Mobile Money For Health: A Two-Part Series

Posted by MohiniBhavsar on Nov 08, 2010

Mobile phones are being tried and tested in myriad ways in health care. They are used for data collection and disease surveillance, for ensuring treatment compliance, for managing health information systems and point-of-care support, for health promotion and disease prevention, and for delivering emergency medical services. Clearly, m-health, as this growing field is dubbed, is here to stay.

At the same time, achieving scale and sustainability in most m-health projects has been a challenge. One of the key aspects of beginning to think about ways to integrate m-health into health systems in a sustainable way is to establish financial systems to pay for health services and to ensure financial accountability within programs.

As has been pointed out, at primary level of care there are tremendous challenges of ensuring financial sustainability [Mechael et al. 2010]. For most health projects implemented in the developing world, including those that use mobiles for health care delivery, funding tends to come primarily from external donors. Once the funding dries up, scaling a working program is exceedingly rare. Additionally, mismanagement, corruption, and the nature of informal payments in many countries can challenge efforts in m-health. [Lewis, 2006, World Bank, 2006].

What is the role of mobile money in increasing the financial sustainability of m-health efforts?  In low to middle-income countries, where the majority of health care expenditures is out-of-pocket, mobile money services could provide consumers with a more secure and convenient means to pay.  Additionally, to ensure that limited funds are used to deliver optimal health impact, governments and organizations could leverage mobile money services to better control financial flows.

As suggested in this discussion paper, m-payments and financial transfers in m-health can:

  • Offer a convenient and secure mode of payment for patients to pay for health services
  • Guarantee payment to providers for services delivered
  • Increase and secure payments throughout the supply chain
  • Reduce the opportunity for corruption
  • Improve reliability of health impact evaluations because expenses are clearly recorded
  • Increase financial transparency which, in turn, can attract donors

Additionally, mobile financial services allow for micro-insurance schemes so individuals can avoid financially catastrophic health care costs (such as those for birth or surgery). With mobile payments, more sustainable, secure, and efficient ways for financial transactions are within reach in the health sector.

In this two-part series, looks at the linkages between mobile money services and health. We spoke to Dr. Patrica Mechael (Director of Strategic Application of Mobile Technology for Public Health and Development for The Earth Institute at Columbia University), Karl Brown (Associate Director of Applied Technology at the Rockefeller Foundation), Gavin Krugel (Director at the GSM Association and lead on the Mobile Money for the Unbanked initiative) and Menekse Gencer (Mobile Payments Consultant and founder of mPay Connect).

In part one of this series, we outline the possibilities for mobile money in mobile health in developing countries. We describe the advantages of mobile money services in health for individual patients, mobile network operators, and the health sector.

In part two, we highlight specific use cases. Though they are scattered and limited, innovation in leveraging mobile money services has come from users and organizations who see its potential. We describe the challenges and why some services have not yet taken off.  We also outline what needs to happen to catalyze mobile money services in the health sector.

Mobile Money in Mobile Health - For What?

At the primary level of care, subscription-based mobile payment services can create two-way links between patients and health care providers. For example, patients can pay service providers for health care services delivered with mobile-based transactions, and service providers can pay patients with monetary or airtime incentives for treatment compliance.

At the management level, governments and organizations can improve efficiencies in the transfer of funds and introduce better checks and balances.  Examples include:

  • Paying salaries of health care providers based on services delivered via mobile payments (programmatic level);
  • Paying incentives to health care workers based on performance (programmatic level);
  • Using voucher-based systems to reimburse health care providers for services delivered (national level);
  • Paying conditional cash transfers for health care directly to individuals’ mobile phones (national level); and
  • Using voucher-based systems for micro health insurance and claims reimbursements (national level).

Dr. Patricia Mechael explained that the financial link is often missing in m-health projects, hindering scalability and sustainability.  Improving quality of care and increasing better health outcomes are key priorities in health care delivery.  Mecheal noted, “Efficiencies and cost benefits are really going to start to come when we can link mobile finance to health in general and to m-health specifically.”

