Author’s Note: This piece was written before the devastating earthquakes that took the lives of over 8,000 people and ravaged Nepal’s infrastructure. The earthquakes have laid bare many of the core issues of health systems strengthening that we address in this piece. Indeed, over the coming years, as we undertake the long path of rebuilding the health sector, we aim to incorporate these ideas into that effort.

A woman traveled three days from a northern district to present to the emergency department, whose signs and symptoms ultimately suggested pelvic inflammatory disease — a severe bacterial infection of the gynecological tract. She was stabilized in the inpatient unit on antibiotics. The policy at the hospital is to provide free food to patients but not to other family members. She pleaded with the medical team to provide a thirty-rupee (thirty cents) meal to her husband, saying she would give him her food; the medical team agreed.

That same day, forty-five minutes down the hill at one of the wealthiest towns in the region, a man who owns a jewelry shop in town presented with a mild head cold to a private medical shop run by a “health assistant” non-physician provider. Though he was almost certainly suffering from a mild, self-limiting viral process, he received an oral steroid, an oral antibiotic, and B vitamins. The bill was eight hundred rupees (eight dollars).

These two vignettes illustrate the paradoxical and tragic reality of medical care. While the first patient ultimately received the care she needed for free via the public sector, her care came at great personal cost, and put her at danger of complications. While the second patient was able to access and afford medical treatment, he received care that provided little benefit, and conferred broader risks.

The multitude of daily tragedies caused by a lack of medical care around the world are well known. Yet harms of medical excess simultaneously loom with terrifying breadth and impact across the globe. Much of the excess is driven by the same flawed business model that the health assistant used in earning money on needless antibiotics. From antibiotic resistance and hospital-acquired pneumonias, to unnecessary catheterizations and surgeries performed at great risk to patients, fee-for-service payment models combined with technological advances have led to deep traditions and cultural practices of excess care — which is particularly true in America.

At first glance, the pathologies of the fee-for-service American health care system seem incomparable to those suffered in the world’s settings of extreme poverty, where rates of maternal and child mortality, tuberculosis, and malnutrition far exceed those in the U.S. In some poor nations, annual per capita health care costs are $10 rather than $10,000, and access to basic services overrides the need to protect again excess care.

Yet fee-for-service health care systems in impoverished settings exhibit three remarkably similar features to the American health care system: doctor- and hospital-centered health care provision, lack of incentives and tools for longitudinal, home-based follow-up care, and a fee-for-service revenue model. These features pose an ominous threat to the financial sustainability and quality of the national health care system over the long-term, because they lack a regulatory regime that holds providers accountable to quality and cost.

Delivering Durable Health Care

We have together been working on a public-private partnership (PPP) approach that the Nepal Ministry of Health and Population (MoHP) and the nonprofit health care company Possible have taken to create a new approach to high-quality health care. We have taken this approach in Achham District, one of Nepal’s most impoverished and remote places. Here, we discuss some of the principles that we have learned during this work.

Taking a cue from the Accountable Care Organization (ACO) in the American system, we call this model a Durable Healthcare Organization. The purpose of the Durable Healthcare Organization is similar to a Triple Aim ACO in America: to deliver high-quality, low-cost, patient-centered care to populations of patients across sites of care, from hospital to the home. The approach blends the access and scale of the public sector, the customer orientation and management practices of the private sector, and innovation of philanthropists and academics. Core revenue is from public social safety resources, research grants, teaching fees, and, eventually national health insurance.

Defining A Per Capita Price Point

The objective of a Durable Healthcare Organization is to deliver high-quality, population-based health care at a particular per capita price point. The population is defined at the district level and care is delivered to that population within the government’s existing infrastructure — hospitals, clinics, and community health workers, shown in the below infographic. The per capita price point may be defined through a variety of factors, including existing per capita expenditures, road conditions, public sector infrastructure, and political will. From our example, in a district where current per capita expenditure is roughly $6 plus an additional $6 from the Possible PPP, the current goal is to expand to the entire district over the next three years on a $20 price point.

Care is provided free to the patient at the point of care, and all staff members are salaried. Our team’s performance is evaluated by their manager on a semi-annual basis to decide upon promotion, compensation, and termination. Performance is assessed by achievement of quarterly objectives and embodying our organizational culture of “solving for the patient.” Employee compensation is entirely uncoupled from revenue, a critical shift away from the distorted incentives of fee-for-service.

Revenue should be a mix of public and private sources in the durable health care organization. In the specific case of the Achham Durable Healthcare Organization, the financial breakdown is as follows:



To achieve a particular per capita price point and population-level outcomes, and fight the prevailing hospital-centered fee-for-service model, we suggest the following three strategies.

Strategy 1: Realign Revenue With Care For Population Medicine

The fee-for-service medical system distorts incentives in broad-reaching ways that are detrimental to patients, communities, and economies. In the United States, fee-for-service has incentivized the unnecessary use of percutaneous coronary intervention (PCI, or cardiac catheterization). In this procedure, a cardiologist threads a large catheter from an artery in the patient’s groin to his or her heart to manage clots in the heart’s coronary arteries. This is life-saving in the event of a heart attack, but it is not beneficial in many instances of chest pain evaluations, and it comes with substantial risks to patients: bleeding, infection, and radiation exposure. In the United States, up to one-third of all cardiac catheterizations are performed without an evidence-based intervention.

