On Friday, June 3, S&P Global Ratings announced that it would not downgrade South Africa’s credit rating to junk, letting South Africa breathe a sigh of relief. The outlook, however, remained negative. While some experts were confident that the rating would not be cut, most continued to warn that future economic or political turmoil could spark a downgrade later this year. The South African Treasury agreed, but remained positive releasing a statement saying:

Government is aware that the next six months are critical and there is a need to step up the implementation [of measures to boost the economy] … The benefit of this decision is that South Africa is given more time to demonstrate further concrete implementation of reforms that are underway.

South Africa, whose current rating stands at BBB- (one level above junk), has been facing weak economic growth—at 1 percent—over past months. The International Monetary Fund has given a 2016 growth forecast of 0.6 percent. Many feared that a downgrade could have pushed the country into a recession. Borrowing by the government would have also become more expensive, especially as it tackles a 3.2 percent of GDP budget deficit for the 2016-2017 fiscal year.

Other credit ratings agencies also are concerned with South Africa’s economic performance. Last month, Moody’s Investors Service ranked the country two levels above junk but on review for a potential downgrade, while Fitch Ratings is reviewing its current stable outlook and BBB- rating.

For South African Finance Minister Pravin Gordhan’s thoughts on the South African economy, see the April 14 Africa Growth Initiative event, “Building social cohesion and an inclusive economy: A conversation with South African Finance Minister Pravin Gordhan.”

Former Chadian President Hissène Habré is sentenced to life in prison by African court

This week, the Extraordinary African Chambers—located in Dakar and established in collaboration with the African Union—sentenced former Chadian President Hissène Habré to life in prison. Habré seized power in 1982, overthrowing then President Goukouni Oueddei. He fled to Senegal in 1990 after being ousted by current Chadian President Idriss Deby. After he fled to Senegal, the African Union called on Senegal to prosecute Habré. In 2013, the Extraordinary African Chamber was created with the sole aim to prosecute Habré. The Habré trial is the first trial of a former African head of state in another African country.

Habré faced a long list of charges including crimes against humanity, rape, sexual slavery, and ordering killings while in power. According to Chad’s Truth Commission,  Habré’s government murdered 40,000 people during his eight-year reign. At the trial, 102 witnesses, victims, and experts testified to the horrifying nature of Habré’s rule. His reign of terror was largely enabled by Western countries, notably France and the United States. In fact, on Sunday, U.S. Secretary of State John Kerry admitted to his country’s involvement in enabling of Habré’s crimes. He was provided with weapons and money in order to assist in the fight against former Libyan leader Moammar Gadhafi. Said resources were then used against Chadian citizens.

Also this week, Simone Gbagbo, former Ivorian first lady, is being tried in Côte d’Ivoire’s highest court— la Cour d’Assises—for crimes against humanity. She also faces similar charges at the International Criminal Court though the Ivoirian authorities have not reacted to the arrest warrant issued in 2012. In March 2015, Simone Gbabgo was sentenced to 20 years in jail for undermining state security as she was found guilty of distributing arms to pro-Laurent Gbagbo militia during the 2010 post-electoral violence that left 3000 dead. Her husband is currently on trial in The Hague for the atrocities committed in the 2010 post-election period.

Despite Mozambique’s debt crisis and low global gas prices, energy company Sasol will continue its gas investment

On Monday, May 30, South African chemical and energy company Sasol Ltd announced that Mozambique’s ongoing debt crisis and continuing low global gas prices would not slow down its Mozambican gas project. The company expressed confidence in a $1.4 billion processing facility upgrade stating that the costs will be made up through future gas revenues. In explaining Sasol’s decision to increase the capacity of its facility by 8 percent, John Sichinga, senior vice president of Sasol’s exploration and production unit, stated, “There is no shortage of demand … There’s a power pool and all the countries of the region are short of power.” In addition, last week, Sasol began drilling the first of 12 new planned wells in the country.

On the other hand, on Monday The Wall Street Journal published an article examining how these low gas prices are stagnating much-hoped-for growth in East African countries like Tanzania and Mozambique as low prices prevent oil companies from truly getting started. Now, firms that flocked to promising areas of growth around these industries are downsizing or moving out, rents are dropping, and layoffs are frequent. Sasol’s Sichinga remains positive, though, emphasizing, "We are in Mozambique for the long haul. We will ride the waves, the downturns, and the upturns."

       

On December 12, 2015, 195 countries adopted the Paris Agreement, the most ambitious climate change pact to date. The document lays out a plan to curb greenhouse gas emissions, among other climate-related initiatives. Participating countries must now find ways to translate those ambitions into policy, and answer important questions about financing, transparency and accountability, national implementation, and accelerated emissions reduction goals, to name but a few. But one issue looms large: coal.

Coal-fired electricity is responsible for producing 40 percent of the world’s power and about 70 percent of its steel. The coal industry employs millions worldwide and provides billions of people with electricity. Analysts estimate that the world has hundreds of years of coal reserves in the ground, at current consumption levels. Its abundance, low price, and global availability make it a difficult fuel source to give up. But despite coal’s advantages, it poses significant environmental and health risks. Ten percent of coal consists of ash, which contains radioactive and toxic elements. It is responsible for over $50 billion in medical costs annually in the European Union alone. The environmental consequences of coal use, such as water contamination and habitat destruction, are common. Burning coal adds millions of tons of dangerous particulates and greenhouse gases, including carbon, to the atmosphere.

States and societies around the world rely on coal, even though many of its dangers have been known for decades. If the Paris Agreement is to succeed, global leaders must address the reasons why many countries—particularly in the developing world—still rely on coal. Better yet, they must find new ways to provide coal-reliant countries with affordable, alternative energy, and invest in new technologies that could help mitigate coal’s negative consequences.

COAL ACROSS THE WORLD

Globally, coal production and consumption has risen almost continuously for more than 200 years. The International Energy Agency has estimated that the world burned approximately 7,876 million tons of coal in 2013, adding over 14.8 gigatons of carbon to the atmosphere. But global coal statistics do not tell us much about markets and trends. In fact, coal usage varies enormously around the world, with some regions transitioning away from the resource as others have increasingly embraced it.

For example, stringent environmental, health, and safety policies in the United States have put increasing pressure on the coal industry. Well-funded environmental groups have succeeded in closing coal-fired power plants, and many states on the country’s west coast and in its northeast have aimed to create a coal-free power grid. Yet market forces have turned out to be the nail in U.S. coal’s coffin. The rise of natural gas in the United States has gave the country’s electricity producers an incentive to shift away from coal. In fact, U.S. coal consumption declined from a billion tons in 2008, to roughly 850 million tons by 2013. This year, analysts suggest that coal will fuel only 32 percent of all U.S. electricity, and natural gas will become the country’s leading electricity source for the first time. As a result of low prices, low returns, and political controversy, investors have shied away from coal, which has caused major coal companies to struggle to stay afloat. Of all announced new electricity generation capacity in the United States, not a single megawatt is coal-fired. Although change is happening, it will likely be decades before coal is no longer an important fuel source in the U.S. economy. Canada’s coal sector faces similar pressures: weak demand from Asia, public opposition to the construction of new export facilities, domestic environmental legislation, and the shale boom have all taken their toll.

In Europe, stringent air quality controls and climate change regulations have cut the use of coal dramatically in Denmark, Sweden, and the United Kingdom. But the EU emissions trading scheme, which relies on carbon offsets and carbon dioxide caps, has proven disappointing. In fact, most European countries still lack an economically competitive and readily available alternative to coal. Plus, the coal industry still has political power in capitals like Berlin and Warsaw, which lowers the European common denominator for energy policy, as well as its policies that fight climate change.

Photo courtesy of REUTERS/James Regan/File Photo. Coal is stockpiled at the Blair Athol mine in the Bowen Basin coalfield near the town of Moranbah, Australia, June 1, 2012.

In Asia, both Japan and South Korea are set to expand their use of coal despite signing the Paris Agreement. After the Fukushima disaster, Japan has implemented ambitious renewables and energy efficiency policies, but those cannot take the place of its nuclear energy production on their own. These countries are entirely import dependent, which makes natural gas prices high. This, in turn, makes natural gas a less likely fuel source as the countries transition to greener electricity. In this context, high-efficiency coal plants appear to be a viable alternative, especially as nuclear power remains highly controversial.

And outside of advanced economies, coal often plays the role it once played in Europe and North America. For over a decade, China was the main engine of global coal consumption, driving booms in coal mining and shipping. China’s domestic coal production skyrocketed, and other countries, such as Australia, experienced coal booms to keep pace with Chinese demand. Although China produced and consumed almost as much coal as the rest of the world combined in 2014, it seems that the country’s consumption has peaked. But China will still rely heavily on coal-fired electricity for decades. The country remains a key player in steel production, and millions of its citizens continue to work in the mining industry, despite recent layoffs.

South Asian countries continue to invest heavily in new coal-fired electricity plants and industrial projects. India may appreciate the risks of climate change, but its chief concern is delivering low-cost power to 350 million of its citizens who lack electricity. Coal is set to play a prominent role in meeting such goals. Countries like Indonesia, Thailand, and Vietnam have followed suit as they search for low-cost electricity to power their countries.

In short, coal remains a big player in the global fuel mix, even as it faces tough challenges from stringent environmental regulations, competition from other fuel sources, and a lack of new investments.

Photo courtesy of REUTERS/Sheng Li/Files. A labourer carries honeycomb briquettes at a coal processing factory in Shenyang, Liaoning province in this December 2, 2009 file photo.

WHITHER COAL?

Different strategies apply in different parts of the world when it comes to eradicating coal, despite the global agreement in Paris. Just as there is not a global energy grid, there is also no single, global transition to lower-carbon energy. Although some countries are transitioning away from coal, others continue to transition toward it.

