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Private Providers Boost Drug Access for Insured Ethiopian Clients

What’s happening to the Asfaw Norahun Drug Store could be the wave of the future. Frequently, when the private Ethiopian drug vendor’s customers try to get free medicine from public hospitals or health centers, they find empty shelves. This leaves some customers with unpalatable choices, for example, paying for a drug out of pocket, paying then waiting an unpredictable time for insurance reimbursement, using cheaper traditional medicine, or going without and risking a worsening condition.

No longer. In 2021, the Lay Armachiho woreda community based health insurance (CBHI) office contracted with the drug store to dispense covered prescription medicines for free to CBHI beneficiaries in a project supported by the Abt Global-led U.S. Agency for International Development (USAID) Health Financing Improvement Program (HFIP). So whether CBHI beneficiaries go to a public facility or the drug store, medicine doesn’t pose an economic burden.

What’s more, the CBHI office can pay claims more efficiently and timely by processing one quarterly invoice from Asfaw Norahun Drug Store on behalf of all CBHI beneficiaries served, plus a few claims from CBHI beneficiaries who buy medicine from other private vendors. “Before the contract with the private vendor, the CBHI team was so busy processing numerous reimbursement requests from individual beneficiaries that we could do nothing else,” said Agere Enyew, the woreda’s CBHI coordinator.

The Asfaw Norahun Drug Store is part of a larger story: the growth of public-private partnerships (PPPs), which many governments and donors use to increase equitable access to publicly financed commodities in the private health sector.

Stakeholders have many reasons to pursue PPPs for medicines and other health commodities, notes a recent brief by the Abt-led, USAID-funded Sustaining Access through the Private Sector (SHOPS) Plus project. PPPs can extend the reach of public sector health programs, including government-sponsored health insurance schemes, in many low- and middle-income countries. PPPs for commodities or health services can add points of access and reduce out-of-pocket costs for clients who seek health care in the private sector. They can also enable public stakeholders to learn about private sector capabilities and activities through reporting and other ways to share information.

In addition, PPPs can relieve demand on overburdened public providers and programs while generating revenue for private providers: a win-win for all. And PPPs can fill gaps in low- and middle-income settings, where the private sector is an important source of care, and health systems face persistent challenges such as medicine stock outs and under-resourced public health facilities.

The Asfaw Norahun Drug Store, for example, functions as a private extension of the public health network for CBHI beneficiaries. In the first six months that the contract was in effect (June to November 2021), the CBHI office paid the drug vendor 272,500 Birr (approximately USD $5,300) for drugs provided to over 2,500 CBHI beneficiaries. CBHI coordinator Agere believes that improved CBHI client satisfaction and availability of medicines from the drug store are two factors contributing to rapid growth in the number of households in Lay Armachiho enrolled in CBHI. Currently, around 19,000 households (73 percent) in the woreda are enrolled in CBHI, a 58 percent increase over last year.

The Asfaw Norahun Drug Store contract is part of a succession of Abt/USAID projects in Ethiopia over 15 years that expand and improve the quality of private-sector health services. The projects have helped assess the readiness of private health facilities to partner with the public sector to provide HIV; tuberculosis; malaria; and reproductive, maternal, newborn, and child health services, including family planning. Most recently, from 2015 to 2020, the Private Health Sector Project (PHSP) helped select 862 private facilities qualified to establish a memorandum of understanding for service provision with their regional health bureaus. PHSP helped participating private providers improve their quality and management practices with targeted training and on-the-job mentoring.

In parallel, Abt has been working for decades with USAID, now as lead implementer for HFIP, to help Ethiopia develop, launch, and scale up CBHI as a cornerstone of universal health coverage. As of 2021/22, CBHI schemes cover 44% of Ethiopians, a 76 percent increase since 2018/19. Program financing relies on various government subsidies, along with annual contributions paid by enrolled households. In exchange, insured clients face less financial hardship to access health care. They get a package of basic curative health services at public primary healthcare facilities with no out-of-pocket cost at the time of service. Additionally, clients can receive benefits for hospital services in case of emergency and when referred to a hospital by a lower level health center.

If the CBHI-Asfaw Norahun Drug Store partnership continues to thrive, it may well serve as a paradigm to expand private sector engagement within the CBHI program, other Ethiopian financing programs, and similar programs in other low- and middle-income countries.

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