Sustainability Background Document: Fostering Healthy Businesses


Published on

Published in: Health & Medicine, Business
  • Be the first to comment

  • Be the first to like this

Sustainability Background Document: Fostering Healthy Businesses

  1. 1. Innovation Working Group A Report of theTask Force on Sustainable Business Models in Health DRAFT FOR COMMENT April 25, 2012 [1]
  2. 2. Fostering Healthy Businesses: Delivering Innovations in Maternal and Child Health Executive SummaryProblemPut simply, the world is not on track to meet Millennium Development Goals (MDGs) 4and 5. While there has been noteworthy progress in reducing maternal and childmortality since the declaration of the MDGs in 2000, more than 350,000 women and 3.5million infants continue to die each year – nearly all from preventable causes. Thesedeaths are concentrated in the developing world and more than half occur in just sevencountries: Afghanistan, China, the Democratic Republic of Congo, Ethiopia, India,Nigeria and Pakistan.To accelerate progress and keep MDGs 4 and 5 within sight, governments, donors,businesses and NGOs cannot act alone. We need new models of collaboration amongthe public and private sectors. We need to think more creatively about new ways todraw on all available expertise and resources to provide health care to those in greatestneed. And, as this report argues, we need to tap into the vast potential of private healthbusinesses to deliver high-quality, affordable and accessible care to those at highestrisk of maternal and child mortality.The challenge, however, is to ensure scale-up of these health businesses as healthybusinesses – ones that are not dependent for their survival solely on the good intentionsand one-off grants of donor governments, multilateral agencies and private foundations.The Every Woman, Every Child Innovation Working Group (IWG) has set out tounderstand the complexities and challenges in achieving financial viability and torecommend ways to overcome barriers to growth and sustainability for companiesdesigned to provide needed interventions for improved maternal and child healthoutcomes in lower- and middle-income countries.The Emerging and Existing Private Health SectorThe past few years have seen an unprecedented burst of activity among entrepreneursand socially-minded innovators seeking to improve health for some of the poorestpeople in the world. Their businesses range from direct delivery of care —such as low-cost hospitals and franchise clinics —to ones that facilitate care—such as emergencytransport services and mobile technology solutions.Collectively, these businesses comprise an emerging group in the global health anddevelopment community worth watching closely to identify how learn from their model, [2]
  3. 3. enhance their success and fulfill their potential to help reduce maternal and childmortality.At the same time, it is critical that we not overlook the vibrant private healthcare systemthat already exists – and is growing rapidly – in many lower- and middle-incomecountries throughout the world. In fact, more than half of people in Africa seek care fromprivate providers; and this rate is even higher in Latin America and South Asia, whereprivate providers are estimated to deliver services to 66% and 80% of the population,respectively.The private healthcare system – a mélange of independent physicians, nurses andmidwives, together with private clinics, hospitals, pharmacies and health shops – hastremendous reach into high-need communities. They are based in the communities theyserve, have many touch points with families and, as businesses, have learned how toestablish trust and build customer loyalty. The frequent criticism of private health care,however, is that it is unregulated and that quality of care is poor.Task Force on Sustainable Business Models in HealthGiven its reach and ability to innovate, private health care has an important role to playin supplementing public health systems and supporting governments’ efforts to reachthe MDGs. But these businesses need support to help them reach scale and have areal impact in saving the lives of women and children.This Task Force on Sustainable Business Models in Health —commissioned by theIWG—has been charged with exploring the landscape of health businesses servingpoor women and children in lower- and middle-income countries to understand what itwill take for such organizations to reach scale and yield long-term improvements inhealth.Task Force members brought a wide variety of practical experience to the work (TaskForce members are listed on page 4; see the roster of Reference Group members in theAnnex). They harnessed their deep knowledge and consulted with dozens of experts inglobal health and development to learn about promising new business models; creativeways by which longstanding businesses are reaching poorer populations; and thechallenges all these businesses continue to confront as they try to grow, to survive and– most importantly – to thrive.Key FindingsWhat we heard consistently is that the leading barriers today’s businesses face fall intothree main categories: access to working capital; creating demand for health productsand services; and designing the right incentives to serve the poor in a sustainable way. [3]
  4. 4. Perhaps the most striking finding – which, in retrospect, seems obvious – is thatbusinesses striving to reach people at the bottom of the pyramid face the sameconstraints and opportunities as any other businesses. The financial, organizational andleadership challenges of managing a successful business are similar, whether acompany is trying to serve people who are very poor and lack basic health care orserving a wealthier and healthier customer base. All still struggle with securing workingcapital, identifying customers in a competitive marketplace, generating adequate cashflow, hiring and retaining a skilled workforce, optimizing operational efficiencies,sourcing and managing inventory and supply, ensuring and improving the quality ofproducts and service delivery, producing convincing outcomes and ultimately providingdesired products reliably to customers at affordable prices that ensure the company’ssolvency.RecommendationsThe Task Force’s actionable recommendations center on three complementary areas:changes in policy, financing and incentive schemes to stimulate the expansion of high-quality, accessible and equitable maternal and child health care:Incentives to Reach the PoorGovernments and businesses should develop creative incentives jointly to encouragethe use of health-related products and services and expand access to quality healthcare among those with greatest need. Governments are experimenting withperformance-based incentives, voucher programs, conditional cash transfers, subsidiesand insurance. Similarly, businesses are testing out cross subsidies, no-frills modelsand medical savings programs to attract and retain a diverse customer base to ensuresustainability.Investment OpportunitiesTraditional financing for maternal and child health has typically been driven by the donorcommunity. As we look toward more sustainable models, it will be important to considerhow to channel resources in a way that spurs entrepreneurial activity and achievesdesired health outcomes on a broad scale. Financial cooperatives, social venture capitalfunds, local development banks and other investment mechanisms are becoming morepopular. We need to evaluate and continue to refine the most effective ways to supportthe incubation and scale-up of health enterprises that serve the poor.Ensuring an Enabling Environment for Health BusinessesGovernments need to engage businesses more proactively in their effort to improvematernal and child health outcomes. By forging strategic public-private partnerships,implementing commerce-friendly policies and enacting regulatory measures andregistration requirements to weed out substandard businesses, governments can [4]