Second, pragmatism and persistence—rather than ideological purity—remain key values as countries transition towards low-carbon economies. Natural gas provides North America with a backup fuel as it transitions to green energy. Without major bulk terminals on the west coast, western U.S. coal producers will not find new markets for their products overseas. And in Europe, policymakers will have to make good on long-promised and long-delayed changes to energy policy and infrastructure. If Germany and other EU states are to achieve promised clean energy transitions, coal production must be scaled back substantially across the continent. European leaders must also build an “Energy Union” that will accelerate the flow of cross-border electricity, if they are to achieve the Paris Accord’s climate change goals. Europe must also reform its existing carbon pricing mechanisms. And across China, Europe, and North America, workers will have to be re-educated for new job opportunities as the coal market dries up.

But for now, coal still keeps the light on around the world. It powers new, high-tech economies, as well as a huge share of traditional manufacturing. If hundreds of millions of Africans and Asians are to gain access to electricity, new coal-fired power plants will have to come online in the years ahead. As coal continues to play a prominent role in industrial processes like steel and cement making, technological investments are required to limit its consequences.

To tackle these challenges, coal advocates, as well as some climate experts, suggest that more countries must invest in carbon capture and sequestration (CCS) research. But such investments are lagging, and the world would require several dozen CCS projects in order to make the technology commercially viable in the long term.

If the Paris Accord is to succeed, the earth’s atmosphere cannot remain a free dump for billions of tons of pollution every year. In fact, virtually all greenhouse gas emissions must be reduced. Countries can impose taxes, cap-and-trade schemes, and regulation to make this happen. Governments will have to design unique strategies that are custom fit to their countries, and, in some cases, find opportunities with their neighbors as well. For example, some private and public institutions have chosen to stop financing coal-fired projects, and the Obama administration has indicated it will not give out new leases for coal mining on federal land. Others will choose to build more coal-fired plants until the alternatives are cheaper, or until someone pays them not to.

Globally, coal may indeed be at the beginning of the end. But the energy transition is not strictly global. It is also national, regional, and local. Coal remains economically competitive—attractive even—in many parts of the world. Some countries will wage wars on coal, which will be as much economic and financial as they are political. But some countries, like India, will host coal booms regardless of the consequences. After Paris, there is no point in ignoring coal. It will be powering the world—and the world’s debates—for decades to come.

This piece was originally published by Foreign Affairs.

       

When the Volkswagen emissions control scandal broke into the headlines in September, I wrote here how I felt like my lifelong love affair with VW had been violated. As an environmentalist, owning a Jetta that zipped along for 42 miles on a gallon of diesel was the best of both worlds. And it was a lie. My wife, Holly Flood, said she felt like she’d been “duped,” and since then she’s vowed never to buy another VW.

I’m not so sure. But I was pleased this week to see the agreed terms for the nearly half million of us who own the smaller diesel engine cars in the U.S. This was the largest car settlement in U.S. history.

What I like is the combination of individual and collective compensation for this crime.

Making it right with the customers

On the individual side, if this deal is approved by the judge in early October, my family will get our 2009 Jetta TDI sedan fixed for free (if the Environmental Protection Agency approves the fix), and we’ll get a check for $5,100. Holly says that’s perfect timing for a down payment on a new car (which will not be a VW).

I’m pushing for a plug-in electric hybrid, which we can charge with renewable energy we get off the grid from our local provider, People’s Power & Light. In our case, for every electron we use, they pay to have one electron put in from wind power somewhere right here in New England. Hopefully we’ll have variable pricing of electricity by then, allowing us to charge the car when the juice is cheapest, like when the wind blows at night but few people are using much electricity.

The unknown for us is whether the VW fix will noticeably harm the performance of the car. I’m guessing it will, perhaps in its remarkable torque, in its gas mileage, or both. But at this point the car has tons of my wife’s commuting miles on it, so we’re hanging on to it as the in-town backup car. Under the settlement we could get an extra $7k and give up the car entirely. That may be tempting, as it’s at that point where it’s getting substantially more expensive to maintain, and the Kelley Blue Book value is around $6k. They apparently aren’t lowballing us.

Making it right with the public

The collective part of this agreement is actually more interesting.

VW agreed to pay $4.7 billion  into environmental programs, which in my estimation will eliminate more harm than they created. One estimate guessed that scores of premature deaths occurred in the U.S. from VW’s “defeat devices” that shut off emissions controls when they were not being tested. Most of the deaths were probably in California, where there were many more sales of diesels than elsewhere in the country. (Of course in Europe the concentration of diesels is much greater and the Guardian put the number of deaths at thousands in the U.K. alone.) 

One part of this fund will go to replace diesel buses with electric ones. This will measurably improve air quality in inner cities, the precise places where extra sooty VWs were causing ill health and premature deaths with their NOx emissions. Another part will go to install electric vehicle charging stations in California. This helps overcome the “chicken and egg” problem of people not being willing to switch to electric vehicles for fear of running out of juice. The settlement says that “Volkswagen must spend $2 billion to promote non-polluting cars (“zero emissions vehicles” or “ZEV”), over and above any amount Volkswagen previously planned to spend on such technology.” That counterfactual will probably be impossible to prove, but the idea here is fairness.

A case of how America deals with environmentally criminal corporations

Sociologically, this is a fascinating case, because it reveals how our society resolves scandals that killed people through knowing contamination of the environment. As Deputy U.S. Attorney General Sally Yates harshly put it, "By duping regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our environment." There are individuals inside this company who deserve criminal prosecution, but apparently most of the thousands of other employees did not know what was going on.

The corporate response has been interesting, and seems to vary sharply from how most U.S. auto firms have dealt with similar lawsuits and scandals in the past. VW did not drag out the battle, but set aside $16 billion immediately as a loss, and then settled rather generously with us. (This spring they had already given us a $500 gift card and $500 in repairs in what was essentially hush money.)

VW’s response to this crisis was creative, forward-looking, and ultimately pro-social. Just a week or so ago they announced that their new business model was to be in electrics: They announced they’d be rolling out 31 electric vehicles in the coming years. This is a remarkable turn for a company that pushed diesels for decades as the solution to climate change. This is what it looks like when a massive corporation whose reputation was built on trust and belief in the integrity of a brand seeks to battle its way back into a changing market.

Spending billions on charging stations and replacing diesel buses may make immediate sense—can we say if this is helping avoid premature deaths or it is merely crass self-interest? Does it matter? 

Of course it does. But my first impression of what VW did this week was of a fair deal that was not just lining my pocket. It was helping us get off fossil fuels as a society and benefiting human health and the environment in a substantial way. And by rebuilding a major employer in Germany, the U.S., and around the world into one that might be a part of the solution to climate change, this is a significant and fairly brilliant business move to position the company for the next half century.

Or am I merely a sucker for my old flame?

       

       

       

       

       

       

In many African countries, women still cannot own land or resources, a significant barrier to their ability to start businesses and take advantage of the continent’s economic potential.  Fellow Anne Kamau explores their plight.

Video

• Challenges for Women in the African Economy

      

Emerging economies may chafe at international agreements calling for sustainable development, but Nonresident Fellow Nathan Hultman says many governments are putting plans for sustainability and green innovation in place out of self-interest, and cooperating with neighbors across the globe.

 

Video

• Nathan Hultman: Global Progress in Sustainable Development

       

       

"At the end of the day, we need to remember that Daesh is more a product of the civil wars than it is a cause of them. And the way that we’re behaving is we’re treating it as the cause.  And the problem is that in places like Syria, in Iraq, potentially in Libya, we are mounting these military campaigns to destroy Daesh and we’re not doing anything about the underlying civil wars.  And the real danger there is—we have a brilliant military and they may very well succeed in destroying Daesh—but if we haven’t dealt with the underlying civil wars, we’ll have Son of Daesh a year later." – Ken Pollack

“Part of the problem is how we want the U.S. to be more engaged and more involved and what that requires in practice. We have to be honest about a different kind of American role in the Middle East. It means committing considerable economic and political resources to this region of the world that a lot of Americans are quite frankly sick of… There is this aspect of nation-building that is in part what we have to do in the Middle East, help these countries rebuild, but we can’t do that on the cheap. We can’t do that with this relatively hands off approach.” – Shadi Hamid

In this episode of “Intersections,” Kenneth Pollack, senior fellow in the Center for Middle East Policy and Shadi Hamid, senior fellow in the Project on U.S. Relations with the Islamic World and author of "Islamic Exceptionalism: How the Struggle over Islam is Reshaping the World," discuss the current state of upheaval in the Middle East, the Arab Spring, and the political durability of Islamist movements in the region. They also explain their ideas on how and why the United States should change its approach to the Middle East and areas of potential improvement for U.S. foreign policy in the region. 

Show Notes

Fight or flight: America’s choice in the Middle East

Security and public order

Islamists on Islamism today

Temptations of Power: Islamists & Illiberal Democracy in a New Middle East

Ending the Middle East’s civil wars

A Rage for Order: The Middle East in turmoil, from Tahrir Square to ISIS

Building a better Syrian opposition army: How and why

With thanks to audio engineer and producer Zack Kulzer, Mark Hoelscher, Carisa Nietsche, Sara Abdel-Rahim, Eric Abalahin, Fred Dews and Richard Fawal.

Subscribe to the Intersections on iTunes, and send feedback email to intersections@brookings.edu.

         

       

Introduction

The global community has set itself the challenge of meeting the Millennium Development Goals (MDGs) by 2015 as a way to combat world poverty and hunger. In 2007, the halfway point, it is clear that many countries will not be able to meet the MDGs without undertaking significantly greater efforts. One constraint that needs to be overcome is that development interventions—projects, programs, policies—are all too often like small pebbles thrown into a big pond: they are limited in scale, short-lived, and therefore have little lasting impact. This may explain why so many studies have found that external aid has had weak or no development impact in the aggregate, even though many individual interventions have been successful in terms of their project- or program-specific goals.

