Answering “Who Pays?” Before Scaling Up

mHealth has the potential to transform healthcare, particularly for the hardest-to-reach women and children around the world. The debate about exactly how, when, and in what form is alive and well. Successful pilots are in abundance, but most of the sector has been slow to reach scale. In short, the sector has a case of mHealth Pilotitis. In the first debate of a series on mobile health, the Skoll World Forum on Social Entrepreneurship partnered with Johnson & Johnson and Stanford Social Innovation Review to surface important lessons and learning from some of the world’s leading organizations who have taken mHealth services to scale. This debate will also set the stage for a larger discussion on mobile for development at this year’s Skoll World Forum in Oxford, UK.

The issue of financial sustainability and the fundamental question of who pays pose persistent challenges and barriers to scale in the field of mHealth. Among key stakeholders, the consensus is that most of the pilots active in low and middle-income countries today rely too heavily on short-term grant funding from government, foundation, and private-sector sources.

To help cure “pilotitis” and achieve the scale required for meaningful impact, mHealth solutions need sustainable financial models. This means a shift during the scale up phase: from dependence on funders to courting economic buyers who are willing and able to pay for a particular mHealth solution because of the social or economic return that it offers. This shift is an active rejection of if-you-build-it-they-will-come thinking.

I recently led a Vital Wave team that delivered a report in partnership with the mHealth Alliance on sustainable financial models for mHealth. A fundamental conclusion of that report is that building sustainable financial models requires the rigorous analysis of each project’s value chain to identify all of the incentives—both costs and benefits—of each player during the sequence of transactions that bring an mHealth solution from its raw inputs to the end user.

While the health outcome improvements of mHealth projects are increasingly being tracked and evaluated, the other benefits that value chain members stand to enjoy receive much less attention. Sustainability requires the ongoing measurement and promotion of both.

Financial models for mHealth rest on the balance of stakeholders’ “gives” and “gets” across the value chain. In our work with mHealth implementers, we define the “get” as the sum of all benefits or value received from the products or services produced and delivered. This includes financial, operational, social, reputational, or political returns. The typical “gets” for mHealth are most often improvements in social and economic outcomes, or increased efficiency and cost savings in the delivery of services.

We define the “give” as the perceived price of products, services, or payments contributed to the value chain. It stands to reason that the calculation of the “give” also includes the cost of foregoing the next-best opportunity, which in resource-constrained environments may even mean doing nothing. For mHealth projects, typical “gives” include outright financing or financial contributions, the cost of component parts or services (including in-kind contributions), the provision of technical or managerial support and training, and costs associated with partnerships or relationship development.

Universally, we see that value chain players in any project or industry participate because they believe that what they “get” exceeds what they “give.” If, within a given value chain, all players believe that they get more out of the exchange than they put in, and what they get is greater than what they could get from investing their resources elsewhere, then the model is financially sustainable.

However, assessing an mHealth solution’s value chain cannot be a one-time exercise. Just as health conditions, market environments, and technological capabilities constantly change and evolve, so too must we regularly examine and refresh mHealth models. Regardless of whether value chain players’ incentives are commercial or social—or a mix of the two—the project owner or implementer needs to understand and continually update what those incentives are, and determine how much each value chain member needs to “give” and “get” for the project to sustain. 

To be actionable, this modeling needs to be empirical and take place in a specific local context; it cannot be done theoretically. To help save mHealth from “pilotitis,” funders would be wise to attach capacity building to their dollars, and ensure that mHealth implementers have the skills and operational discipline in place to: 1) ensure there is a viable economic buyer, 2) regularly evaluate the value chain, and 3) measure and promote the “get” to stakeholders.

Read more stories by Brendan Smith.