  5. 5. advance the ability of private health care to make quick and long-lasting positivechanges in health – and thus expand on and reinforce what government can achieve onits own.Moving AheadThe IWG is committed to mobilizing its multi-sector membership to carry out theserecommendations, working closely with governments, financial institutions, investmentfirms, multilateral organizations, bilateral donor agencies, healthcare companies,business associations, networks of knowledge-generating centers (often university-based) and others. Our goal is to catalyze a wide-ranging dialogue on innovativemethods to establish and develop new enterprises to improve maternal and child healthoutcomes in lower- and middle-income countries; to encourage experiments in a widevariety of settings; and to disseminate results broadly so that lessons learned will sparkadditional innovations.Special thanks to our Fellow Task Force members and the many experts from NGOs,investment firms, donor agencies, UN organizations, academic institutions, consultingfirms and, most importantly, health businesses, who graciously shared their experienceand insights on the key ingredients for healthy businesses – those that will savewomen’s and children’s lives today and for years to come.Naveen Rao Frederik KristensenLead, Merck for Mothers Senior Advisor, Norwegian Agency for Development CooperationTask Force MembersIain Barton, CEO, RTT Health SciencesStefan Germann, Director, Partnerships, Innovation & Accountability, Global Health and WASH Team, World Vision InternationalBright Simons, Founder and President, mPedigree NetworkNarayan Sundararajan, Chief Technology Officer, Grameen-Intel Social Business Ltd. & Program Manager, Intel World AheadWendy Taylor, Senior Advisor, Innovative Finance and Public-Private Partnerships, USAID [5]
  6. 6. Contents I. Executive Summary II. Introduction [still to come] a. Context of maternal and child health b. The Every Woman, Every Child Innovation Working Group c. Problem Statement d. Task Force on Sustainable Business Models e. Objective of reportIII. Sustainable business a. Working definition of “sustainable business” b. Key elements of sustainable business [STILL TO COME] c. The role of sustainable business models in delivering health care to women and children at the BOPIV. On the Path towards Sustainability – Summary of Learnings a. Demand i. Finding: Demand identification precedes solution delivery ii. Challenge: Converting need into demand iii. Case study: LifeSpring Hospitals (India) b. Reaching the BOP i. Finding: Businesses and governments can enhance access through cross-subsidies, performance-based incentives and demand-side financing mechanisms ii. Challenge: Balancing affordability with sustainable pricing to reach the BOP iii. Case study: Greenstar Social Marketing (Pakistan) c. Partnering i. Finding: Focusing on core competencies while partnering around ancillary areas enables enterprises to retain focus while building an ecosystem of care ii. Challenge: Leveraging existing private-sector channels for healthcare delivery and identifying nontraditional opportunities to collaborate iii. Case study: Changamka MicroHealth (Kenya) d. Local context [6]
  7. 7. i. Finding: Sustainable business models must be contextualized and locally-driven ii. Challenge: Leveraging local knowledge, human resources and existing networks iii. Case study: Living Goods (Uganda) e. Scaling up i. Finding: Governments are essential to catalyzing market-based models for health care and supporting scale-up ii. Challenge: Establishing an enabling policy environment iii. Case study: Ziqitza Health Care (India) f. Technology i. Finding: Technology alone may not be the solution to improving health, but it is a vital tool ii. Challenge: Breaking the quality perception barrier iii. Case study: Click Diagnostics (Botswana, Bangladesh) g. Measuring impact i. Finding: There is a need to evaluate the impact of businesses aiming to deliver care at the BOP ii. Challenge: Until we are able to measure impact, it will be difficult to know what works and where to encourage scale-up iii. Case study: RedPlan Salud (Peru) h. Doing Business i. Finding: The same challenges that apply to traditional businesses also apply to “sustainable” businesses that seek to deliver maternal and child care at the BOP ii. Challenge: Obtaining capital, determining appropriate legal structure and finding and retaining talent iii. Case study: eHealthPoint (India)V. RecommendationsVI. Annex a. Reference Group b. Full case studies [7]
  8. 8. Every Woman, Every Child Innovation Working Group Task Force on Sustainable Business Models1. “SUSTAINABLE BUSINESS”Working Definition of “Sustainable Business”The Task force on Sustainable Business Models defines “sustainable business” to be amarket-based, pro-poor model that provides low-income consumers with critical goodsand services in a financially-sustainable way.Key Elements of a Sustainable Business[STILL TO COME]The Role of Sustainable Business Models and Market-Based Solutions inDelivering Health Care to the BOPTraditionally in most low- and middle-income countries (with the notable exception ofIndia), delivering health care services to the BOP has been primarily the role ofgovernments and NGOs. Over the last two decades, the private sector has played anincreasingly larger role in the provision of both health care delivery and health carefinancing. While private sector players are often thought of as large hospital chainscatering to the rich, a number of market-based models focusing on the poor have grownglobally. These include low-cost hospitals, health care rural kiosks, micro-franchisingorganizations, and many other disruptive models that aim to increase accessibility tohealth care for the BOP. Using a market-based approach, these organizations aimtowards financially sustainability, with the revenues from their goods and servicescovering the cost of operations and capital expenditure. This report aims to identifylearnings across the various models, framed around common challenges thatsustainable businesses face. [8]