Confronted with the challenge of meeting the MDGs, the development community has recently begun to focus on the need to scale up interventions. Scaling up means taking successful projects, programs, or policies and expanding, adapting, and sustaining them in different ways over time for greater development impact. This emphasis on scaling up has emerged from concern over how to deploy and absorb the substantially increased levels of official development assistance that were promised by the wealthy countries at recent G8 summits. A fragmented aid architecture complicates this task; multilateral, bilateral, and private aid entities have multiplied, leading to many more—but smaller— aid projects and programs and increasing transaction costs for recipient countries. In response, some aid donors have started to move from project to program support, and in the Paris Declaration, official donors committed themselves to work together for better coordinated aid delivery.

The current focus on scaling up is not entirely new, however. During the 1980s, as nongovernmental organizations (NGOs) increasingly began to engage in development activities, scaling up emerged as a challenge. NGO interventions were (and are) typically small in scale and often apply new approaches. Therefore, the question of how to replicate and scale up successful models gained prominence even then, especially in connection with participatory and community development approaches. Indeed, the current interest among philanthropic foundations and NGOs in how to scale up their interventions is an echo of these earlier concerns.

In response to this increased focus on scaling up—and its increased urgency—this policy brief takes a comprehensive look at what the literature and experience have to say about whether and how to scale up development interventions.

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Abstract

Scaling up of development interventions is much debated today as a way to improve their impact and effectiveness. Based on a review of scaling up literature and practice, this paper develops a framework for the key dynamics that allow the scaling up process to happen. The authors explore the possible approaches and paths to scaling up, the drivers of expansion and of replication, the space that has to be created for interventions to grow, and the role of evaluation and of careful planning and implementation. They draw a number of lessons for the development analyst and practitioner. More than anything else, scaling up is about political and organizational leadership, about vision, values and mindset, and about incentives and accountability—all oriented to make scaling up a central element of individual, institutional, national and international development efforts. The paper concludes by highlighting some implications for aid and aid donors.

An annotated bibliography of the literature on scaling up and development aid effectiveness was created by Oksana Pidufala to supplement this working paper. Read more »

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EXECUTIVE SUMMARY

Fragile states present one of the greatest challenges to global development and poverty reduction. Despite much new learning that has emerged from within the development community in recent years, understanding of how to address fragility remains modest. There is growing recognition that donor engagement in fragile states must look beyond the confines of the traditional aid effectiveness agenda if it is to achieve its intended objectives, which include statebuilding, meeting the needs of citizens, and managing risk more effectively. Current approaches are constrained by relying heavily on small-scale interventions, are weakened by poor coordination and volatility, and struggle to promote an appropriate role for the recipient state.

Scaling up (i.e., the expansion, replication, adaption and sustaining of successful policies and programs in space and over time to reach a greater number of people) is highly relevant to fragile settings, both as an objective and as a strategic approach to development. As an objective, it reinforces the logic that the scale of the challenges in fragile states demands interventions that are commensurate in purpose and equal to the task. As a strategy, it encourages donors to identify and leverage successes, and to integrate institutional development more explicitly into projects and programs. In addition, scaling up can assist donors in addressing the priority areas of improved project design and implementation, sustainability and effective risk management.

Successful scaling up in fragile states almost certainly occurs less often than is possible and does not always involve a systematic approach. Donors should therefore look to more systematically pursue scaling up in fragile states and evaluate their performance with specific reference to this objective. This can be done by incorporating relevant elements of a scaling up framework into operational policies, from strategy development through to program design and monitoring.

Contrary to expectations, there are compelling examples of successful scaling up in fragile states. While the conditions prevailing in fragile states create serious obstacles in terms of “drivers” (the forces that push the scaling up process forward) and “spaces” (the opportunities that need to be created, or potential obstacles that need to be removed for interventions to grow), and in terms of the operational modalities of donors, these can be overcome through the careful design and delivery of programs with a clear focus on creating scaling up pathways, and through close partnership and sustained engagement of governments, communities and foreign partners.

Case study evidence suggests that the pathways taken to reach scale in fragile states demand different approaches by donors. Donors need to adopt greater selectivity in determining which areas or sectors for scaling up are justified—a strategy that has also assisted some donors in managing risk. More investment and time are required in upfront analysis and building the evidence for successful scaling up pathways. In some cases, donors require longer time horizons to achieve scale, although demand from government or beneficiaries has sometimes forced donors to move immediately to scale, allowing little or no time for piloting. Regardless of the pace of scaling up, donors that were most successful were engaged early and then remained engaged, often far beyond the replication phase of scaling up, to increase the likelihood of interventions being sustained. Other common characteristics of successful scaling up were simple project design and a focus on the institutional aspects of the scaling up pathway.

Case studies also point to the crucial role of drivers in moving the scaling up process forward in fragile states. Proven ideas and practical models have often been picked up in fragile states, contrary to the expectation that actors may be less responsive to recognizing and acting on the utility of promising results. Leaders undoubtedly have a role to play in supporting scaling up, although there are clear dangers that must be avoided, including avoiding the perception that donors are picking (political) winners by nominating leaders, and tying the survival of projects too closely to the fortunes of a leader’s political career. Incentives were found to be one of the most important drivers in fragile states, and there is a good case to be made for donors introducing new inducements, greater transparency or similar reforms to strengthen the role incentives play. Finally, and in contrast to the standard scaling up framework, community demand was found to be an important driver in many fragile states, both in demanding the expansion of small-scale projects and by facilitating the community’s own resources to support the scaling up process.

The greatest challenge to scaling up in fragile states is the limited spaces these environments provide. This is especially the case in respect to those spaces which concern aspects of governance: political, institutional and policy spaces. When working in fragile states, donors must recognize that spaces for scaling up are almost always more constrained, but look for ways to expand upon them. Some of the most successful examples of scaling up used creative approaches to build space quickly or used existing capacity to the fullest possible extent. Also relevant are the lessons of robust analysis, greater realism and cost control. The case studies confirm the importance of two additional spaces in fragile states. For example, security space often imposed horizontal obstacles to scaling up which could not realistically be overcome while ownership space served as a good indication of the perceived legitimacy of the scaling up process and the likelihood that interventions would be sustained longer term.

Case studies also affirm the importance of emphasizing robust project design and implementation, and the close linkages between the scaling up agenda and the role of risk management and sustainability in fragile states. While sustainability presented a significant problem for many of the projects and programs reviewed, a more focused approach around scaling up may assist donors in addressing sustainability concerns. This would entail adopting a longer-term perspective beyond the immediate confines of any individual project, looking for available drivers and supportive spaces, and focusing on effective implementation and consistent monitoring and evaluation (M&E). Any intervention introduced on a small scale that scores well in sustainability serves as a possible candidate for scaling up.

Similarly, many of the methods used by donors for managing risk—an emphasis on analysis, scenario planning, realism and making use of specialized aid instruments—are equally relevant for supporting scaling up in fragile countries. A persuasive argument can be made that the adoption of a more explicit scaling up approach by donors can form part of a risk management strategy in fragile states. Scaling up can enable donors to more ambitiously tackle development risks without allowing institutional and project risks to grow unchecked. Ultimately, a donor approach that combines good risk management and scaling up requires strong leadership and well-aligned incentives.

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Development ministers and experts will meet at the Fourth High Level Forum on Aid Effectiveness in Busan, Korea, in November 2011 to assess their efforts to improve the impact of aid. A recent survey by the Organisation for Economic Co-operation and Development (OECD) shows that little progress has been made since they met in Accra in 2008 for their Third High Level Forum. The many good intentions to improve coordination among donors, to enhance the alignment of aid programs with the priorities of aid recipients, and to develop effective partnerships in practice have turned out to be difficult to implement.

If anything, the challenge has become greater: the number of aid agencies keeps rising, as does the number of aid-supported projects, while average project size continues to drop. According to the OECD, more than half of the 90,000 official aid projects implemented annually are now well below $100,000 in size. With so many small interventions, most of them one-time, without links to each other, driven by the short-lived preferences of individual agencies and individuals in agencies, it is no surprise that the lofty goals of aid ministers go unrealized and that the cumulative impact of the many well-intentioned small aid projects is minimal at best.

It doesn’t have to be that way. There are examples of successful development programs that have lifted millions of people out of poverty, have greatly improved health conditions and have generated new business and employment opportunities. Examples such as the Mexican government’s national program of cash transfers to poor households (“Progresa- Oportunidades”) which conditions assistance on whether children attend school and mothers take their infants for health check-ups; the multi-donor program to eradicate the deadly river-blindness disease in West-Africa; the community based microcredit and employment programs of Grameen Bank and BRAC in Bangladesh; the Chinese government’s program for the development of the loess plateau with support of the World Bank; or the program of rural poverty reduction in the highlands of Peru supported by the International Fund for Agricultural Development (IFAD) – these are just a few examples of cases where the impact of development programs has been at a scale such that it made a real and lasting difference in the lives of millions of people. And success at scale is also possible in fragile and conflict-affected states as a recent review by the Brookings Institution for the Australian aid agency AusAID has shown.

This raises three questions that development ministers should consider as they prepare for and meet in Busan: What made these success stories possible? Why are they the exception rather than the rule? What needs to be done the make scaling up the norm? Let us take these questions in turn.

