Finance in Focus TRANSFORMING HEALTH THROUGH E-PAYMENTS Knowledge IN INDIA Notes This Knowledge Note is authored by Jennifer Isern, Practice Manager for Finance & Markets; Anita Sharma, Financial Sector Specialist; and Georgina Marin, Consultant. The authors benefited from comments provided by team members Vandana Kumar and Harish Natarajan. The World Bank Group project team included Jennifer Isern (from project inception in November 2009 through October 2016), Arun Sharma, Anita Sharma, Kuberan Selvaraj, Harish Natarajan, Vandana Kumar, Peter Relich, Girish Nair, and Niraj Verma (October 2016-September 2017). This note is part of the Finance in Focus series from the Finance & Markets Global Practice. The authors also wish to thank Aichin Lim Jones for providing layout for the note. TRANSFORMING H E A LT H T H RO U G H E-PAYMENTS IN INDIA TRANSFORMING HEALTH THROUGH E-PAYMENTS IN INDIA Project Impact: Headline Results (as of June 2017) Health clinics and other sites 617 sites offering health payments in Bihar1 offering health payments Payments processed 1,730,058 payments Volume of payments to date Rs 2.8 billion, or US$43.3 million People trained 73,210 people, including more than 71,000 community health workers plus health center staff across 617 sites Bank accounts registered 834,025 accounts for new mothers People expected to benefit Approximately 2.3 million people annually BACKGROUND The World Bank Group (WBG), in collaboration with the Government of Bihar, is implementing a government-to-person (G2P) health payments project with cofunding from the Bill & Melinda Gates Foundation (BMGF).2 Complications during delivery are one of the main causes of newborn and maternal mortality. Receiving prenatal care and facility births reduces the mortality risk. Offering pregnant women modest monetary incentives to receive prenatal care and deliver in approved clinics can help increase those women’s access to health services and reduce mortality and health complications. The timeliness and integrity of these monetary incentives are key to their effectiveness. In late 2009, WBG began discussions with the State Health Society of Bihar (SHSB) and BMGF about delays and inefficiencies related to conditional incentive payments to health program beneficiaries and health workers. On the basis of those initial discussions, WBG conducted a diagnostic with SHSB on health payments in Bihar in 2010–11. WBG found that health programs in Bihar experienced significant delays (ranging from two months to two years) in making incentive payments and that health officials 1 In Bihar, there are 663 total payment units operating across the state. However, payments for health workers and women beneficiaries are processed at only 617 units and the remaining units are medical colleges, district health offices, and state level units. The project’s direct support is provided for the 617 payment units. 2 The BMGF cofunds this project with WBG and the Government of Bihar. Initial BMGF funding of US$ 331,000 led to two subsequent amounts, US$2.5 million and US$9 million. WBG has contributed US$596,000, and the Luxembourg Trust Fund contributed US$17,000. Of these resources, the total bud- get spent as of June 2017 is US$6.3 million. In parallel, the Government of Bihar has contributed approx- imately US$762,000 to activities supporting the project. 3 TRANSFORMING H E A LT H T H RO U G H E-PAYMENTS IN INDIA spent nearly 30 percent of their time administering payments a statewide financial awareness program to enhance instead of providing health care services.3 To address those banking penetration among women beneficiaries. challenges, WBG recommended that SHSB modernize its Trainers organize financial awareness events for health payment system by (a) automating the calculation, frontline health workers to empower them to become verification, and recording of payments; (b) enabling change agents who help women open bank accounts. centralized payment processing; and (c) making payments The program aims to train all 85,000 frontline health using electronic funds transfers directly into beneficiary workers across the state; 71,700 workers have received bank accounts. Subsequently, WBG and SHSB signed a training as of June 2017. memorandum of understanding in August 2012 to develop the G2P health payments system in Bihar. • Monitoring and evaluation: The team designed the monitoring and evaluation framework, and an Launched in 2012, the G2P health payments project focuses evaluation firm has been on board since the beginning of on the following key areas of work: the project. The baseline and midline studies conducted thus far have been useful in guiding and adjusting • Development of a web-based payments engine: WBG project activities. An end-line study is planned for 2017. worked with a specialized team within the Ministry of Finance managing the Public Financial Management In August 2016, building on the project’s positive System (PFMS) to design and develop the PFMS Health experience in Bihar, the Ministry of Health and Family Module (HM). WBG strategically selected PFMS as a Welfare (MoHFW) decided to use PFMS HM to process basis for the health payment module rather than creating all health payments nationwide. That decision aligns with a stand-alone payment processing engine.4 the Government of India’s plan to implement PFMS for a • Linking the health module with PFMS was a critical broader range of government-to-person payment programs. decision because it increased ownership among relevant state and central government departments, building on For the project’s first stage, as of November 2016, all 617 an existing government information technology (IT) payment units (mainly primary health centers) across Bihar platform. Longer-term sustainability of the system, were using PFMS to process health payments. Uptake including security reviews and server maintenance, is of the health module—the second stage of the project— more likely because PFMS is hosted in the National continues to rise swiftly. As of June 2017, 72 percent of Informatics Centre. The health module was rolled payment units are using the health module, and more than out in June 2014 in selected pilot districts of Bihar. 