As noted, there are a number of areas where mobile financial services and payments make sense in mobile health, including the following.

Patients as Payers of Health Services

One of the most common ways of financing health for people in developing countries is out-of-pocket. Mobile money services can offer a means for these consumers to pay user fees at the hospital or clinic or pay for medication. Especially in rural areas, accessing a bank during a medical emergency can be challenging and mobile money can be an instant, secure, and convenient way to pay.

Though out-of-pocket expenses for health care can be devastating for poor individuals, the service could be a useful tool for those who can pay, or can collect via mobile transfers the funds to pay. Often the payers for health care costs are not the same as the beneficiaries. In fact, remittances via mobile payments make up a significant source of funding for poor families, and a report from the International Labor Organization suggested a large portion of remittances received in Kenya, for example, are spent on education and health care costs. Connecting remittances to directly pay for care received at the hospital or clinic could add value to a service already being used by base-of-the-pyramid customers.

Incentivised Compliance

There are a number of examples for incentivising treatment compliance. X out TB in Nicaragua, a discontinued pilot project, provided airtime rewards for patients who took their TB medication on a timely basis. In an interview in 2008, team members said that they had initially planned to use microfinance loans as incentives but changed their approach when they found that users preferred airtime as incentive.

In a related incentive program, albeit not focused on treatment compliance directly, we noted a program that gives airtime benefits to vendors in Tanzania for selling condoms in their shops. In our case study, we noted that the organization involved was able to partner with telecommunication companies and relevant public health partners to deliver these incentives. The program is now out of pilot phase and those involved plan to implement a larger-scale roll out.

Paying Salaries to Health Care Providers

While we did not come across any mobile salary disbursement scheme to pay health care providers, one use case in Afghanistan shows the potential for increasing financial accountability and transparency.  In 2009, Roshan, an Afghani mobile operator, tested M-PAISA to pay salaries for a small group of Afghan National Police. The pilot found that approximately 10% of salaries paid were going to ghost police offers who did not exist, and by curbing corruption down the payment chain through mobile payments, officers received salaries that were a third higher than before. Similar issues could be addressed in the health sector of developing countries, but have yet to be tested.

Performance-Based Pay For Health Care Providers

Performance-based pay provides monetary incentives to health care workers who deliver on set targets. For instance, mobiles could be applied to similar programs like Rwanda’s performance-based initiative for traditional birth attendants. In the national program, attendants who bring pregnant women to hospitals for delivery or accurately refer emergency cases to hospitals receive cash payments as reward.

A policy paper published by the World Bank about this strategy, also known as Paying for Performance (P2P), explained how incentives can increase use of services and quality of care. In Rwanda, health workers who identified at-risk pregnancies and referred women to the hospital for delivery were given $1.83 (US) as compensation. For emergency transfers to hospitals if complications arose during delivery, health workers were compensated with $4.59 (US). Facilities received the money and on average, they shared 77% of the P2P funds with their personnel. Subsequently, this resulted in a 38% increase in staff salaries.

The hope is to explore the automation of these incentives using mobile payments to health care workers. According to Dr. Mechael, mobile payment incentives could be used to pay health care workers faster and more reliably.

Conditional Cash Transfers

There is evidence supporting the success of mobile automated conditional cash transfers for social services. These social transfer payments fall under the umbrella of Government-to-Person (G2P) payments. According to Gavin Krugel, who was with the Mobile Money for the UnBanked Initiative at the GSMA, there are already successful models of conditional cash transfers to build on.

Mobiles can counteract many problems that are inherent in cash payout schemes.  Mobile payments can ensure that money reaches the correct recipients, reduce the risks for cash to be taken, and decrease travel and time costs for payment recipients.  One report describes several country programs that have electronic payment arrangements using pre-paid smart cards or debit cards. As mobile phone penetration reaches more people in developing countries, it stands as the likely technology to enable social cash transfers.