What made these success stories possible? Each case has its own ingredients of success, but three dimensions are common to them all:

• The programs pursued a scaling up pathway towards a long-term goal: Few successful programs followed a blueprint for long-term scaling up from the start, but they all built on the recognition that if the early steps were successfully piloted, subsequent steps needed to systematically replicate and scale up what works, adapting the approach in the light of lessons learned at each of the earlier project. A key element in this connection is that the long-term objective of scale impact is part of the program concept from the beginning; that monitoring and evaluation are designed to test not only whether an idea works, but also to measure progress against the long-term goal; and that an effort is made to identify the drivers, to create the spaces and to chart a suitable scaling up pathway for programs to move from small pilot to impact at scale.
  
  
• The programs benefitted from strong and sustained drivers for scaling up: Specifically, they had strong leadership with a clear vision of the need for large scale impact, with ideas that were suited to the challenge, ready to learn from experience, willing to stay engaged for the long haul, championing the cause, building partnerships with other like-minded actors and politically savvy in overcoming obstacles. This leadership could come from public officials, such as the President of Mexico and his Deputy Minister of Finance in the case of “Progresa”, from private individuals, such as the founders of Grameen Bank and BRAC, from a community of national experts and community leaders, as in the case of the Peru Highlands Development Program, from outside aid donors, as in the case of the West-African River- Blindness program, or be part of a wellestablished system of experimentation with replication of success as established in China’s approach to economic growth.
  
  
• The programs created the space for sustained growth: As programs expanded successfully they managed to open up financial and fiscal space by keeping costs down and finding suitable financing mechanisms; they pursued policy reforms that created favorable legal and regulatory conditions; they created the institutional space by identifying appropriate organizational approaches and building institutions for managing the programs at scale; they adapted approaches to the specific cultural realities; and they created political coalitions and operational partnerships that made it possible to grow and sustain the initiative. In the case of “Progresa- Oportunidades” the Mexican government designed a program with a long-term goal of universal coverage of all poor, but started with carefully designed pilots, which were subjected to detailed evaluation against control groups and adapted as needed during the 5-10 year scale-up phase. It created the required fiscal and financial space by abandoning other less successful social programs and by seeking the support of international financial institutions. The government also insulated “Progresa-Oportunidades” from political controversy by carefully monitoring and documenting its positive impacts and by legally assuring that it did not get caught up in party politics. Finally, it designed an institutional approach suitable for phased nation-wide scale-up with minimal bureaucratic obstacles.

Why are these success stories the exception rather than the rule? The first explanation for the lack of systematic and effective focus on scaling up lies in the nature of governmental and bureaucratic incentives and the resulting planning and implementation mechanisms in the developing countries themselves. Typically, governmental plans set out broad targets, policies and implementation modalities, but they generally do not link specific interventions, projects and programs or individual agency budgets and investment plans with the longer-term goals set forth in national or sectoral plans. Moreover, whenever governments or heads of agencies change, the new leadership has a strong tendency to discard the programs supported by the former incumbents and instead to pursue new ideas and new programs. Finally, the practice of methodically evaluating the impact of programs is poorly understood in most countries, and in any case is not well appreciated, since politicians and agencies like to claim success, but prefer not to acknowledge failures in their programs. Contrast this with the incentives for scaling up in the private sector: In a competitive market a successful new initiative, i.e., one that makes a profit, will be replicated and scaled up either by the firm that pioneered it, or by competitors who see the opportunity to garner some of the potential profit for themselves.

The second explanation can be found in the way aid agencies work. While some donors help governments with advice and technical assistance to develop a longer-term national, sub-national and sectoral plans and improved budgeting and investment planning mechanisms, the aid agencies’ own operational modalities and incentives tend to operate just like those of governments: Their operational policies, programming, management and staffing do not encourage support for systematic scaling up. On the contrary, they tend to focus on innovative initiatives and even discourage replication of successful projects and programs. They do not reward effective monitoring and evaluation against longer-term objectives. They rotate managers and staff frequently and with little attention to ensure appropriate hand-over. And the incentives for staff are to start new projects rather than focusing on implementing and building on ongoing ones. And while partnerships, coordination and handing off programs to the clients are encouraged at the level of ministers and agency heads, in practice staff have little incentive to pursue these avenues, since they take time, effort and even budgetary resources, increase risks of delay and of loss of institutional identity and control, and since fiduciary requirements for procurement and disbursements are not harmonized among donors.

What needs to be done to make scaling up the norm? Let us start with aid agencies. Donors have an obligation to do no harm, and it can be argued that their proliferation of small, one-time, uncoordinated and unevaluated interventions do more harm than good. They certainly represent an opportunity forgone, namely the opportunity to support a systematic focus on scaling up successful development interventions. Indeed, this represents an obligation that should be reflected in the mission statements of all official aid organizations, as well as in those of the larger non-governmental organizations and foundations that provide development assistance A recent assessment of donor performance in terms of their attention to scaling up concluded that donors need to address five critical gaps in their operation approach:

1. Institutional information gap: Aid agencies should review and develop their institutional approaches to scaling up.
2. Evaluation gap: Evaluations of donor projects should include an assessment of the scaling up practices of donors.
3. Incentives gap: Donors need to develop internal and external incentives (e.g., operational policies and staff incentives; replication funds, competitions) to help drive the scaling up process.
4. Partnership gap: Donors should expand the use of programmatic approaches and instruments with joint funding of programs designed to bring donors together so they can help scale up successful interventions;
5. Ownership gap: Ultimately, scaling up is a country’s job; donors need to help by setting an example, build capacity and hand off to agents in the country.

In their turn, the governments of developing countries need to make scaling up of successful interventions an explicit part of their national planning and programming, need to implement rigorous monitoring and evaluation as learning and accountability mechanisms for the political and agency leadership, and need to find ways to ensure that successful programs do not fall victim of the electoral cycle.

The good news is that progress is being made. There is now a well established body of evidence that scaling up can and does work, even in fragile states. There exists a framework for analyzing, planning monitoring and evaluating scaling up approaches, building on the scaling up pathway, drivers and incentives concepts as summarized above. Examples of governments focused on scaling up success show that it is possible to pursue this avenue to development, with China the outstanding case in point. And some aid agencies have begun to focus systematically on scaling up in their operational mission, strategy, policies, processes and incentives, among them IFAD, the Global Fund to Fight AIDS, Tuberculosis and Malaria, and the Bill and Melinda Gates Foundation. The United Nations Development Program has made scaling up an explicitcriterion in its evaluation of its programs. And the Gesellschaft für Internationale Zusammenarbeit (GIZ) recently issued practical guidelines for scaling up.

What is needed now, and what development ministers and agency heads should focus on in Busan and beyond, are the following three important priorities to ensure that an operational focus on scaling up becomes the rule, not the exception, in the way governments and aid agencies work:

1. Developing country governments commit themselves to introduce the scaling up objective and practice into their own planning, implementation, evaluation and accountability mechanisms.
2. Official donors and large private donors commit to introduce the objective and practice of scaling up into their mission statements, operational policies and evaluation practices.
3. Donors specifically commit to assist development partners through their technical and financial assistance to implement systematic approaches and incentive mechanisms that help drive the scaling up of successful development interventions. Scaling up success is not rocket science. It is a simple, intuitively appealing concept. And yet in practice it has been an orphan in the development literature and practice. Fortunately, this is now changing. We do not need complex models and metrics, nor do governments and aid agencies need sophisticated operational instruments. What we need is for scaling up to become the accepted goal at the political and institutional level. We need a clear vision of scaling up pathways, an assessment of the needed drivers and spaces for scaling up. And we need a readiness to evaluate progress against ultimate and intermediate goals and to adjust the scaling up pathway in light of the lessons learned.

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A key objective of the United Nations Development Programme (UNDP) is to assist its member countries in meeting the Millennium Development Goals (MDGs). UNDP pursues this objective in various ways, including through analysis and advice to governments on the progress towards the MDGs (such as support for the preparation and monitoring Poverty Reduction Strategies, or PRSs, in poor countries), assistance for capacity building, and financial and technical support for the preparation and implementation of development programs.

The challenge of achieving the MDGs remains daunting in many countries, including Tajikistan. To do so will require that all development partners, i.e., the government, civil society, private business and donors, make every effort to scale up successful development interventions. Scaling up refers to “expanding, adapting and sustaining successful policies, programs and projects on different places and over time to reach a greater number of people.” Interventions that are successful as pilots but are not scaled up will create localized benefits for a small number of beneficiaries, but they will fail to contribute significantly to close the MDG gap.

This paper aims to assess whether and how well UNDP is supporting scaling up in its development programs in Tajikistan. While the principal purpose of this assessment was to assist the UNDP country program director and his team in Tajikistan in their scaling up efforts, it also contributes to the overall growing body of evidence on the scaling up of development interventions worldwide.

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Editor’s note: This post is adapted from a forthcoming full-length case study; the second in a series from the Engelberg Center’s Merkin Initiative on Physician Payment Reform and Clinical Leadership designed to support clinician leadership of health care delivery, payment, and financing reform. The case study will be presented during the Merkin Initiative’s “MEDTalk” event on July 9 from 10:30 AM to 12:30 PM EDT, featuring live story-telling and knowledge-sharing from patients, providers, and policymakers.

Oncology practices and hospitals across the nation struggle with providing sustainable, comprehensive, and coordinated cancer care. Clinical leaders with strategies and models to improve the quality and value of health care often don’t know how to navigate the landscape of payment and delivery reform options to sustain their innovations.

We use a case study approach to investigate and tell the story of the New Mexico Cancer Center (NMCC), an independent cancer center that is experimenting with innovative ways to improve patient-centered oncology care. We identify challenges for creating sustainable and supportive payments models, and we share the broader strategic and policy lessons for adopting alternative payment models.