Such distorted incentives are also at play in the Nepali health care system. In some Kathmandu-based hospitals, excess fees for cesarean sections over vaginal deliveries has led to rates of over 60 percent of deliveries being performed surgically in some hospitals, far in excess of the 5-15 percent rates advocated for by the World Health Organization.

This is even more dramatic than the excess cesarean rates seen in the United States. Even in the most remote parts of the country, non-physician, non-pharmacist providers will do “free” evaluations and then charge patients for the medicines — including antibiotics, steroids, and vitamins, many of which are not actually beneficial. This is the dominant cultural framework in the health care industry throughout the country, which imperils patients receiving care at both public and private sector institutions. Cardiac catheterization has recently been introduced to Nepal; we anticipate similar problems with this remarkable technology, in terms of over-incentivizing the acute procedure and under-incentivizing prevention and follow-up care.

Central to the durable health care approach is transforming the work environment to facilitate health care worker behavior change away from authoritarianism to patient-centered and evidence-based care delivery. Health care worker behaviors are exceedingly challenging to alter, and management systems need to be well designed and relentlessly executed.

Fundamental to avoiding distorted incentives in health care delivery is to uncouple simply doing stuff with revenue (i.e. the fee-for-service model) and instead align revenue and regulation with improving health. We suggest doing this by structuring performance-based agreement between the government and the delivery care organization such that payment is tied to population metrics. These, like the per capita price point, may differ depending upon the geographical realities, political landscape, and epidemiology of a particular place. Central to success is that the metrics are few, simple, collectable, and understood by both the delivery organization and the government regulator.

As one example, the following are the six Key Performance Indicators of the Achham Durable Healthcare Organization, which we have devised to transition volumes-based financing and evaluation of typical hospital systems to outcomes-based metrics:


Strategy 2: Integrate Across Sites Of Care Through Technology

Integrating care across primary sites of the district health care system is essential to reduce delays in treatment, avoid over-testing and treatment, and minimize the distance patients need to travel for care. Community health care workers provide care at the home and help patients navigate across sites of care, which include health posts and a hospital hub. The need for integration is vital in rural populations; specifically in rural Nepal, patients walk hours and even days to receive care because of the lack of quality services available closer to their home. Travel distances substantially increases the cost and burdens of care on patients, and result in delays and poor outcomes.

Rural care providers in Nepal are typically under-supervised, under-trained, and under-resourced. Medicines often run out after the first few days of the month and team members often supplement their income through work in the private sector. As a result, most Nepalis have only intermittent access to basic care and bear substantial out-of-pocket expenses despite constitutional guarantees on the right to universal health care.

A central tool for care integration and performance evaluation is an electronic medical record (EMR) that is integrated within the population via an electronic civil registration and vital statistics system (CRVS). This should integrate from the household to the clinic to the hospital.

Within the Achham Durable Healthcare Organization, we have deployed the electronic medical record, the first of its kind in Nepal, at Bayalpata with forms that facilitate protocol-based management of acute and chronic conditions, integration with government reporting systems, and impact evaluation. This has required substantial investment in design, infrastructure, and computer training. Furthermore, we have also developed a smartphone-based household surveillance system used by community health workers. This is currently used to track population health events—births, deaths, contraception, and institutional deliveries—to compute population metrics.

Over the coming years, we will expand the EMR to the clinic level, and integrate the EMR with the smartphone system by community health workers. That way, when patients receive care at any site in the system—hospital, clinics, at home with community health workers—the necessary information about the patient is available along with protocols to guide what to do next.

Strategy 3: Deepen Government Investment And Regulation

Central to the challenge of health care transformation is demonstrating that the government is serious about investing in and regulating private actors in public sector health care. The carrot and stick of investment and regulation is how the government’s national health insurance scheme will be able to bring in and hold accountable private health care providers into care delivery that serve the public good.

Government investment in the health sector, particularly by a more diverse array of providers than the typical monolithic State enterprise, is central to effective regulation. Without this investment, the private sector will continue to look to patients for revenue. Currently, private providers in the fee-for-service market are unaccountable to populations and individual patients. The information irregularities intrinsic to health care—where clinicians are privy to knowledge that most patients aren’t—are exploited to perform excess testing and treatment, with both financial and health care-related harm costs borne by patients.

The conviction and reliability of the government’s financial investment is central to bring strength to its regulatory regime and to demonstrate to private providers that entering public sector delivery and leaving fee-for-service care is worth the shift. Similarly, private sector delivery organizations like Possible need to demonstrate their capacity and willingness to give up this revenue model. Lack of commitment or competency on either end will weaken the transformation needed. To that extent, the Durable Healthcare Organization is truly a Public-Private Partnership, and cannot be sustained without that partnership. In the short-term, a Durable Healthcare Organization can rely on individually negotiated contracts to achieve revenue from the government. In the long-term, a universal national health insurance scheme is essential. This can be built upon a pay-for-performance population medicine regime.

Conclusion: On Impact And Scale

We believe that Durable Healthcare can transform the health care industry away from the dominant fee-for-service paradigm and towards a model that incentivizes patient safety, patient-centeredness, and evidence-based medicine. Only then we will have a competitive marketplace of private sector providers who leverage public funds for the broader public good.

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