1,730,058 transactions—worth Rs 2.8 billion (approximately Enhancements were made on the basis of user feedback, US$43.3 million)—have been processed through digital and the revised version was launched in July 2016. payments using PFMS. • Capacity building: To help health workers use PFMS The project continues to implement e-payments across HM for processing payments, the project has worked Bihar. A team of more than 150 people—including the staff, intensely to build the capacity of the finance staff, consultants, and vendors—supports the project. This note medical officers, and other personnel using the system. explains the lessons WBG learned from implementing PFMS In addition to providing ongoing training, WBG HM in Bihar over the past five years and from designing the deployed IT agents to train and support system users at ongoing national expansion. the 617 payment units across the state. LESSONS FROM BIHAR • Financial awareness: The baseline study conducted Lesson 1: Empower State Ownership in 2013 revealed that nearly 90 percent of women beneficiaries of health programs in Bihar did not have Through Effective Communication bank accounts. Having a bank account is a prerequisite Building state ownership in Bihar has been challenging; yet for receiving e-payments through PFMS HM, so the low it is essential to implementing the program. Ownership and level of bank accounts presented a significant challenge commitment at the senior level were achieved by establishing to the project. To address this issue, the team designed close communication channels with SHSB leadership and by creating broader stakeholder involvement and 3 Jennifer Isern, Hemant Baijal, Vishal Goyal, Vandana Kumar, Harish Natarajan, Caroline Pulver, Huyen Pham, and Peter Relich, “Government to Person Health Payments in Bihar, India: Diagnostic and Recommendations,” International Finance Corporation, Washington, DC, June 2011. 4 In earlier project documents, the payment module was called the Health Operations Payments Engine. During the life of this project, PFMS has evolved and expanded to become the Government of India’s central payment platform for all government-to-person payments nationwide. 4 TRANSFORMING H E A LT H T H RO U G H E-PAYMENTS IN INDIA accountability through a steering committee. In particular, • Assess the basic conditions. Determine whether the WBG implemented the following strategies: basic conditions for implementation exist before rolling out the project, even when they seem obvious, and • The project appointed a single contact person at the address any gaps from the beginning. state level, who worked closely with the SHSB executive director and coordinated all communication among • Phase implementation. If an initial assessment of stakeholders. Building a trust-based relationship with every basic conditions uncovers substantial gaps, do not delay new executive director helped ensure critical support at key rollout of the project. The “perfect” context rarely exists, junctures to keep the project moving forward. especially in remote rural areas such as Bihar. Instead, phase implementation by starting with centers that are • The SHSB and WBG formed a steering committee ready for rollout while simultaneously addressing any to bring together the diverse stakeholders involved gaps where they exist. in payments in Bihar. The committee included representatives from the national identity agency Lesson 3: Avoid Reinventing The Wheel (Unique Identification Authority of India), the State The initial project design included creating a stand-alone Level Bankers’ Committee, telecommunications payment platform for health payments in Bihar. Shortly after agencies, prominent banks, and the regional office the project started, the Ministry of Finance expanded its of the central bank (Reserve Bank of India). During existing payments platform called PFMS. After significant periodic meetings, WBG briefed the steering internal analysis, WBG changed its strategy and negotiated committee on progress and sought guidance on project with the PFMS team to link the health module to PFMS. implementation, which helped coordinate efforts and achieve joint commitments. • Build on an existing system, if possible. Building on PFMS facilitated project implementation by providing a • WBG encouraged senior government leaders to issue broader government platform, extensive future support official communications about project activities. In for maintenance, and long-term sustainability of the hierarchical institutions as found in the health sector in system. This strategic decision had trade-offs, including Bihar, official communications help ensure that health a loss of autonomy and a need to negotiate with the workers cooperate with project activities. Having Ministry of Finance for each system change. This change a single contact person and the steering committee of strategy also delayed the project by approximately six became instrumental in securing approvals and issuing months in initial design of the payments platform. official communications, which were essential to project implementation. • Invest in relationship building. To be successful, WBG had to invest time in building its relationship with the Lesson 2: Ensure The Basics Ministry of Finance, including adjusting to the Ministry The limited availability of basic IT infrastructure has been of Finance’s time schedule, system capacity, and a major challenge in implementing this project. After availability for system improvements. The investment encountering infrastructure challenges during the initial paid off, and in the end PFMS provided important pilot activities, WBG conducted a statewide infrastructure government links and an excellent