The Clinical Scenario: Living With Cancer

Vicky Bolton, a 58-year-old full-time medical legal coordinator from Albuquerque, has stage 4 adenocarcinoma lung cancer. She started chemotherapy in 2003 and has consistently received treatments over the last 11 years. Vicky is one of 13 million Americans currently living with cancer, with more than 1.6 million new diagnoses added each year.

Although Vicky’s condition is currently stable, she is at high risk for venous thrombosis (blood clots), life-threatening infections, and other complications, which put her at high risk for repeated hospitalizations. In the past six months, she has taken advantage of “after hours” care on three occasions as an outpatient at NMCC. Fortunately, each of her providers and services — oncology, radiation therapy, labs, x-rays, and internal medicine — are centralized in a single location at NMCC, reducing the need for emergency room (ER) visits or hospitalizations for these episodes.

The Challenge: Controlling Spending While Improving Patient-Centered Care

Cancer is the second leading cause of death in the U.S. Forty-one percent of Americans will be diagnosed with cancer during their lives. Cancer care is also expensive, accounting for $125 billion of total health care spending annually. In 2011, Medicare alone spent nearly $35 billion in fee-for-service (FFS) payments for cancer care, representing 9 percent of all Medicare FFS payments.

The high costs of cancer care are driven by issues that plague the entire health system: uncoordinated care delivery, duplication of services, fragmentation, and volume-based payments. A common impact of these drivers in oncology is the use of the ER to relieve symptoms associated with adverse effects of chemotherapy or other treatments that can also result in hospitalization.

For example, research shows that the most common reasons for cancer patient ER admissions are pain, respiratory distress, nausea, and vomiting. More than half of the ER visits occurred on weekends or in the evening, and over 60 percent resulted in hospital admission. This suggests that if a patient’s symptoms could be managed at home or in the community, costly hospital admissions could be avoided. ER visits, where patients are exposed to germs and infections as they wait — often hours — to be admitted, can have catastrophic outcomes for patients that are actively in treatment since they have weakened immune systems and are more prone to infections.

In addition to the inherent issues with fee-for-service (FFS) payments — with payments incentivizing volume of procedures rather than the value of care delivered — the current payment system further exacerbates problems: If a practice provides higher-value care to patients at a lower cost to the overall system (that is, they perform fewer services and have lower revenue), the financial winner is the payer who reimburses fewer services, not the practice (which merely has less revenue). This combination of the misaligned incentives of FFS and the lack of financial benefit for improving care while reducing costs means that many practices simply cannot afford to make the transformations needed without other funding mechanisms.

The Real World: How Has An Independent Cancer Center Responded To These Challenges?

NMCC delivers care to roughly 2,700 patients and provides care to one in three New Mexicans with cancer. The changes that the center has made have focused on reducing the impact of fragmentation of care on their patients (Table 1).

A key innovation was enhancing comprehensive after-hours and weekend care on site and creating a telephone and urgent care triage program to avoid expensive emergency room and inpatient care, which NMCC termed the COME HOME model.

As part of its redesign process in 2012, NMCC – along with six community oncology practices — secured a $20 million Center for Medicare and Medicaid Innovation (CMMI) Health Care Innovation Award (HCIA), for a three-year period. The award has an explicit aim of reducing ER visits by 50 percent and hospitalizations by 20 percent to justify the program costs.

Table 1: Care Redesign Elements Undertaken by NMCC

The Key Levers: How Can COME HOME Be Sustained?

On the heels of the Affordable Care Act (ACA) and numerous quality and payment focused initiatives in the private sector, health care organizations need to enhance the competitiveness and efficiency of their systems in the marketplace.

Alternative payment models (APMs) such as Accountable Care Organizations (ACOs), bundled payments, and patient-centered oncology medical homes (PCOMH) are just a few of the initiatives supported by public and private payers to align care redesign and payment reform and encourage continuous improvement. (Clinical pathways, a strategy recently embraced by WellPoint, offer PCOMH-like incentives to encourage adherence to practice guidelines, a strategy primarily geared to encourage higher-value chemotherapy practice.)

Broader or larger case-based payments may also provide stronger incentives to limit costs, to help assure that promising delivery reforms actually lead to cost reduction, but this exposes oncologists to greater levels of financial risk, as shown in Table 2. Consequently, implementing payment reforms that are viewed as feasible and desirable by both providers and payers is difficult.

Table 2: Comparison of Alternative Payment Models for Oncology

The Path Ahead: How Can These Models Assist NMCC?

NMCC currently receives approximately $70,000 per month from the CMMI grant and has not yet identified a clear strategy to sustain the delivery reforms in the COME HOME care model past the end of the grant (July 2015). As for payment reform options, NMCC has been unable to contract as part of a comprehensive ACO due to local health care market conditions.

Clinical pathways are geared primarily to guidelines and chemotherapy adherence, and are not designed to provide funding for after-hours care or triage programs that are intended to achieve offsetting savings through avoiding costly complications. Possible remaining options include:

• PCOMH: Using the data it gathers, NMCC intends to quantify the additional costs the COME HOME model requires, and the savings that it achieves. Based on that estimate, NMCC could suggest a per-member per-month (PMPM) payment from a private insurer to cover the costs of providing higher quality care. To encourage participation, NMCC could also enter into a risk-sharing agreement, in which overall costs of inpatient care and ER visits would be compared against a target. The PMPM payment could be at-risk if the targets are not achieved after a certain period of time.

• Bundled Payments: NMCC could potentially use the medical home approach with risk sharing (described above) as a first, interim step toward a bundled payment system, NMCC’s long-term preferred model. Computing actuarially sound expected costs for the bundled payments would require merging claims data with clinical data (for example, ICD-9 codes fail to distinguish between subtypes of breast cancer that have radically different treatments). A bundled payment pilot might be performed for high volume cancers, such as breast and lung.

Lessons Learned

The experience of innovative pioneers like NMCC can shed some light on potential barriers to conceptualizing and implementing sustainable clinical redesign. The lessons learned have been sorted into three main categories: relationships with payers and networks, payment model selection, and data collection and quality improvement considerations.

Relationships with payers and networks. Though counterintuitive, merely demonstrating significant value from care design, perhaps from lower utilization of inpatient and emergency department utilization, does not automatically create a financial pathway for sustainable delivery reform. To do so, innovative providers should consider involving lead payer partners early on to help identify end-points of interest to payers and potential payment strategies that may emerge later.

Providing support for health care delivery reforms requires new activities by payers towards aligning their payments with value, rather than volume and intensity of services. However, fragmented health care markets face the challenge of the “free rider” problem: payers may be unwilling to shoulder delivery transformation costs that may benefit other payers’ clients while they wait for CMS or others to make the financial investment, pay for the program evaluation, and enact policy change). Other challenges include payer inertia and long lag times between care redesign and subsequent data demonstrating results.

Large ACOs and other integrated payer-provider plans, including those large enough to form Medicare Advantage plans, are moving forward on negotiating payment and delivery reforms. This may be more difficult for innovative, smaller practices, even if they can provide higher-value clinical services. In turn, this may have anti-competitive consequences, such as discouraging delivery innovation that leads to “demand destruction” of high-cost hospital-based services. Private and public payers should be particularly interested in developing models that enable smaller, specialized providers like oncology practices to undertake key delivery reforms.

Sustainable Payment Model Selection. While substantial attention has been paid to primary care focused APMs, specialty-focused APMs are needed for practices like NMCC. Their development should be a high priority for public and private payers. Clinical transformation grants, such as those offered by CMMI, should include clear pathways for transitioning to APMs if initial cost savings targets or projections are met. Otherwise, delivery system innovations are at high risk of failure despite evidence of improved value.

Data Collection and Quality Improvement Considerations. Timely sharing of actionable information from claims and other administrative data remains a major challenge, with complex and varied procedures for obtaining claims from payers; smaller practices are particularly challenged in interpreting the claims data. Some states, such as Maryland, Massachusetts, Vermont, and Colorado (among others) are proceeding with creating all-payer claims databases. (Maryland, for example, offers almost instantaneous provider feedback from claims through their CRISP database.)

Others, such as Minnesota, are using “distributed” approaches in which multiple payers and systems produce measures in consistent ways. As NMCC’s early efforts illustrate, practices can produce more clinically sophisticated performance measures. Strategies to achieve consistent methods for sharing key data on cost and quality need to be expanded to encourage quality improvement and payment reform.

      

Payment reform in health care is confusing, but the goal is simple: How can health care providers change their economic incentives to encourage value over volume? If you've wondered about how these new payment models work, we’re here to help. And if you want to see Dr. Patrick Conway, the head of the Center for Medicare and Medicaid Innovation, talk about it more in depth at our most recent MEDTalk event about oncology care reform, click here.

Where are we now?

Fee-for-Service. Traditionally, health care providers are paid in a "Fee-for-Service" (FFS) model. This is exactly what it sounds like: every time you have a blood test, a doctor's visit, a CT scan, or any other service, you (and your insurance company) pay separately for what you have received. Over the course of a long treatment or a chronic condition, that can add up to a huge expense.

The Fee-For-Service System

It is well known that FFS is draining the entire health care system. When paying for volume, a sick patient is worth more than a healthy patient , and this status quo results in uncoordinated care, duplication of services, and fragmentation. After all, the more doctors and providers do, the more they get paid.

Reformers hope to replace the traditional FFS model with something better, and they’ve come up with many different models of payment that could allow this to happen. (Note to reader:  these are simplified explanations; policy enthusiasts can learn much more about them through the Engelberg Center’s Merkin Initiative).

Here are four widely proposed and increasingly popular alternative payment models:

Accountable Care Organizations (ACOs) are groups of providers across different settings– primary care, specialty physicians, hospitals, clinics, and others – who chose to come together to jointly share responsibility for overall quality, cost, and care for a large patient population. These providers recognize that poorly coordinated care from these entities can lead to increased costs from things like redundant tests and overlapping care.

