Editor's Choice, October 2012: Piloting low-cost health care; results and revenues so far
Another case study – yawn? An inside look at the revenue structure and productivity dilemmas of a 2-year-old healthcare business? Well that's more exciting, particularly if you too are in the healthcare sector. Or perhaps not in health, but in IT, mining, logistics, or spaza retail shops, all or which have a clear current or potential role in the evolution of low-cost healthcare.
Primary Health Care at the Base of the Pyramid: RTT’s Unjani Clinic Model is not a glossy report and may reach a narrow audience. But it turned out to be highly relevant for another inclusive business we are supporting, and well worth sharing with Hub members. A B4D Pathfinder Case Study, it is a softly-spoken inside look at an emerging model that aims to provide primary healthcare for South African families that live on around US$250-500 per month and lack access to affordable health care.
The model is well worth a look for several reasons. I was immediately struck that this is not a pharmaceutical company, but a leading logistics company. But soon that made sense. In meeting basic health needs of an undeserved populations, the major issue is not pharmaceutical expertise, but how to boost access for those who have unacceptable travel time and waiting time at limited public health points: families may travel far, queue from 4am, and get sent away unseen at 16.00. As a logistics company, RTT has medical subsidiary, which already services the health sector and reaches 8,000 delivery points a day. So is better placed to tackle the challenge of distribution and access.
In RTT’s model, primary health care is provided by an Unjani Clini, staffed by a registered Primary Health Care nurse. The aim is for these nurses to become franchisees - either owning or leasing the clinic. Thus selection criteria are based not only on a nursing qualification but also on interest in developing administrative and business skills. This model is not unique to RTT, but is a critical part of current attempts to roll out low-cost healthcare to marginalised markets, including the HealthStore initiative, supported by BIF in Zambia. It is a perhaps a para-professional version of the ‘village entrepreneur model’ on which so much of the future of inclusive business depends.
A second feature is the integration of Spaza shops (informal retailers), as outlets for basic over-the–counter medicines, linked to a clinic less than 5km away. A nice example of how inclusive business integrates into the core social fabric of a community in order to sustain success at the Base of the Pyramid.
Then there is the productivity challenge. How to reach sufficient scale and productivity to break even and scale the model? With consultations providing the main source of revenue, increasing consultations per day appears an obvious solution. Using IT for automation has helped achieve this, and so has adjusting opening hours to fit with local usage. But over incentivising staff to boost this metric would conflict with quality and reputation. So other measures – a loyalty card and other sources of revenue – are being introduced. The revenue model – detailed with welcome frankness - shows a net loss of around 4,000 Rand being replaced by small net gain in year 3 in the existing pilot clinic at Etwata (Gauteng Province).
Social marketing is identified as critical to success - reaching out to churches, schools and local leaders. This echoes experience well beyond the health sector – and indeed parallels experience in Oando’s intiative to develop affordable liquid petroleum gas stoves, supported by BIF in Nigeria.
The report is recommended, because all of this is detailed with clarity and brevity, with quiet reporting. No trumpets sounding.
RTT is piloting its approach at Etwata, developing and adapting the model so it can be scaled. The report documents the model and lessons so far. The authors, Pierre Coetzer and Nicolas Pascarel, seem to be both on the 'inside' and sharing with us on the 'outside.'
The ethical problems that are specific to the health sector are not ignored: the challenge posed that health care should simply be free and not commodified. Even though this clinic is clearly meeting health needs in the yawning gap between public and private provision, the tensions are recognised and these may limit potential partnerships.
The health sector was not the first sector in inclusive business, perhaps because of the ethical concerns. But it is now present at every turn: present among winners at the G20 challenge, evident in the inclusive business portfolio of the International Finance Corporation, of the Business Innovation Facility, and Innovations Against Poverty, and Business Call to Action, a clear sector of innovation in the ‘shared value’ strategies of multinationals just outlined by FSG (another excellent report and candidate for Editor’s Choice), featuring on u-tube (see how Ehealthpoint works via telemedicine) and a sector that is taking all the classic challenges of inclusive business, around social marketing, last mile distribution and accessibility, to adapt and evolve rapidly at the Base of the Pyramid.