platform for eventual readiness assessment in December 2015. The assessment national rollout. revealed a lack of basic Internet connection, electricity, and working computers, as well as insufficient computer literacy Lesson 4: Change Mindsets for staff at many payment units. The team also assessed Paper registers, cash, and checks are king, especially in rural availability of key staff members at the payment units and India. However, paper- and cash-based systems are more submitted recommendations to SHS on ensuring requisite easily mishandled. Introducing a web-based system for staffing and training. The assessment revealed that only 64 electronic payments that go directly into bank accounts met percent of the payment units were ready for implementation with significant skepticism from many stakeholders. The initial of PFMS, and the remaining 36 percent lacked basic IT assessment in 2010–11 suggested that beneficiaries received infrastructure. Initial rollout started with the centers that were less than their entitled payments, often with long delays. The well equipped, and WBG worked with SHSB to improve IT primary health center staff managing those payments may have infrastructure in the remaining payment units, introducing been skeptical about the new automated system, given the likely a color-coded rating system to track the units’ readiness. reduction in “leakages” that they once received. Changing Within a year, all payment units were ready and were using mindsets requires time, patience, persistence, incentives, and PFMS to process health payments. investment in terms of training and capacity building. 5 TRANSFORMING H E A LT H T H RO U G H E-PAYMENTS IN INDIA • Encourage early adoption. Early adopters of the new Trainers from SHSB were used for these sessions so that system were identified, encouraged, and promoted, and they could be available later as resource people within they became useful change agents to convince their the state. For some, including many medical officers in peers about the benefits of the new system. The project charge,5 the project provided basic computer literacy. tracks progress in number and volume of payments, and payment units are ranked in terms of implementation. • More than 130 IT agents were deployed across the This gamification of monitoring introduced more state’s 617 payment units to work closely with finance competition among payment units to use PFMS staff and health staff, explaining how to use the system and HM. The project started with quick wins by first and assisting in making initial transactions. registering health workers who receive regular monthly routine payments. After adopting the system themselves, • The project worked with SHSB to set up a help desk those individuals could then encourage other program with two IT staff members, computers, and phone lines beneficiaries to register. for users to call with questions about PFMS HM. • Use a familiar platform, if possible. Adding the health • Standard operating procedures for PFMS HM were module to a broader familiar platform such as PFMS may written and refined based on user feedback, and they have helped more people adopt it. Building on a larger were made available to users. platform helped reduce the learning curve investment and increased the perceived value of implementing the • A statewide financial awareness program informed health module, given that payments for many other and empowered frontline health workers to interface government programs are disbursed through PFMS. with banks and banking correspondents and to help women beneficiaries open accounts. Senior frontline • Work with leadership. Convincing administrators health workers were trained as trainers to impart financial higher up the hierarchy was also instrumental to awareness information; the objective was to build a pool successful implementation. Field coordinators were of skilled resource people who would be available to given responsibility for specific geographic areas and SHSB for future training programs. Through June 2017, worked closely with IT agents to train and support 71,700 health workers across Bihar have participated in district health staff. In districts where the project’s field financial awareness training. coordinators and IT agents developed a rapport with district leaders and convinced them of the benefits of Lesson 6: Stay Flexible the system, PFMS HM was used more extensively. During implementation, several operational issues arose, and Furthermore, giving the field coordinators ownership the project team needed to respond with practical solutions. and responsibility of specific areas helped track results Challenges included lack of bank accounts for the majority and motivate the project team. of women health beneficiaries, marginal initial interest in the program from banks working in Bihar, low capacity of vendors Lesson 5: Build Capacity procured for software development and other services, and Rolling out a new IT system is challenging in most decentralized government fund management. In addition, the environments, and it was especially challenging in this case initial scope of the project focused on incentive payments for because some people were not even familiar with computers or health beneficiaries, and over time government counterparts bank accounts. Building stakeholder capacity to process and requested that the scope be expanded to include other payments. solve operational issues improves ownership, speeds project implementation, improves project sustainability, and frees Once PFMS was live in most payment units, uptake remained the team to focus on other aspects of project implementation. low because many women beneficiaries did not have WBG adopted the following strategies to build capacity: bank accounts. The initial diagnostic in 2010–11, sample interviews, and focus group discussions indicated that • The project started with classroom training, and, on very few women health beneficiaries held bank accounts, the basis of participant feedback, periodic refresher and the baseline survey in three selected pilot districts6 in sessions were provided. Nearly 1,700 users across 617 January 2013 indicated that only 10 percent of women health payment units were provided classroom training on beneficiaries had bank accounts. The subsequent formal and PFMS. Refresher sessions were offered as needed, and broader statewide baseline survey conducted in October the total number of trainings per center ranged from 2015 revealed that 26 percent of women beneficiaries had a minimum of one session to three or four sessions. bank accounts. This hurdle of bank accounts threatened the Medical officers in charge manage public health centers and approve transactions in PFMS HM. 5 The three initial pilot districts were East Champaran, Patna, and Sheikhpura. 