Accountable Care Organization Model

Here’s how it works in basic terms: the ACO physicians bill the way they always do, but the total costs get compared to an overall target. Plus, they have to measure some of their patient outcomes, to prove that they hit certain quality benchmarks. If costs are higher than the target, the ACO may get penalized. In the end, if they are under the cost target and satisfy their quality measures, they get a share of the savings.

By bringing all of these providers under the umbrella of an ACO, caregivers can all be on the same page, and the patients ideally receive coordinated care with a focus on prevention – since providers are encouraged to keep their patients healthy and not just earn more by doing more tests and procedures.

Bundles: A health care bundle estimates the total cost of all of the services a patient would receive per episode over a set time period for a certain problem, like a knee replacement or heart surgery. For example, a payer such as Medicare or an insurance company could calculate that a hypothetical 30-day bundle for a knee replacement surgery costs $10,000.

Without Bundled Payment...

The payer reduces the total cost of the episode by 2-3%, and hands the bundle over to the provider – in the knee surgery example, that becomes $10,000 minus 2%, so $9,800. The provider is then responsible for all costs of treatment – whether or not it exceeds the amount of money they were originally given. This encourages the provider (collaborating with the entire care team) to help the patient avoid preventable complications like a hospital readmission by better managing a patient’s care.

With a Bundled Payment...

If the provider keeps costs low, they can keep the margin on the bundle, while the insurance company already saved by reducing the cost of the episode by a small percentage when they created the bundle. So, in our example, if the provider was able to meet quality benchmarks and the total cost of the 30-day episode was $9,000, they get to keep the extra $800.

Patient-Centered Medical Homes set themselves apart by providing set monthly payments on top of existing funding models, in order to fund a highly coordinated team of primary care professionals, which may include, depending on the patient’s needs, physicians, nurse practitioners, medical assistants, nutritionists, psychologists, and possibly even specialists. The team works closely to build a strong relationship with each other,with their patients and their caregivers.

Patient-Centered Medical Home Model...

This extra money can be used to hire nurses or agencies to give special care and attention (by phone or home visits, for example) to high-risk patients, with the goals of reducing emergency room visits and other preventable problems in the long run. Other enhancements might include email communication with patients, more time to call and coordinate care between primary care doctors and specialists, and so on. In the end, the savings from better coordinated care make the extra monthly payments worthwhile.

Pathways, an idea which has gained traction in oncology care, provides a system of choices and decision making tools for providers and patients in order to prescribe the most effective and least costly treatment. For example, let’s say there are two cancer drugs proven to have the same effectiveness, with no differentiation in side effects, but one of them costs less than the other.

Same Effectiveness, Different Cost...

Like the medical home, the pathways model uses a “per-patient” add on fee (often much larger than for medical homes focused on primary care, since cancer patients need intensive treatment) that might encourage the provider to prescribe the less expensive of two equally effective treatments.

How Pathways Creat Savings...

 

 

 

 

 

 

When this is implemented on a broad scale, the savings could add up for payers, and defray the cost of the add-on fees.

Please feel free to use any of these images in your own work, presentations, or educational efforts, and to view and download the interactive versions here.  The images should be attributed to The Merkin Initiative on Clinical Leadership and Payment Reform at Brookings.

      

Please note that this Engelberg Center for Health Care Reform Health Policy Issue Brief first appeared in the Health Affairs Blog on July 31, 2014. Click here for the Health Affairs Blog version.

Abstract

Individual patient expanded access is a process by which patients can obtain investigational drugs that have not been approved by the Food and Drug Administration (FDA) outside of a clinical trial setting from biopharmaceutical companies when no other alternative therapy is available. Currently, no industry-wide structural principles exist to help companies navigate this process while balancing the needs of getting a drug to the market as quickly as possible with providing potentially life-saving treatment to individual patients. The Engelberg Center convened a stakeholder group to identify common themes and identify common principles related to expanded access, as none currently exist. The result was 4 A’s - Anticipation, Accessibility, Accountability, and Analysis – to help assist patients, providers, and companies with expanded access. Process and capacity building recommendations for the FDA also were proposed to assist companies with sustaining expanded access programs.

Call to Action: The Importance of Expanded Access Programs

Individual patient expanded access, sometimes termed “compassionate use,” refers to situations where access to a drug still in the development process is granted to patients on a case-by-case basis outside of a clinical trial, prior to completion of mandated clinical trials and approval by the Food and Drug Administration (FDA). This typically involves filing a single patient or emergency investigational new drug (IND) request with the Food and Drug Administration and voluntary release of the drug by the manufacturer. Generally, the following criteria must be met: there is reasonable expectation of meaningful benefit despite the absence of definitive clinical trial data, the patient has a serious or life-threatening condition, there are no comparable or satisfactory treatment alternatives, and there are no suitable clinical trials for the drug available to the patient. This form of expanded access, which is the focus of this paper, is different from the situation in which a drug is discharged to a large group of needy patients in the interval between successful phase 3 trials and presumed FDA approval, a strategy often termed a “treatment” IND or protocol, which was initially used in the 1980s for releasing zidovudine to patients with acquired immune deficiency syndrome.

The Engelberg Center for Health Care Reform at the Brookings Institution recently invited senior leaders from several pharmaceutical companies, two bioethicists, a senior FDA representative, and a patient advocate to share experiences and discuss organizational strategies related to expanded access (see acknowledgements). A driving factor for this meeting was a recent flurry of highly public cases of desperate patients seeking access to experimental drugs, which lead to social media campaigns and media coverage. Such cases included 7-year-old Josh Hardy (brincidofovir from Chimerix for disseminated adenovirus infection), 45-year-old Andrea Sloan (BMN673 from BioMarin for ovarian cancer), 41-year-old Nick Auden (pembrolizumab from Merck for melanoma), and 6-year-old Jack Fowler (intrathecal idursulfase from Shire for Hunter Syndrome). Expanded access requests to the FDA for new patients are increasing, from 1,000 patients nationwide in 2010 to more than 1,200 in 2012.[i] (This is likely an underestimate, since it does not include appeals made directly to companies.)

In the wake of these events, it became clear that many biopharmaceutical companies had varying experiences and policies related to such access. From the domestic regulatory standpoint, the FDA revised its expanded access regulations in 2009, which define criteria that must be met to authorize expanded access, list requirements for expanded access submissions, describe safeguards that will protect patients, and preserve the ability to develop meaningful data about the use of the drug. Biopharmaceutical companies typically face a complex global environment in which legal and regulatory frameworks can differ substantially. At the meeting, a senior FDA representative indicated the agency has approved over 99 percent of expanded access requests submitted via single patient or emergency INDs since 2009, suggesting the regulatory agency is not a major barrier to expanded access. As such, provided the access request is reasonably related to the potential benefits of the drug, the biopharmaceutical company is almost solely responsible for the decision and liability regarding whether to grant expanded access to an individual. Still, the public belief persists that the FDA is the main bottleneck that restricts access. In April 2014, Representative Morgan Griffith (R-VA) proposed H.R. 4475, The Compassionate Freedom of Choice Act of 2014, designed to restrict the FDA’s ability to prevent the use of investigational drugs in terminally ill patients. Similarly, some states have passed “Right to Try” legislation to reduce FDA oversight, but contains no requirement that companies must make drugs available.[ii]

The goal of our meeting was to identify common themes and possibly broad outlines to suggest industry-wide policies related to expanded access, as none currently exist. The group first discussed background issues related to expanded access and agreed on definitions. The meeting then focused on three topics. First, the group participants who play key roles in evaluating expanded access requests were invited to share narrative experiences in specific clinical cases, in an effort to lay the groundwork for trust and open discussion. Second, the group was asked to identify internal industry-specific structural barriers, such as the existence of clear procedures or tracking mechanisms within companies to handle requests. Finally, the participants reflected on situations in which expanded access may not be appropriate, or where regulatory barriers or liability concerns may hinder expanded access. This paper reflects the authors’ observations and assessment of the internal and external landscape, based upon information provided by the meeting participants.

Laying the Groundwork with Shared Experiences

The FDA allows companies to provide drugs and charge individual patients that do not meet the enrollment criteria for clinical trials geared towards regulatory approval through expanded access programs.[iii] These programs are meant to provide the drug directly to treat the patient’s condition, rather than having the primary goal of collecting efficacy or detailed safety data in support of approval. Before 1987, the FDA lacked formal recognition of expanded access, although investigational drugs were provided informally.[iv] Since then, the FDA has instituted novel classes of individual INDs so that a company sponsor or licensed physician can legally obtain treatment access from the FDA to provide a drug while it is still in the approval process.[v] Essentially, this provides companies a legal exception from the law to ship unapproved drugs across state lines, and if they desire, to charge for them. These INDs are designed solely for the potential benefit of desperate patients and not intended to formally collect safety or efficacy data that could potentially inform a regulatory decision, but can have regulatory impact, nonetheless.

At the outset, several participants objected to the term “compassionate use,” since it introduces inherent value decisions, can emotionally charge discussions, and does not recognize that there may be valid and ethically appropriate reasons for denial. The generally agreed upon term “expanded access,” is used throughout this paper. (One participant suggested the term “early access.”) Ideally, the term would make it obvious that this is access to an unapproved drug, in order to temper expectations of favorable results. Somewhat confusingly, the FDA uses the terms “expanded access,” “access,” and “treatment use” interchangeably to refer to the use of a drug, and of which none clearly identify the stage of development.[vi]

Participants shared numerous examples of requests for expanded access and explained that their companies handle anywhere from a handful to several hundred requests per year. The following selected stories illustrate the wide range of experiences and situations that companies encounter when navigating the complex decisions involved in administering an expanded access program. Several other examples were discussed and the specific participants expressed that they would be willing to share these particular examples publicly.