  9. 9. II. On the Path towards Sustainability – Summary of Learnings1. DEMAND“Build it and they will come?”The key salient feature that sustainable businesses share is a pro-poor business modelfocused on providing critical goods and services to low-income individuals in afinancially-sustainable way. The key to sustainability and scale, of course, is a strongcustomer demand. However, in providing these pro-poor goods and services, it can beeasy to confuse need with demand. As described by Monitor Inclusive Market’s“Emerging Markets, Emerging Models” report: “The most common mistake among unsuccessful market-based solutions is to confuse what low-income customers or suppliers ostensibly need with what they actually want. Many enterprises have pushed offerings into the market only to see them fail. People living at the base of the economic pyramid should be seen as customers and not beneficiaries; they will spend money, or switch livelihoods, or invest valuable time, only if they calculate the transaction will be worth their while.”1One example of a commercial failure targeted the Base of the Pyramid (which laterturned into a philanthropic success) is Procter & Gamble’s PUR, which convertscontaminated water to drinking water and was developed in partnership with theCenters for Disease Control and Prevention. Three years of test marketing ultimatelyresulted in a low return on investment and weak penetration rates. As Dr. Erik Simanisfrom Cornell University’s Johnson School of Management, states:“How did all the market research go wrong? There wasn’t a market there. Yes, whenasked, villagers told the researchers that they needed clean water and would beprepared to pay for it. But when it came time to buy and use the product, the villagersdecided, for whatever reason, that it didn’t make sense in their lives and simply wasn’tworth the effort.”2Indeed, as is often the case in selling to consumers at the base of the economicpyramid, sustainable businesses need to begin with the basics: converting need todemand and creating the market. Organizations fail when they see a need and assumethe market is there to address this need.Why traditional market research often does not work1 Karamchandani, Ashish, Michael Kubzansky and Paul Frandano. “Emerging Markets, Emerging Models: Market-Based Solutionsto the Challenges of Global Poverty”, Monitor Inclusive Markets, March 2009.2 Simanis Erik. “At the Base of the Pyramid: When selling to poor consumers, companies need to begin by doing something basic:they need to create the market,” Wall Street Journal, October 26, 2009. [9]
  10. 10. Finding: Demand identification precedes solution deliveryThe most successful businesses start with a thorough understanding of consumers and theirspending habits: their needs, demands, perception of quality, ability to pay, access to financesand how they make decisions about their health care. Successful businesses capitalize onexisting demand, routines and spending habits; and where these do not exist, successfulbusinesses appropriately promote their product or service in a context and channel that fits theirtarget market. Interviews and focus groups are common tools that sustainable businesses have utilized from traditional marketing to better understand their customers. Yet as Henry Ford famously quipped: “If I had asked people what they wanted, they would have said faster horses.”3 Steve Jobs agreed: “It’s really hard to design products by focus groups. A lot times, people don’t know what they want until you show it to them.”4 The same is true across all income levels, but the challenge of uncovering long-held assumptions is exacerbated at the base of the pyramid. Let’s return to Procter & Gamble’s PUR. As Dr. Erik Simanis points out: “The development team did everything you’re supposed to do when you enter a new market, seeking out input from thousands of low-income consumers and visiting the homes of slum dwellers and villagers to understand their needs.”5 In the standard model of investment in human capital, individuals invest in a health product or service if the expected benefits outweigh its cost.6 Yet there are often many “invisible” costs at play, often associated with long-held assumptions, that traditional focus groups and community visits often miss. In the case of PUR: “Consider some of the changes a villager would need to make PUR part of her daily routine. She might have to reassess age-old folk knowledge and home remedies and learn about bacteria. Likewise, she might have to jettison long-held beliefs about what clean water looks and tastes like...And the time spent buying the product might interrupt an informal weekly chat with friends. All those disruptive changes outweighed the potential benefits of PUR.”7 While speaking with customers is essential in understanding their desires, simply asking what they “want” is not enough. Crucial is being able to observe their day-to-day activities, ask the right questions, truly listening, and developing empathy. As Malcolm Gladwell argues: “Market research, when it is observational or when it is interpretive, is profoundly useful. But those are two critical things. They require the intervention of the person conducting the research. They require the findings that are gathered are considered, and thought about, and processed and interpreted.”8 3, Quotable quotes. 4 Linzmayer, Owen. “Commentary: Steve Jobs’ Best Quotes Ever,” Wired Magazine, March 29, 2006. 5 Simanis, 2009. 6 Dupas, Pascaline. “What Matters (and What Does Not) in Households’ Decision to Invest in Malaria Prevention?”, Department of Economics, UCLA; quoting Michael Grossman 1972. 7 Simanis, 2009. 8 Gladwell, Malcolm. “Focus Groups Should be Abolished,” Advertising Age, August 8, 2005. [10]
  11. 11. Often, this level of observation and insight-generation occurs best not in a focus group,but in consumers’ communities and homes through immersion. One of the bestexamples of this at the base of the pyramid is Hindustan Unilever Ltd. (HUL) who formany years has sent young managers to live in remote rural Indian villages for eightsweeks as part of its entry-level leadership training bootcamp. Rural immersions such asthis have enabled HUL to better understand both the needs and demands of ruralfamilies, leading to the success of initiatives such as its “Project Shakti.” Observing howmuch time rural women spend at each other’s homes, HUL developed “Project Shakti”to enable women entrepreneurs (called “Shakti Ammas”) to sell Hindustan Lever’ssoaps and shampoos door-to-door in rural areas where there is no retail distributionnetwork, little advertising, and poor roads.9 Challenge: Converting need into demand Organizations often focus on need and take demand for granted. The challenges that sustainable businesses face are: (1) truly understanding what their customers want and what drives demand; (2) successfully communicating their value proposition to end customers; and (3) enabling an “easy” point of sale for customers, leveraging their daily habits or rituals. One particular challenge in maternal and child health is preventative care, which is one of the most challenging areas for behavior change across the developed and developing world.Understanding what consumers want: Innovation and Human-Centered DesignIn addressing this challenge of converting need into demand, many successfulbusinesses have utilized a design approach to innovation, popularized by designconsulting firms such as IDEO, Frog Design, and Idiom. One tool to help socialenterprises is’s Human-Centered Design Toolkit, an innovation guide forsocial enterprises and NGOs. Created with International Development Enterprise (IDE)as part of a grant from the Bill & Melinda Gates Foundation, the Human-CenteredDesign Toolkit supports sustainable businesses in building listening skills to translateneed into demand, prototyping ideas, and developing innovative solutions.10One example of how human-centered design can bridge the gap between need anddemand is’s work with the Global Alliance for Clean Cookstoves (GACC), apublic-private initiative of the UN Foundation. Clean cookstoves have the potential toimprove health through reducing exposure to smoke from traditional fires -- particularlyrelevant to women who traditionally spend the majority of their time at home. As team states, “Despite the significant improvements in cookstove technology inrecent years, there has been too little attention paid to the habits, motivations, and9 Prahalad, C.K. The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, Wharton School Publishing, 2004.10 “Human-Centered Design Toolkit. [11]
