procurement information. Yet more can be done.
An agency that plans to commission needs a clear definition of what interventions are to be purchased -at what minimum quality standard, on both the supply- and demand- sides. Ideally, interventions and products to be financed will be identified through a country-run process that rigorously considers economic evaluation and affordability, as well as social preferences and ethical considerations. Once a country has determined the appropriate mix of interventions that maximizes health impact within a given priority, countries -with Fund or partner support if needed- will need to track how much it costs to provide, how much is spent, and how results can be measured and attributed at baseline and follow-up.
This is not research or academic nicety, but rather the necessary intelligence that will allow for effective policy in a recipient country and a return on investment by the Fund. With this information, the Fund and its recipient partners can implement genuine performance-based contracts based on mutual accountability with a quantifiable, credible return on investment.
In the absence of such intelligence, analysis and support ex ante and during implementation, proposals are filled with hundreds of non-standardized performance indicators, budgets are submitted with no financial or operational connection to performance indicators and targets, and the focus is on producing receipts instead of results.
As Gabriel Jaramillo begins his work, his banking background should serve him well.
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4 Responses to “Why a Banker Is Good for the Global Fund”
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January 30th, 2012 at 8:53 pm
It seems to me that a lot of what you are saying concerns country capacity and systems more than how the Fund works. I think the quality of country planning processes has improved quite a bit over the past few years, with more emphasis on better information and analysis. To an extent the Fund has provided some of the incentive given its shift toward funding applications based on national strategies. But a national strategy is always going to be much more than the GF, and the importance of spending the money well doesn’t apply only to GF funds.
I don’t think the discussion about whether the Fund needs a banker is as relevant as the discussion on how countries develop health systems that plan and deliver more effectively.
January 31st, 2012 at 10:32 am
Amanda–good to read an explanation of why a banker, appointed as a General Manager (GM) of the Global Fund, would be good for the organization because my gut reaction wasn’t so positive when I first heard the news. Over the last week I’ve read different views about Gabriel Jaramillo and they make me more confident that he could be good for the Global Fund in terms of tightening up the way it does business with countries and raising money for the Global Fund. That said, I’m still unsure about the impact he can have given that the Global Fund’s problems are far greater than money management issues alone. As I said in a tweet on the day this news was announced:
\Ex banker as new \Gen Mgr\ 4 #globalfund. But GF probs far > $ issues. if GM succeeds he will b a devpt. rock star! http://t.co/XEhdXI4b\
You propose an interesting way to think about the GF– as an investor rather than a cashier or financier, and for that to happen \the Fund needs new information, competencies and organizational arrangements that allow it to commission or purchase care, outputs and outcomes effectively and responsibly.\ After following the Global Fund closely for five years in three different countries (as part of CGD’s HIV/AIDS Monitor team), it’s very clear that that new information, competencies and organizational arrangements you mention as necessary tools for sustained impact investment are highly dependent on country capacity and motivation to achieve health outcomes. These are long standing development challenges that the Global Fund naively assumed other donors would take care of, so it could just provide performance based financing (i.e. cashier role) to achieve short term treatment outputs. Clearly, that model was flawed (even if it did better than other development agencies in many ways), and the Fund tried to modify its approach with capacity strengthening grants such as for health system strengthening, but with little success. It is unclear how the Global Fund reform process will tackle this problem moving forward, even with a banker at the helm. With all the necessary intelligence to manage money (fund raise and spend it well), I’m not sure that the Global Fund can buy quality outcomes when it has limited ability to strengthen the development machinery–people, policies, governance and systems–to produce these on a sustained level. I hope Senor Jaramillo proves me wrong and does something miraculous to strengthen the Global Fund model as a value-added and nimble aid mechanism for global health. He will definitely be a development rock star!
April 13th, 2012 at 11:48 am
I totally agree that the GF needs to stay on top of all new information that is out there that can help benefit its returns. Also i think it is a smart idea to take an investor approach instead of a cashier because obviously you want to get the most out of what you are putting into this healthcare funding and I think a bankers qualities better suits what needs to be done to get the most successful results.
April 17th, 2012 at 3:58 am
Amanda, your articule is raising interesting points about aid management by the donor community. one thing we have learned from 4 years of work at the DAC on health and aid effectiveness is that we urgently need a clearer division of labour amongst health organisation. Not everybody can do health system strenghtening (WHO, World Bank, GF, GAVI…). And similarly, not everybody can work on strenghtening public and financial management, audit and reporting functions. The latter was never the mandate of the GF. But those who have ranked the GFATM as number 1 in their multilateral reviews in terms of results and “value for money” should also be more proactive in rationalising the aid architecture and fostering more collective action between the various parts of the multilateral system.