Chimerix, a 54-employee company based in Durham, North Carolina, is developing the drug brincidofovir and previously had created an intermediate expanded access protocol for the drug (CMX001-350) as encouraged by the FDA following over 200 emergency INDs granted for access to brincidofovir.[vii] One such case was for an armed services member with previously undiagnosed acute myelogenous leukemia who developed life-threatening vaccinia infection following smallpox vaccination in 2009.[viii] The patient received the drug from Chimerix through an emergency IND. After two years, the company had not secured FDA approval for the drug and eliminated expanded access in February 2012 in order to focus on studies which would inform a regulatory decision. In March 2014, Chimerix originally rejected an emergency IND request for 7-year old, Josh Hardy, who was critically ill from disseminated adenovirus infection after bone marrow transplantation. A highly public social media campaign targeted the company in the wake of this decision, and the experience was traumatizing for many of the employees. Following discussion with the FDA, Chimerix initiated a new clinical trial for the treatment of adenovirus infection in order to collect safety and efficacy data to support an NDA submission. Hardy was the first patient enrolled in the clinical trial, and his family reported through several media outlets that he recovered from the adenovirus infection and was discharged home.

One biopharmaceutical company representative described receiving a middle-of-the-night telephone call directly at home, with an emergent, time-sensitive request for an experimental therapy for a critically ill child with a rare acute disease in a foreign pediatric intensive care unit, where regulatory standards were different from those in the U.S. The ideal pediatric dosage was unknown, and only limited safety data and clinical details were available. Urgent efforts were made to gather more information and the request was approved, but despite these efforts the patient did not survive.

Bristol-Myers Squibb began a clinical trial for a cancer drug several years ago.[ix] A woman with pancreatic cancer enrolled in the trial and saw that her tumor was no longer growing. After the 3.5 year trial, the study closed because the drug was deemed ineffective for all other patients and was not approved for further development. However, the company continued to provide the drug for the one woman for whom the drug was effective through a single patient IND for an additional 9 years.

To demonstrate the volume of expanded access requests, one participant showed several messages on his mobile device during the half-day discussion, directly from patients who had located his email addresses through on-line searches, to plead for expanded access to an anticancer therapy.

Development of Structural Principles: The Four A's 

Broadly, no specific industry-wide consensus on expanded access procedures exists. As a result, there is significant variation in company policies and procedures. During this phase of discussion, participants shared their own company strategies and suggested possible areas of consensus that might form the basis for shared principles and industry-wide practices. These suggestions fell into four categories, which we termed the 4 “A’s”: Anticipation, Accessibility, Accountability, and Analysis (see Figure 1).

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First, the group agreed that large and small companies should anticipate the need for and creation of expanded access programs when developing drugs expected to generate expanded access requests and as part of the drug development plan. This is particularly important for drugs that might be considered for priority or breakthrough designation during FDA approval. In these cases, companies should strongly consider developing a written expanded use policy with clear guidelines for inclusion and exclusion, which would also feature a defined review process, clear decision making criteria, and a defined time frame for response to requests. This also allows companies to plan for the demands that may be placed on their supply chain and staff resources to ensure sufficient supply for investigational and expanded use purposes. Identifying a decision maker within each company and for each disease area/product will also help patients or physicians reach the appropriate contact when requesting a drug, as well as assist the company in gaining expertise in responding to these requests. For example, one large company identifies one point of contact for all expanded access requests regarding each product and posts that individual’s contact information on the website.

In the early stages of drug development, supplies of investigational drugs are extremely limited. This is often because the technically-challenging process of optimizing drug product manufacture takes a considerable amount of time. Low yielding manufacture batches are not uncommon at the early phases of research. Some companies do not approve expanded access requests because they do not have enough of the drug in stock to supply these external requests and meet the needs of investigational study patients and individuals participating in clinical trials, an issue which may be particularly acute for biologics. Smaller companies may have more resource constraints, such as inadequate staff to manage requests or supply chain and logistics issues. One representative suggested that if a company had early transparency from regulators about the final numbers of subjects they would be willing to accept to achieve drug development milestones, it would make it much easier for the company to feel less reservation about its drug supply. (It may be beneficial for companies to analyze their financial ability to provide drugs potentially at no cost or when there is not a large enough supply, ideally in a transparent manner.)

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Once an expanded access policy is anticipated and developed, the second key principle the group identified was making the policy accessible to all individuals who may qualify. First, for patients, with guidance from their treating physician, the company making the drug should always steer the patient to enter a clinical trial (if they meet eligibility criteria). If the contacted company cannot accommodate the patient, they should steer them to other open trials if possible, even if sponsored by another company. Many of our participants noted that this already occurs.

The group was particularly cognizant of the disparity in access to drug companies and their expanded access programs: patients with savvy social media strategies are more likely to succeed in navigating across organizational constraints than without similar sophistication. The group believes that increased accessibility would assist in making opportunities for expanded access more equitable. In addition, these policies could help educate patients and physicians about submitting legitimate expanded access requests and help decrease the costs of reviewing inappropriate requests on the company (for example, if there are other proven therapies or the situation is not life threatening).

If the patient is ineligible for a trial, the patient should be able to easily access the written expanded access policy online. For example, both large and small companies like Pfizer, Bristol-Myers Squibb, Shire, and Merck post their expanded access policies on their websites, though the terminology may in some cases be complex. In addition, Janssen has developed a video explaining their policies in non-technical terms. Ideally, such policies should be available in some web based or public facing platform to both patients and physicians and written in a clear manner that is jargon free and accessible to individuals at various education levels. Most participants felt strongly that requests for expanded access should originate from a medical provider, not from a patient, since expertise is needed to first screen appropriate candidates. This is consistent with current FDA regulations for an IND, in which a physician or qualified medical expert must sponsor an IND or serve as an investigator under an existing IND for expanded access.

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Third, companies should have accountability to the requesting party for expanded use requests that they receive and review them within a specified, transparent amount of time. If the request could not be approved, the company should consider clear communication and provide an explanation of why the request was turned down. In these cases, some participants suggested that the company might also consider instituting an appeals process by which a patient can receive an additional review if not approved, potentially from a non-binding third party such as an independent, multidisciplinary body or a regulatory agency like the FDA. (Two participants, however, were uncomfortable with any third party review.)

Companies can track expanded access requests in order to guarantee that the patient has received follow-up and that the communication loop has been closed. One large pharmaceutical company conducted an internal audit of its expanded access procedures and found that the largest problem was that employees did not know where to find information. Another representative noted that it is important to maintain consistency across patients and the process of requesting a drug.

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The final principle would encourage companies to release timely analysis of data from expanded access patients. In addition to tracking communication, companies should keep a database of the number of requests and outcomes, in a manner that doesn’t slow getting drugs to needy patients rapidly. One company refined its internal tracking tools to determine who was requesting drugs, for what conditions, and where they lived. Where possible, companies might be encouraged to share anecdotal or preliminary safety or efficacy data from expanded access in peer-reviewed or other refereed venues in a prudent time frame following collections, if this is available or known. This is not always possible, because emergency INDs do not require provision of safety or outcome data to the company.

There are several challenges associated with operationalizing this in the current model, namely the appropriateness of anecdotal data, the level of detailed safety and efficacy data currently available through expanded access, suitability for publication, and funding for these activities in the current budget climate. One potential approach to address this is funding from federal or state regulatory agencies or payers for the reasonable costs of follow-up and reporting outcomes.

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Regulatory Considerations

The participants then discussed the types of risks, including regulatory and financial, that may affect companies’ expanded access policies. When a company is considering expanded access requests, they consider the risks-benefits of providing the drug outside of a clinical trial as well as the potential for any regulatory issues in an era of litigation and an increased threshold for demonstration of safety. While a company’s provision of a drug for expanded access is voluntary, the FDA does require the company to collect and report safety data. Notably, none of the representatives felt that the FDA is a major regulatory barrier to processing and approving expanded access requests once the sponsor has reviewed the request, assessed the benefit-risk, and determined the request meets FDA requirements and evidentiary standards. In addition, the attendees felt that adverse effects and related liability risk were not of particular concern given that the drugs are assessed on a risk-benefit analysis.

However, companies that make drugs in particularly limited markets with small numbers of patients (for example, for unusual diseases with less than 200,000 patients nationwide which may justify a special designation called “orphan status”) may be more concerned about restrictive labeling if an unusual adverse event occurred even in one or two patients during expanded access of an orphan or small market therapy. However, there is no data of which participants were aware and no public reports that an adverse event during expanded access has harmed regulatory approval.[x] The group opinion was that that safety data would be available eventually in any event and an FDA “safe harbor” provision would not necessarily affect companies’ willingness to accept more requests for expanded access. A final concern was that there is no regulatory mechanism to consider data from expanded access in the evidence generation process for approval.

An Expanded Role for the FDA

While the FDA may not serve as a strong barrier to expanded access, the group considered strategies to promote equitable and fair access. For example, some argued that the breakthrough or priority review categories for FDA review might identify products that could have high potential for expanded access requests. This designation expedites “the development and review of drugs for serious or life-threatening conditions.”[xi] As of mid-April 2014, the FDA had received nearly 180 requests for breakthrough designation, with 44 requests granted.[xii] By hastening the drug development process, the FDA has already begun to bring drugs that have a reasonable expectation of benefit to the market faster. In order to receive breakthrough therapy designation, current legislation might be amended so companies could be asked to provide evidence that the 4 A’s are being followed in some capacity.