6 6 TRANSFORMING H E A LT H T H RO U G H E-PAYMENTS IN INDIA motivation that had been building among users after they • They documented project achievements and decisions were trained and understood the system benefits. To open to help secure agreements and build a foundation for bank accounts and register more women in the system, the new leadership to understand progress already achieved. project team used a variety of approaches. • Instead of depending only on top leadership, the WBG • Iterate to find practical solutions. The team tested team gradually built good relationships with mid-level a series of practical solutions incorporating feedback officials, who were relatively longer lasting in their from users. Initially, the project tried community positions and who proved tremendously effective in outreach through billboards with broad messaging, achieving project objectives. street plays, and responsible finance workshops for program beneficiaries. As a next step and to focus • At the national level, WBG (a) engaged early and often efforts, frontline health workers were trained in financial in talks with MoHFW to obtain approval for PFMS HM awareness, and the SHSB executive director approved a and (b) kept the ministry well informed of progress in small monetary incentive of Rs 5 (US$0.08) per account Bihar. After a thorough review in 2016, the ministry for the health workers to help women open bank decided to adopt the health module developed by WBG accounts. Despite these efforts, many women reported for nationwide health payments. onerous requirements and even requests for bribes from bank representatives to open accounts. In response, Lesson 8: Maintain Perspective the project contacted local banks, their business There is a trade-off between expedient project needs and the correspondents, and representatives of the Reserve overall impact of the program. Asking health officials to take on Bank of India (the central bank) to clarify requirements additional tasks might have facilitated project implementation in for opening bank accounts, and project staff members Bihar. However, those requests would have taken the officials’ documented cases where bank officials resisted opening time and effort away from providing health care, which would accounts. A statewide financial awareness program was have countered the BMGF health project’s overall goal. conducted to facilitate the opening of bank accounts for women beneficiaries. As of June 2017, given this • Prioritize the overarching goal of the project. In this ongoing effort, 834,025 women beneficiaries have case, the goal to improve health outcomes required successfully registered a bank account in PFMS. the team to minimize and simplify requests to health officials. For example, when brainstorming for ideas • Adapt to external changes. Initially, three banks were to open bank accounts for women beneficiaries, one procured through a competitive call for proposals to idea would have required auxiliary nurse midwives provide health payment services. However, the largest (ANMs) to supervise frontline workers’ efforts to open bank withdrew from the project after a few months, and bank accounts for beneficiaries. However, ANMs have the two smaller regional rural banks did not have the a very tight schedule and directly provide health care capacity to deliver payments to such a large number to mothers and families. Therefore, the project decided of people across the state. In response to this setback, to target community health workers (who have lighter the project team changed its strategy and advised the workloads) and block accountants (who do not directly SHSB to work with all banks that had a presence in the provide health care) as key change agents to encourage state. The IT vendor also posed challenges, including women to open bank accounts. an attempt to switch the proposed team after winning the procurement bid, and that issue was factored into the selection and contracting conditions for future Lesson 9: Ensure Sustainability Devising an exit strategy well in advance is crucial. procurements. Given the need to coordinate closely with Because the health module is now running successfully PFMS for design of the payment system, the software across the state, the team is planning to transfer full operations development team was shifted from Mumbai to New to the two key stakeholders—SHSB and PFMS. PFMS and Delhi and housed within the PFMS offices. WBG are working on a roadmap for complete integration of the health module within PFMS, which has been the strategy Lesson 7: Manage The Political Economy since early in the project. The SHSB director has changed five times throughout project implementation, and each change had the potential to slow CONCLUSION or derail the project. To overcome those critical leadership The project team developed these approaches through changes, the team did the following: educated trial and error, while listening closely to the system users and adapting as necessary. Perseverance and clarity of objectives helped the team reach its goals to improve health payments in Bihar. 7