  12. 12. aspirations of the cookstove’s target market that strongly influence adoption. Our teamwill focus in particular on bringing some clarity around user preferences andbehaviors.”11 Through a deeper understanding of customers through immersion, then, itreasons that opportunities and innovations will be identified to increase demand forclean cookstoves.Sustainable businesses that have utilized the Human-Centered Design Toolkit includeVisionSpring, which brings low-cost vision care into communities; and AyurVAID, achain of Ayurvedic hospitals. In the maternal and child health space, LifeSpringHospitals (see case study below) utilizes a design-based approach, as does EmbraceGlobal, which has developed a low-cost infant warmer. All these models demonstratethe need to be innovative in developing a completely new product, rather than just astripped-down version of existing products. As articulated by Jane Chen, CEO ofEmbrace: “We didn’t just take existing incubators and cost-reduce. We tried to thinkabout the product in an entirely different setting -- for example, the needs of ruralmothers.”12Communicating the Value Proposition: Moving from “Education” to AspirationalMarketingA second challenge that sustainable businesses face in converting need to demand isaround communicating the value proposition of its product or service, or “socialmarketing.” Traditionally, and particularly in the case of global health organizations,social marketing has revolved around educating consumers in an attempt to transitionfrom “bad” behavior (e.g. delivering one’s baby at home without the presence of askilled clinician) to “good” behavior (e.g. delivering at an institution). This is based onthe assumption that if people simply “knew” what they were doing is bad for their healthand well-being, they would certainly change their actions and habits. We know evenfrom personal examples that this is not the case (e.g. exercising regularly).Melinda Gates, in a TEDxChange Talk, discusses what nonprofits can learn from Coca-Cola. As she states: “Ultimately, Coke’s success depends on one crucial fact: thatpeople want Coca-Cola...What is the secret to their marketing? It’s aspirational. Itassociates its product with the kind of life that people want to live.”13 She contrasts thethemes of celebration and unity from Coca-Cola’s marketing with the “avoidance” and“education” traditionally used by health and development organizations to market, withmessages like: “Use a condom... don’t get AIDS” or “Wash your hands... don’t getdiarrhea.” One set, exemplified by K’Naan’s “Wavin’ Flag” and “I’d like to teach theworld to sing” builds on customer’s happiness, pride, and unity; the other is almostcondescending, focusing on “should’s”. She touches on marketing challenges faced by11, “How can we support a market aimed at improving health, livelihoods, and the environment?”, February 21, 2012.12 Chaykowski, Kathleen. “At-risk babies kept warm by Stanford innovation,” The Stanford Daily, November 18, 2010.13 Gates, Melinda. TEDxChange, filmed September 2010. [12]
  13. 13. global health organizations: “We make a fundamental mistake, we make an assumptionand think that if people need something, we don’t have to make them want that.”14One organization that utilizes aspirational marketing is Population ServicesInternational, or PSI. To support behavioral change to encourage health-seekingbehaviors, PSI engages in mass media, community theater, and mobile multi-mediaevents. During the cholera outbreak in Haiti in 2010, PSI leveraged the power ofcommunications to arm local Haitians with information. Taking a grassroots approachto social marketing, some of PSI’s tactics during this crisis included mobile vans,entertainment education, and village tape players with megaphones.15 Anotherorganization is Greenstar Social Marketing Pakistan, which was established by PSI in1991. Greenstar developed and successfully marketed its first social marketingproduct: Sathi condoms. To sell and distribute their health products, Greenstar trainedprivate health providers through social franchising. Today, one out of every fourmarried couples using modern methods use Greenstar’s family planning products andservices.16Customer-focused delivery channelsIdentifying customer’s wants and communicating this in an aspirational way is notenough to generate demand and guarantee a sale of a pro-poor product. The final steprevolves around the actual point-of-sales. Successful companies make buying theirproduct easy for their customers. This means understanding their daily habits androutines. eHealth Points (launched by Healthpoint Services, Ashoka, and NaandiFoundation in 2009), for instance bundles their products and services together, makingit easy for consumers to purchase. Each eHealth Point offers clean drinking water,medicine, and health care services. As Al Hammond, Co-Founder and ExecutiveChairman of Healthpoint Services, states, “We adjusted the model as we learned moreabout the market. We found that women won’t carry water far, but they will walk for theclinic. So we added more water to the model and created a cluster.”17In addition to making point-of-sales easy for customers, successful sustainablebusinesses develop a portfolio of uses for a particular pro-poor product. As Dr. ErikSimanis argues, “When creating a market from scratch, it’s impossible to predictcustomer reaction. As we’ve seen, even a seemingly critical product like PUR may notgain a commercial foothold. So, instead of introducing just one product, companiesshould come up with a bunch of ideas, all centered on the same core technology, in thehopes that one or two may catch on.”18 He continues: “For an example of how thismight work, look at the infomercials that show 20 different things you can do with an oddtool for the kitchen or garden. PUR could have followed that approach--why limit the14 Gates, TEDxChange, 2010.15 Nerenberg, Jenara. “Lo-Fi Social Marketing is Saving Lives in Haiti,” Fast Company, October 28, 2010.16 Greenstar Social Marketing Pakistan - Company website. Hammond, Al. Telephone interview. January 20, 2012.18 Simanis, 2009. [13]