The FDA might also assist companies in establishing expanded access programs during open clinical trials in two main areas: process and capacity building. First, in terms of process, the FDA could be asked to create a defined path for regulatory approval with provisions that would encourage companies, both large and small, to include plans for expanded access programs when developing a drug. While FDA’s draft guidance related to INDs notes that larger expanded access programs could threaten enrollment in clinical trials,[xiii] and some participants agreed that this was a significant issue, not all companies have had difficulties enrolling patients in both clinical trials and expanded access programs. For example, one large pharmaceutical company left a Phase 1 clinical trial open for a promising therapy while concurrently enrolling individuals who didn’t qualify for open clinical trials into an expanded access program, without appreciable leakage of enrollees in their advanced phase trials that might affect the key development pathway.

Second, the FDA could support convening around capacity building and sharing best practices with companies. With the understanding that there are many small biotechnology or pharmaceutical companies with limited budgets and staff, the FDA could foster a partnership of large and small companies. This partnership could be achieved by convening meetings where companies share their experiences in creating and sustaining expanded access programs. This could be supported by creating a database for these shared ideas, as well as any expanded access data that can be made legally available, such as how many requests are granted or patient outcomes.

To ensure equitable, consistent, and transparent review of requests, some companies suggested the use of an impartial external advisory board. Similar to an unbiased review from an institutional review board (IRB), this committee could have an advisory or decision making function. Companies with supply constraints may feel that if they cannot give the drug to everyone who requests it, then they should give it to no one. This committee could help the company triage the patients who would benefit the most, and would be protected from liability.

Next Steps

The most efficient and equitable way to make new effective treatments to the largest number of needy patients is regulatory approval, accelerated or otherwise, following successful demonstration of efficacy and safety for a given indication in a specific population. Until that process is complete, access to an experimental therapy is by definition an additional risk, as the agreed necessary safety and efficacy have not yet been demonstrated. True informed consent in this setting is difficult to obtain (i.e. studies have shown that severely ill patients, such as those with life-threating circumstances requesting expanded access, had less retention of information discussed in the informed-consent process and less-clear understanding of the risks of therapy compared to healthier patients[xiv]).

One position companies and regulators can consider is that the default answer to expanded access requests should be affirmative, unless there are compelling reasons for not approving requests to patients with life-threatening illnesses. (Such reasons, for example, might include limited treatment supply or lack of reasonable expectation of benefits versus risks.) Such a position would require, however, that there be broader industry, clinician, regulatory, and patient advocacy agreement of shared principles. This paper outlines the experiences, structural principles, and regulatory considerations of a small group, but further meetings may convene a broader group of stakeholders to build upon these concepts. Such consensus-based approaches might lead to durable systems that meet the needs of desperate patients who have run out of options—while allowing innovation to continue to benefit those who may come afterwards.

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Acknowledgements: We are grateful for the participation of the following representatives in the roundtable: Jeff Allen (Friends of Cancer Research), Michelle Berrey (Chimerix), Renzo Canetta (Bristol-Myers Squibb), Anne Cropp (Pfizer), Joseph Eid (Merck), Aaron Kesselheim (Harvard Medical School), Howard Mayer (Shire), Jeffrey Murray (FDA), Lilli Petruzzelli (Novartis), Amrit Ray (Janssen), and Robert Truog (Harvard Medical School). We thank Mark McClellan (Brookings Institution) for helpful discussions of this topic and comments on the manuscript, and to the Richard Merkin Foundation for support. The views and opinions expressed in this article were interpreted and organized by the staff of the Brookings Institution. They do not necessarily reflect the official policy or position of any individual roundtable representative, their companies, or their employers.

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References

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• The Four A's of Expanded Patient Access

       

It is well recognized across the health care industry that the major goals of the Affordable Care Act (ACA) include not only expanding health insurance coverage, but also improving the quality of care and the patient health care experience. A key strategy in achieving these goals is improving the efficiency and delivery of care through innovative financing mechanisms and new delivery models, such as Accountable Care Organizations (ACOs), patient-centered medical homes (PCMHs), bundled payments for acute and post-acute care, and population-based models that aim to improve the health of entire communities. These alternative models emphasize quality and outcomes, while moving care away from the traditional and predominant method of fee-for-service (FFS).¹

The Frontline Work Force
Many conversations focused on the implementation of these models typically emphasize the role of physicians. However, the success of these models relies heavily on the support and manpower of a multidisciplinary team; particularly "frontline health care workers." Frontline workers may include medical assistants (MAs), medical office assistants, pharmacy aides, and health care support workers. Oftentimes, they provide routine, critical care that does not require post-baccalaureate training.²

For example, MAs can play an important role in a medical home model. Upon discharge from the hospital, frontline workers can provide direct outreach to patients that are at high risk for readmission, and discuss any lingering symptoms, worsening of conditions, or medication issues. If necessary, MAs can assign a high-risk patient to a social worker, care coordinator or nurse.³

In a team care environment, frontline health care workers are essential for taking over routine tasks and allowing physicians to employ their specialized skills on their most complex patient cases, which allows all team members to work at “the top of their license”.⁴ Frontline workers can also bridge the gap between patients and a multitude of providers and specialists; help deliver care that is culturally and linguistically appropriate; and provide critical patient education and outreach outside of regular office visits. 

A Workforce in Need of Reform
While team-based care is widely accepted as an industry norm, its current infrastructure is not well-supported. While the frontline workforce represents nearly half of all health care professionals, they are markedly underpaid, underappreciated, and lack formal training to transition into higher-skilled and/or higher paid positions.

A recent study by the Brookings Metropolitan Policy Program “Part of the Solution: Pre-Baccalaureate Healthcare Workers in a Time of Health System Change” demonstrates this glaring disparity between current frontline workforce investment and its value to health reform efforts. The study analyzes the characteristics of the top ten ‘pre-baccalaureate health care workers’ (staff that holds less than an associate’s degree) within the US’s one-hundred largest metropolitan areas (see Table 1).

Table 1: Top ten pre-baccalaureate health care workers in the US’s top one-hundred metropolitan areas

Personal care aides represent a striking example of the underinvestment in frontline workers. The study shows that personal care aides have the lowest levels of educational attainment compared to their peers (32% have no more than a high school diploma), and have the lowest median earnings ($20,000 annually). Meanwhile, The Center for Health Workforce Studies’ (CHWS) estimates that this profession is among the top three national occupations with the highest projected job growth between 2010 and 2020. They are also in highest demand: between 2010 and 2020 there will be an estimated 600,000 personal aide vacancies.⁵ According to this study, MAs are also among the least educated and lowest paid frontline professions. Ninety percent lack a bachelor’s degree and a significant share (29%) are classified as ‘working poor.’

Policy Solutions

A number of policy solutions can be applied to enhance the frontline worker infrastructure. Our recommendations include:

Invest in front line health care workforce training and education. Case studies from a recent Engelberg Center toolkit, outlines how providers are training their frontline workforce to master fundamental skills including care management, patient engagement, teamwork, and technological savviness.

For example, a New Jersey ACO carried out clinical transformation by investing in new frontline staff, and by redefining the role of medical assistants to include health coaching. The return on investment for employers is potentially large. After injecting a substantial initial investment into this project, this ACO saw a 12.3% decrease in net health care costs within the first year of the program’s implementation; as well as significantly improved efficiency, quality of care and patient experience. As the educational curricula for frontline professions are largely variable, more attention should also be spent on the quality of educational content to train these occupations, as well as on developing an understanding of how delivery systems are augmenting traditional educational curricula.

2. Active inclusion of frontline health care workers in payment reform. Although the services of frontline health care workers are beginning to play a role in new payment models, typically frontline staff does not benefit directly from any bonus payments or shared savings incentives. However, their increasingly valuable role in the care team may warrant allowing frontline health care staff to be included in the receipt of shared savings and/or bonus payments based on the achievement of specifically tailored performance and outcomes targets.

The increasing demand for frontline health care workers, driven in part by the ACA’s payment and delivery reforms, will likely spell out a brighter future for these occupations, whose services had routinely been undervalued and underpaid. Future policy efforts should be focused on extending educational grants that have been aimed at primary care and nursing to frontline workers, as well as considering dedicating portions of shared savings to enhancing the earning potential for frontline workers. Some efforts, such as the U.S. Department of Labor’s recent rule to grant wage and overtime protections to home health and personal care aides, are early suggestions of a shift toward greater respect and empowerment for these occupations. It is yet to be seen what effects the continuation of such efforts will have on their high projected attrition trends.

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Introduction

During 2006, the United States saw a considerable upswing in the number of new mortgage defaults and foreclosure filings. By 2007, that upswing had become a tidal wave. Today, national homeownership rates are falling, while more than a million American families have already lost their homes to foreclosure. Across the country, boarded houses are appearing on once stable blocks. Some of the hardest hit communities are in older industrial cities, particularly Midwestern cities such as Cleveland, Detroit, and Indianapolis.

Although most media attention has focused on the role of the federal government in stemming this crisis, states have the legal powers, financial resources, and political will to mitigate its impact. Some state governments have taken action, negotiating compacts with mortgage lenders, enacting state laws regulating mortgage lending, and creating so-called “rescue funds.” Governors such as Schwarzenegger in California, Strickland in Ohio, and Patrick in Massachusetts have taken the lead on this issue. State action so far, however, has just begun to address a still unfolding, multidimensional crisis. If the issue is to be addressed successfully and at least some of its damage mitigated, better designed, comprehensive strategies are needed.

This paper describes how state government can tackle both the immediate problems caused by the wave of mortgage foreclosures and prevent the same thing from happening again. After a short overview of the crisis and its effect on America’s towns and cities, the paper outlines options available to state government, and offers ten specific action steps, representing the most appropriate and potentially effective strategies available for coping with the varying dimensions of the problem.

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