Responding to Vietnam’s Healthcare Challenges: Bolstering Sustainable Funding Models for Community-Based Organizations and Social Enterprises
By Mariah Redfern, INVEST Communications Specialist
At the height of the HIV/AIDS crisis in the 1990s, the United States established PEPFAR — the President’s Emergency Plan for AIDS relief — which is the largest commitment by any nation to address a single disease in history. In Vietnam, USAID used PEPFAR funding to support community-based organizations — private clinics that focused on HIV/AIDS. Thirty years later, medical advancements have transformed HIV/AIDS from an acute, fatal disease to a manageable, chronic condition, and USAID Missions project that PEPFAR funding will decline significantly. This decline in funding presents a problem for community-based organizations that are heavily reliant on donor funding. It also presents a challenge for the Government of Vietnam as it seeks to continue supporting access to specialized healthcare.
Over the past two decades Vietnam’s economic growth has been undeniably strong. Not only has Vietnam seen its per capita gross domestic product increase 2.7 times from 2002 and 2018, but also Vietnam was one of few countries that saw economic growth in 2020 during the COVID-19 pandemic. With its growing middle class, Vietnam is seeing an increased appetite in its citizens for private healthcare services from community-based organizations, social enterprises, and private clinics. As funding from the PEPFAR program declines, private investment may be the key to sustaining successful community-based organizations, social enterprises, and private clinic models throughout the country that provide critical healthcare services.
USAID INVEST’s Private Sector Solutions
USAID’s Vietnam Mission is working with the Vietnamese Government to find sustainable funding solutions for private healthcare providers. In August 2019, the Mission began working with USAID INVEST — an initiative that mobilizes private capital for better development results — to explore and facilitate private investment and diversify funding for community-based organizations, social enterprises, and private clinics.
In order to provide high-quality, specialized services to a wide range of patients, private healthcare providers will need to take advantage of the increased willingness to pay among the middle class and transition from subsidized delivery models to self-sustaining business models.
To address the challenges that Vietnam’s private healthcare providers are facing, INVEST developed a two-pronged strategy: first, to assess the opportunities in Vietnam’s healthcare system for community-based organizations, social enterprises, and private clinics, and second, to partner with the private sector to implement recommendations from the assessment’s findings.
In May 2021, INVEST worked with PATH and the Centre for Social Initiatives Promotion (CSIP) to conduct an assessment — with participation from 42 community-based organizations and social enterprises — of market-based, scalable models for community-based organizations and social enterprises to deliver primary healthcare services. The assessment mapped providers, identified service model types, and assessed the needs of community-based organizations and social enterprises as well as their capacity to implement new models. Based on data collected by INVEST and its partners, the assessment identified 15 middle- to late-stage community-based organizations and social enterprises across Vietnam that could benefit from new business models, commercial capital, or business mentoring.
In Phase Two, INVEST and its partners will provide technical assistance to a shortlist of organizations identified in the assessment — organizations that demonstrated readiness to expand their HIV and other primary healthcare services and that could benefit from business mentoring, support in transitioning their business models, or access to commercial capital for growth or expansion.
INVEST will identify and pilot scalable fee-for-service models and expanded service offerings to assist community-based organizations and social enterprises delivering essential HIV/AIDS services to become financially sustainable and deliver more diversified, quality care. This work will help to support healthcare community-based organizations and social enterprises to seek new business models and diversify their services to ensure viability and sustainability. INVEST will partner with the private sector to bolster the capacity of community-based organizations and social enterprises to test and implement new business models by providing roadmap development, technical assistance, and transaction support.
The Long-Term Impact of Private Sector Engagement
In Vietnam and other markets around the world, public and private sector actors have an opportunity to work together to provide patients with the services they need and want. While private capital may provide a key to sustainable business models for private healthcare providers, many investors are hesitant to invest in social enterprises due to concerns about cash flow and profitability, and current investment models are not well-fitted to newer and less experienced organizations without established track records.The work that USAID/Vietnam and INVEST are doing will help equip community-based organizations, social enterprises, and private clinics with the tools they need to effectively attract private investment and pursue new pathways towards sustainable funding models.
For decades, USAID has helped strengthen healthcare systems, and we cannot afford to lose those hard-won gains. By enabling community-based organizations and social enterprises to diversify their financing, USAID is testing a new way to help healthcare providers adapt to new funding realities and better meet the healthcare needs of their communities.