  14. 14. pitch to water purification? Show how PUR can be used to make great-tasting soups,rice and curries or fruit juices, by adding purified water to fruit pulp.”19Case Study:LifeSpring Hospitals (India)Innovation through ImmersionLifeSpring Hospitals is an expanding chain of low-cost maternity hospitals that servelow-income women and newborns in India. Prior to starting LifeSpring, Founder andCEO Anant Kumar was working in social marketing at Hindustan Latex Family PlanningPromotion Trust (HLFPPT). As part of his role heading social franchising, Mr. Kumarspent much of his time in government hospitals. It was here, through his immersion inpublic hospitals, that he began to observe the long waiting times that pregnant womenface when attempting to see a doctor, as well as the type of service they often receivedin low-resourced public hospitals. He thought there had to be a better way of providingcare and conceived of a chain of low-cost maternity hospitals that focus on providingaffordable, quality care that treats pregnant women with respect and dignity.Speaking with women within their communities confirmed this belief. Throughdiscussions with pregnant women and their families, Mr. Kumar learned that theydesired a better experience, with some going into debt to give birth in expensive privatehospitals. Based on these interactions, Mr. Kumar designed LifeSpring Hospital withthe tenet that “pregnancy is not a disease.”Human-Centered DesignLifeSpring approaches the challenge of converting need into demand through itshuman-centered design approach. Each hospital is designed to be welcoming and notintimidating, with pink walls, smiling nurses, and information boards laying out all pricestransparently. Marketing is approached through outreach workers, often women comingfrom the very communities they focus on. Observing that attendants (often the pregnantwoman’s mother or mother-in-law) were often sitting on the floor, LifeSpring beganproviding an attendant’s cot next to the woman’s bed -- even in the general ward.Doctors are trained to see women as customers (rather than patients), and customerfeedback asks the degree to which doctors treated a customer with dignity and respect.In this way, LifeSpring provides a service that women value, building a demand for low-cost, customer-centered maternal health care. Through its focus on treating womenwith dignity and respect, women are more likely to come for antenatal checkups prior totheir delivery.19 Simanis, 2009. [14]
  15. 15. 2. REACHING THE BOPIncreasing AccessibilityAccess to health care is one of the key challenges that the BOP faces. Thisaccessibility challenge can be further broken down into both financial accessibility(affordability and cash flow) and geographic accessibility (reach). Market-basedsolutions in delivering health care to the BOP, therefore, must address the challenge ofhow to reach their intended consumers. The challenges surrounding this are myriad,and include supply chain, distribution, and transportation costs. Organizations speak ofan “innovation pile-up”, where the intended value of billions being spent on researchand development may not be realized due to the challenges of reaching “the last mile.” Finding: Governments and businesses can increase access to care through cross-subsidies, performance-based incentives and demand-side financing mechanisms: Governments can influence consumption via demand-side financing and performance- based mechanisms such as voucher programs, conditional cash transfers or pay-for- performance schemes. Businesses can reach the BOP by properly building similar incentives into their model, or by targeting a diverse consumer base that would allow for cross subsidy.Enabling Geographic AccessibilitySuccessful sustainable businesses address the challenge of geographic accessibility fortheir customers. In global health care, this may mean opening rural hospitals (such asVaatsalya) or tele-medicine kiosks (such as eHealth Point). Going further intocommunities are direct-to-customer models such as HUL’s “Project Shakti” and LivingGoods, whereby women entrepreneurs sell products door-to-door.Enabling Financial AccessibilityThe challenge of pricing a particular product or service is crucial for market-basedmodels in health care, who must balance affordability for the patient with sustainabilityfor the organization. This challenge is exacerbated as often the consumers of theseproducts or services are engaged in the informal economy or in agriculture, where cashflow is not steady.As Monitor Inclusive Markets advises, pro-poor businesses should price products tomatch customer cash flows: “Cash flow is king; business models that ignore the irregularities of cash flows in low-income segments are unlikely to succeed. The issue here is not just that the poor have limited amounts of cash. It’s that they have unpredictable, lumpy cash [15]
  16. 16. flows. This in turn drives a general aversion to paying higher prices, even for products and services that pay for themselves relatively quickly. Unless the ticket price is sufficiently low and the payback period is sufficiently brief, there will be no sale.”20Coupled with the financial accessibility challenges of affordability and cash flow comechallenges associated with physical payment. As the World Business Council forSustainable Development states, “Traditional payment schemes may not be suited forcommunities lacking postal addresses, phones, credit cards, or bank accounts.”21However, its “Doing Business with the Poor” field guide suggests that prepayment forongoing services, incentives to encourage payments, and a collective billing system thatallows a community to make a common investment are innovative payment solutions forpro-poor businesses.22 Besides these, government subsidies, micro-loans, and creditschemes may help enable revenue collection for products and services targeted at baseof the pyramid customers.23Governments can also play a role in increasing financial access. For instance, theGovernment of India launched the Janani Suraksha Yojana (JSY) initiative in 2005. Aconditional cash transfer scheme, JSY incentivizes women to give birth in a healthfacility rather than at home. Implementation of JSY in 2007-2008 highly varied by state,with anywhere between 5% to 44% of women giving birth receiving cash payments fromJSY.24 Impact assessments have found that JSY has indeed had a significant effect onincreasing antenatal care and in-facility births, as well as a reduction of 3.7 perinataldeaths per 1000 pregnancies, and 2.3 neonatal deaths per 1000 live births.25Coupled with the JSY scheme, the government of Gujarat has also implemented theChiranjeevi Yojana scheme, a public-private initiative that targets women below thepoverty line (BPL), and offers free treatment for delivery, plus medicines, laboratorycharges, compensation for foregone wages, and Rs 200 for transportation for thepregnant woman to utilize services at a private hospital. The obstetrician is then paid bythe Government of Gujarat. An example of a private hospital that has partnered withthe government through these initiatives is Alka Hospital in Gujarat. A 50-beddedmaternity hospital, Alka has developed the “Sampurna Suraksha Card” to provide al20 Karamchandani et al, 2009.21 Timberlake, Lloyd. Doing Business with the Poor: A Field Guide: Learning Journeys of Leading Companies on the Road toSustainable Livelihoods Business. World Business Council for Sustainable Development, 2004.22 Timberlake, 2004.23 Timberlake, 2004.24 Lim et al, Stephen, Lalit Dandona, Joseph A. Holsington, Spencer L. James, Margaret C. Hogan, Emmanuela Gakidou, “India’sJanani Suraksha Yojana, a conditional transfer programme to increase births in health facilities: an impact evaluation,” The Lancet,2010.25 Lim et al, 2010. [16]