In Kenya, Concern Worldwide tested the feasibility of mobiles to pay out social transfers. This 2008 review of the pilot found that the mobile transfers were “secure, enabled a quick response, were cost effective, respected people’s choices, and empowered communities,” but it also found that the process of swapping SIM cards in shared phones led to wear and tear and a number of SIM cards were lost.

Another report highlighted some of these challenges:

“…the proportions of people qualifying for social transfers who have secure access to their own phones is still likely to be very low; and swapping SIM cards on a common phone can cause difficulties as an early pilot has shown.”

To convince governments of the benefits of mobile payments for cash transfers, there needs to be a systematic look at where efficiencies and savings can be had. This analysis of three conditional cash transfer pilots based in Latin America compared the administrative costs with the program benefits.  Clearly, there are opportunities where mobiles could reduce costs of delivery, verify conditionality, and monitor and evaluate administrative processes.

At the same time, the effectiveness of conditional cash transfer schemes and the means of payments, whether mobile or not, can vary from region to region and within countries.  In some instances, reloadable cards could be a workable solution while in others, mobile payments can be used.  Regardless, mobile phones are only cautiously being tested in this area.

 Micro Health Insurance, Vouchers, Claims and Reimbursements

Recently, mobile operator Telenor Pakistan received a grant from the Bill and Melinda Gates Foundations’ Mobile Money for the Unbanked (MMU) Program to develop and launch a micro-insurance/savings product targeting low-income users.  In particular, they aim to pilot the feasibility of using Easypaisa for a savings account for the purposes of covering health care costs. 

According to Karl Brown of the Rockefeller Foundation, India is going to be at the forefront of innovation using mobiles for health insurance.  An example is Rashtriya Swasthya Bima Yojana, launched in 2007 by ICICI Lombard, which uses smart cards with embedded technology to process cashless payments from the accounts of registered users.  The scheme is not yet mobile, however.

Mobile voucher-based systems can also be used to pay for health care services. Vouchers are prepaid certificates either provided by the government to qualified individuals or sold at a subsidized price to individuals in order to pay for a pre-defined service.

The HealthyLife program is a voucher-based system that uses a platform called ClaimMobile to streamline the reimbursement of service providers for health services delivered.  Patients purchase health vouchers at a heavily subsidized price and present them at the clinic to receive services. Using mobiles, hospitals submit the claim form with the voucher to the funding agency, in this case Mary Stopes International. Results of the pilot can be found here.  There are now efforts under way to replicate the voucher program for antenatal care for pregnant women in a new program called HealthyBaby.

Menekse Gencer, an expert on mobile payments in emerging markets, pointed at the prevalence of food voucher systems and suggested to look further into how these could be adapted for the health care sector.  In 2009, the World Food Programme coupled vouchers and mobiles to distribute food aid to Iraqi refugees in Syria.  Mobile phone operator MTN donated SIM cards and refugees were trained on how to use the electronic voucher system. The refugees would receive a text message on their mobile phone showing a voucher code. They could then go to selected government shops to cash all or part of the cash in exchange for food. An updated balance is automatically sent via SMS after purchases. This reduced long queues and wait times and travel time to distribution sites.

The logistics of how mobiles are used to deliver food aid will be different from health applications, but there are similarities.  Voucher-based systems put the power to manage transactions and purchases for a specified service or product in the hands of the consumers themselves. These could include payments for antenatal visits, children’s vaccinations, and medications.

For Mobile Operators, Mobile Money for Health is Promising

Considering the possibilities, it is hard not be optimistic about linking mobile money services to health.  Gencer notes:

"Interestingly, both m-Health and mobile financial services (MSFs) act as catalysts for the other since MFS supports health care payments and since health care is a key use case to spur MFS adoption.  In addition, they both rely on similar building blocks that, when viewed holistically, can lead to efficiency gains cross-sector. This catalyst phenomenon between MFS and m-Health is a great opportunity for the market to address moving forward to jump start both industries."