  17. 17. antenatal care, delivery (including normal and complicated cases), and postnatal carefor Rs 1500 (approximately $30 USD).26A survey aimed at assessing the efficacy of the Chiranjeevi Yojana scheme yieldedsome valuable findings for demand-side financing on the whole, particularly in India. Ofthose Chrianjeevi clients surveyed, 96% of them received antenatal care, 71% of whichreceived services from a private hospital or clinic. And when it came time to deliver,roughly 97% of participants delivered at a private hospital, and afterwards, 89%expressed satisfaction with the service they received27. It is also worth noting that nearlyevery delivery featured in this study was the woman’s first, suggesting a nascent trendtowards facility births if the right demand-generating financing mechanism is in place. Challenge: Balancing affordability with sustainable pricing to reach the BOP: Businesses that target the BOP must strike a balance between a price that is affordable for their consumers and one that allows for solvency. There are little if any profit margins for businesses at the BOP, yet governments have been largely passive in working with the private sector to reach the lowest quintiles.Cross-Subsidy ApproachTo balance affordability and sustainable pricing, several sustainable businesses utilize across-subsidy approach to pricing their products and services. For instance, in AravindEye Care System has established differential pricing based on patients’ choice ofamenities and type of lens. The poorer 70% of their patients are subsidized bywealthier patients who pay market rates. Another example Ziqitza Health Care Limited,whose “Dial 1298 for Ambulance” in Mumbai is financed through cross-subsidy.Patients call the ambulance service, with patients requesting a private hospital chargedabove cost, while those who are transported to a government hospital pay a nominalcost, and trauma patients do not pay. It has been reported that 20% of patients thathave utilized Dial 1298 were subsidized.28Government partnership has also helped other sustainable businesses reach the baseof the pyramid. For instance, eHealth Point is engaged in a public-private partnershipwith the Rajasthan government, under which the Rajasthan government would provide26 Center for Health Market Innovations website. “Alka Hospital Company,” 2011. Ramesh Bhat, Dileep Mavalankar, Prabal Singh, Neelu Singh, “Maternal Health Financing in Gujarat: Preliminary Results from aHousehold Survey of Beneficiaries under Chiranjeevi Scheme,” Indian Institute of Management, October 2007.28 Onil Bhattacharyya, Sara Khor, Anita McGahan, David Dunne, Abdallah S Daar, Peter A. Singer, “Innovative health servicesdelivery models in low and middle income countries: What can we learn from the private sector?” Health Research Policy andSystems, July 15, 2010. [17]
  18. 18. support to open eHealth Points in areas where the formal public health delivery systemis low or non-existent, and demand high. These eHealth Points will include screeningwomen and children for anemia, assessing cardiovascular risk, diabetes screening,addressing child malnutrition, ensuring antenatal care, and providing eye camps.29Similarly, eHealth Point has established a public-private partnership with thegovernment of Punjab, whereby the government builds the building, and eHealthPointoperates it, thereby lowering capital expenditure.Case Study:Greenstar Social Marketing (Pakistan)Greenstar Social Marketing Pakistan is a non-profit organization focused on socialmarketing, particularly around the areas of family planning and reproductive healthservices. Greenstar works through the private sector and with the Government ofPakistan to improve access to affordable health products and services through itsnetwork of over 18,000 private doctors.30 Through its social franchising approach,Greenstar has established two networks of care: its Greenstar network of privateproviders focused on family planning, and a broader network of private health providersunder the brand, “GoodLife.”Reaching the Base of the PyramidTo reach the poor, Greenstar focuses on demand-side financing, utilizing a vouchersystem aimed at low-income individuals for maternal health care and family planningservices. Pregnant women participating in Greenstar’s voucher program receive avoucher booklet worth $50 USD, for which the women pay $1.21 USD (Pakistani rupees100). The voucher booklets are comprised of a $31 USD coupon for delivery, 4antenatal care visits, one postnatal care visit, and one family planning visit. Health careproviders reimburse each woman $3 USD for transportation for the delivery and $0.60USD for other visits.31To address the challenge of balancing affordability with sustainable pricing, Greenstarutilizes a cross-subsidy model through its voucher system. Greenstar’s pay-for-performance model consists of supply-side payment to providers and demand-sidevouchers that subsidize the costs of reproductive health services and transportation forpoor women.32 Coupled with this, Greenstar has developed an outreach strategy totarget women who had previously had a home delivery, as well as accreditation andtraining for private providers through Greenstar’s network.33 75% of its healthcare29 Center for Health Market Innovations website. “E Health Point.” Center for Health Market Innovations website. “Greenstar.” Bashir, Hamid, Sarfaraz Kazmi, Rena Eichler, Alix Beith and Ellie Brown. “Pay for Performance: Improving Maternal HealthServices in Pakistan”, USAID Case Study: Health Systems 20/20 Project, September 2009.32 Bashir et al, 2009.33 Bashir et al, 2009. [18]
  19. 19. outlets are located in low-income neighborhoods, and 70% of its clients report ahousehold income of less than 7000 PKR) per month (or around $2.50 USD per day).34The Role of GovernmentThe Government of Pakistan has played an important role as well, helping enableGreenstar to reach low-income Pakistanis by providing government exemptions forcommodity imports and exemptions around Greenstar’s social advertisementcampaign.35 The Ministry of Population Welfare (MoPW) facilitates the execution ofGreenstar’s operations, and also supports access to foreign assistance.3634 Company website. Company website. Company website. [19]
  20. 20. 3. LOCAL CONTEXTWhile building a replicable model is a key to scale, sustainable business models mustalso be contextualized and locally-driven. As Acumen Fund reflects, “We won’t succeedin the long term without cultivating local leaders, local money, and strong localcommunities.”37 Acumen argues that to solve the toughest problems of poverty, what’sneeded are “robust local solutions whose long-term viability is based not on thedecisions of a faraway funder but because they have deep, lasting support from localteams, local capital, and, most importantly, millions of local customers. This approachcan take longer to execute, but it’s the only one that lasts.”38 Finding: Sustainable business models must be contextualized and locally-driven: Trust underlies brand recognition, and consumers across the income spectrum tend to trust businesses that are locally-managed and attuned to their environment. Word of mouth is often a primary promotional channel, and tends to benefit companies operating on a more localized level.As Acumen Fund states, “There is no currency like trust, and there are no shortcuts toearning it.”39 Consumers tend to trust businesses that are locally-bred and grown. AsAcumen puts it, “Low-income communities are often understandably wary of outsiderscoming in with ‘solutions to their problems’... Trust is the most precious commodity wecan offer. Building it takes time, and it can be destroyed in an instant.”40eHealth Point combines video-conferencing with licensed medical doctors with in-person lay health workers and clinical assistants, who are recruited from local villagesand trained by Healthpoint Services. Additionally, LifeSpring Hospitals has found thatits most successful community outreach workers are those who live in the communitiesin which she serves.37 Acumen Fund, “Ten Things We’ve Learned About Tackling Global Poverty,” 2011.38 Acumen Fund, 2011.39 Acumen Fund, 2011.40 Acumen Fund, 2011. [20]
  21. 21. Challenge: Leveraging local knowledge and existing networks: Successful organizations that serve the BOP are often able to tap into existing local networks, whose proximity to end customers allows these businesses to be more attuned to the demands, routines, and spending habits of their surrounding populations. This local network may consist of microentrepreneurs or small shopkeepers. Sometimes dubbed the “informed” sector, these networks are often (but not always) in the informal sector, often defined as the part of an economy that is not taxed or included in GDP. Organizations that leverage local knowledge and existing networks are better positioned to succeed.Case Study:Living Goods (Uganda)The “Avon” of Pro-Poor ProductsLiving Goods provides low-income families access to affordable health productsfocused on prevention, treatment, fast-moving consumer goods, and pro-poorinnovations (such as clean-burning cookstoves). At the core of their model is a networkof community health promoters: a cadre of independent agents who sign a franchisingagreement with Living Goods to operate under a Living Goods license. In this way,Living Goods has been able to successfully tap into existing local networks within thecommunities in which it operates. Due to this asset-light approach that brings themarket straight to consumers’ doors, Living Goods has been dubbed the “Avon” of pro-poor products.Tapping Local KnowledgeFrom the outset, the organization’s focus on tapping local knowledge has been strategicand deliberate. When Living Goods began operations in Uganda, CEO and FounderChuck Slaughter visited local village councils for recommendations on women who weremost likely to succeed as community health promoters, thus targeting the mostnetworked and potentially highest-earning women.41 Mr. Slaughter himself became anAvon representative in California to learn more about the Avon model and ideas tosuccessfully train community health promoters. As he later reported: “Avon has asimple but brilliant tool that we shamelessly knocked off.”42 This consisted ofdeveloping a social map of each agent’s network, based on a list of everyone theyknow. Each agent then developed a marketing plan based on this social map. In thisway, Living Goods continues to leverage each community health promoter’s localnetworks to sell goods.Community Health Promoters41 Katayama, Lisa. “How Health Care Nonprofit Living Goods Learned a Lesson from Avon Ladies,” Fast Company, December 10,2010.42 Katayama, 2010. [21]
  22. 22. To join the Living Goods network, aspiring community health promoters sign a franchiseagreement and take out two forms of loans: a fixed capital no-cost-loan for uniforms,storage chest, and a thermometer; and a low-interest loan of about $75 a year forpurchasing inventory43 Living Goods’ field staff then provide community healthpromoters with an initial two-week training course, refresher trainings, marketingsupport, field mentoring, and performance monitoring.43 Katayama, 2010. [22]
  23. 23. 4. PARTNERINGDeciding When to PartnerAs is the case in traditional businesses, understanding one’s competitive advantage iscrucial for social businesses to stay focused on impact and prevent diffusion of theirresources across varying activities and initiatives. Clarifying this focus, however, maybe difficult when addressing complex and inter-dependent health needs. In the case ofa sustainable business addressing the problem of maternal mortality, for instance, a keychallenge is identifying which areas are core to the business, and which areas -- whilecrucial to the overall problem of reducing maternal mortality -- are better addressedthrough partnerships with external organizations. Finding: Focusing on core competencies while partnering around ancillary areas enables enterprises to retain focus while building an ecosystem of care: The private sector is already quite active in providing health care at the BOP, and the poor continue to seek care from private providers. Collaboration within the private sector creates “shared value” as businesses capitalize on each other’s competencies while identifying various forms of ROI.The World Business Council for Sustainable Development discusses the three buildingblocks of successful sustainable businesses: (1) Focus on core competencies; (2)Partner across sectors; and (3) Localize the value creation. 44 Specifically regarding thecreation of holistic partnerships, the Council’s advice for pro-poor businesses include:45 • Create partner networks that offset potential risks • Involve partners from the very beginning • Work together to align goals • Ensure that expectations on both sides are clearly set • Design strategies • Partnerships and trust are built over timeIn the field of maternal health, ClickDiagnostics and Changamka have both developedinnovative partnerships with mobile carriers in Botswana and Kenya respectively (seeChangamka case study below). Greenstar, a non-profit, has scaled throughpartnerships with the private sector through social franchising; and Healthpoint Servicesannounced a learning partnership with Procter & Gamble Company at the m-HealthSummit in November 2010. This partnership aims to advance a scalable, self-sustaining model to deliver water, health care, and other benefits. Through the learning44 Timberlake, 2004.45 Timberlake, 2004. [23]