From a commercial perspective, multiple services are already being delivered to a user’s mobile phone. Although very few mobile money services for health currently exist, mobile money is emerging, with multiple markets reaching millions of users.

According to the MMU Deployment Tracker, there are 166 mobile money deployments worldwide (84 live, 82 planned - as of Sept. 29, 2010), with markets in Kenya, Uganda, Tanzania and Thailand reaching over a million users. In these countries, mobile money platforms are innovating beyond basic mobile money services, Krugel said.

As mobile penetration rapidly increases, operators are increasingly recognizing that they need to introduce new products to retain customers, reduce churn, and increase revenues. In a recent paper, Ignacio Mas and Dan Radcliffe from the Bill & Melinda Gates Foundation wrote about what it will take to scale mobile money. In the report, they recommended that mobile operators reach a critical mass of customers by "creating enough urgency in customer's minds to learn about, try and use the [mobile money] service."

Turning to health, consumers can be offered a means to pay for health care costs more efficiently, more timely, and more securely. This can be especially important during unforeseen health emergencies or in remote locations when accessing cash can be difficult. Adding health to the mix of existing mobile money services is now entirely feasible, according to Dr. Mechael.

To the disappointment of mobile operators, many customers are signing up for mobile money services, but are not necessarily using the service. Neil Davidson from the GSMA analyzed how inactive users can be a big problem for mobile operators. Registration for mobile money services is free, but mobile operators still have to pay commission to agents and technology providers, regardless of whether users generate revenue or not. As Davidson discussed on the MMU blog:

“When agents can earn a quick buck (or some fraction thereof) signing up new users, they may decide that that’s more lucrative than facilitating transactions, and focus on the former rather than the latter. (Agents whose only responsibility is signing up new customers don’t even have this trade-off to make; so long as their compensation is tied to registration itself, they’ll register anyone for the service, regardless of whether that person has any demonstrated need for mobile money.)”

For mobile network operators, jumping into the health sector can make for a viable business case with the potential to increase average revenue per user. Said Krugel:

“Mobile money services are reaching critical mass in country after country. Though they are not at a global adoption as yet, for the mobile money industry, health can be pitched as the next logical market to tap into.”

According to Krugel, if it is shown that health service transactions increase usage for mobile financial services, this can be a motivator for mobile operators.

For the Health Sectors: Reduced Costs and more Security

In general, mobile money services can reduce transaction costs and corruption and increase the safety of money transfers. The automation of financing could present significant savings for the health care systems by creating efficiencies that may not currently exist.

The Anti-Corruption Resource Centre reported, “In Ghana, only 20% of non-wage public health expenditures actually reach the service delivery points, with a large proportion of the leakage occurring between the line ministries and district levels.”  In an earlier example, a Kenyan hospital saw a 50% increase in revenue within three months after replacing collection agents with cash registers. Within three years, revenues were 400% higher.

Mobile money services may be able to deliver similar gains in transparency, accountability, and savings in the health care system. In fact, several small-scale use cases have shown that mobile money services could be adapted for health care delivery in innovative ways. We will describe these examples in part two of this series.

Mobile health can draw from earlier experiences with policy barriers and multiple partners, suggested Karl Brown. The take off of mobile money services required negotiating regulatory hurdles and engagement with the private sector. To scale m-health pilots at the national level, discussions with multiple stakeholders, including policy makers and mobile network operators, will evidently need to happen.

A major concern in the health sector is maintaining confidentiality of patient information. Within m-health, there needs to be more investment in data security and encryption technology. Building on the expertise of mobile money, Dr. Mechael said the mobile health field could incorporate better security technologies to manage confidential patient information and manage the flow of sensitive information.

In the second part of this series, we will present a use case and delve into the challenges and ways forward for mobile money in health.

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