  24. 24. partnership, Procter & Gamble has provided financial support, experienced people, andin-kind services.46 Challenge: Leveraging existing private-sector channels for healthcare delivery and identifying nontraditional opportunities to collaborate: The current supply chain for maternal and child health care is plagued with disconnectedness, poor infrastructure, misaligned price points and a quality- affordability-accessibility trade-off. However, those at the BOP still consume products and services related or tangential to health, and these spending habits should be harnessed through nontraditional partnerships.A recent report by FSG on shared value in global health states that: “Global healthstakeholders desire a move away from charity to more sustainable and scaleable waysto provide drugs, vaccines, and medical devices to patients in underserved markets.And these stakeholders want to partner -- in a recent survey, 79 percent of nonprofitorganizations reported that pharmaceutical and medical device companies are essentialpartners in the effort to achieve their mission.”47 The report goes on to discuss a keyprinciple around implementing shared value for global health: “Companies are looking toa new set of partners to help with shared value strategy-setting and specificcompetencies in adapting products, improving productivity and cost effectiveness, andstrengthening the competitive context.”48Case Study:Changamka MicroHealth (Kenya)Changamka MicroHealth provides products that allow low-income individuals to savemoney towards doctor visits, medicines, and other health needs. Originally focused onsmartcards sold in retail outlets, Changamka is currently shifting its business model to afully mobile-based platform, a process which is expected to be completed by the end ofFebruary 2012. Its focus will remain around outpatient services, maternal health, and e-vouchers for beneficiaries of safe motherhood, family planning, and food programs.Partnerships46 Healthpoint News Release. “Healthpoint Services Announces Innovative Learning Partnership with Proctor & Gamble.”PRNewswire via COMTEX, November 9, 2010.47 Peterson, Kyle, Samuel Kim, Matthew Rehrig, Mike Stamp. “Competing by Saving Lives: How Pharmaceutical and MedicalDevice Companies Create Shared Value in Global Health”. FSG white paper, 2012.48 Peterson et al, 2012. [24]
  25. 25. Changamka MicroHealth partners across technology platforms, insurance, mobilefinancing, distribution centers, and a network of hospitals and clinics, thus leveragingexisting private sector channels for healthcare delivery, as well as identifyingnontraditional opportunities to collaborate, such as with mobile phone operators.On the supply side, Changamka partners with hospitals as well as NGOs (health clinicsand networks). Hospitals are taken through an accreditation process to control forquality. Its medical provider network includes Pumwani Maternity Hospital in Nairobi(with capacity to deliver 300 babies per day), as well as 25 clinics and medical centersacross Nairobi, Kikuyu, and Mombasa for outpatient services. In July 2010,Changamka began partnering with two more maternity hospitals in the outskirts ofNairobi, two in Mombassa, and one in Nairobi. In the next few months, Changamkaplans to partner with six more maternity hospitals in Nairobi.49On the demand side, Changamka has partnered with mobile phone operators andinsurance companies, including Kenya’s Health Insurance Authority.50 Additionally,Changamka MicroHealth has partnered with GA Insurance as an underwriter.51 Clientsare able to save on a smart card through mobile money systems (M-PESA) and makepayments at designated providers.52 Safaricom is the GSM network provider used tocarry out transactions.53Changamka MicroHealth currently has eighteen distributers across Kenya (includingChandarana Supermarkets, LiveWell Ltd, I & M Bank, and Uchumi Supermarkets)where clients can buy Smart Cards. This model, however, is shifting as Changamkatransforms into a mobile-platform model.49 Agutu, Sam and Zach Oloo. Telephone Interview, January 20, 2012.50 Phone interview with Sam Agutu and Zach Oloo, January 20, 2012.51 Center for Health Market Innovations, “Changamka Microhealth Limited,” Center for Health Market Innovations. “Changamka Microhealth Limited.”53 Center for Health Market Innovations, “Changamka Microhealth Limited.” [25]
  26. 26. 5. TECHNOLOGYTechnology is a powerful tool to address global health challenges...Within the global health space and maternal health in particular, technology has thedisruptive potential to create lasting change. Technological innovations in recent yearsin the maternal health space include clinical innovations such as pocket-sizedultrasound scanners produced by GE and others, and a portable fetal monitordeveloped by the West Wireless Health Institute.54Technological innovations also allow patients to consult with a doctor remotely, as wellas utilize mobile phones which have become ubiquitous across the developing world torelay information. eHealth Points, for instance, utilizes a clinic model, where tele-medical consultations are conducted via video-conferencing with licensed medicaldoctors and lay healthworkers/clinical assistance (who are recruited from local villagesand trained by Healthpoint Services India).55 Additionally, mHealth SMS messages thatallow pregnant women to receive information about their pregnancy linked with their duedate.56Besides arming pregnant women and end consumers with pertinent and timelyinformation and increased access, technology also increases the effectiveness andefficiency of back-end operations. For instance, Dimagi’s CommCare strengthens theeffectiveness of community health workers across ten countries, who are equipped withopen source software that contains registration forms, checklist, high risk factormonitoring for pregnant women, and tracking of pregnant women.57 At 1298,employees staff the 24-hour control room and tracks calls using Google Earth andglobal positioning systems on each ambulance.58 Finding: Technology may not be the solution to improving health, but it is a vital tool: Technology plays a major role in overcoming infrastructure barriers that often inhibit the delivery of health care at the BOP. The appropriate use of technology can bridge a range of private-sector players—both health-related and non-health- related—in the delivery of maternal and child care....But technology alone is not the answerWhile crucial, dissemination of information through technology (whether through SMSmessage or tele-medicine services) is only the first step. Sustainable businesses musthelp customers make the shift from knowledge (“there are dangers associated with54 Needleman, Rafe. “GE shows off pocket-size ultrasound scanner,” C/NET News, October 20, 2009.55 Healthpoint Services company website. Maternal Health Challenge by IDEO, Nokia, Oxfam. Dimagi Company website. Naim, Anjum. “Rushing to the Rescue,” Span Magazine, May/June 2010. [26]
  27. 27. giving birth at home in the absence of a skilled clinical attendant” via SMS) to a changein behavior (e.g. having an institutional delivery). We all know from personal experiencethat access to medical information (e.g. the importance of working out and gettingadequate sleep) does not often translate to behavior. This is true across the incomeladder, yet many organizations still focus predominantly on “education” as their coredriver in changing behavior at the BOP.Additionally, a technology must be backed with a strong business model that addressesan unmet demand by the base of the pyramid. As Acumen Fund reflects, “People buyservices that they understand; they don’t buy technologies alone. Innovations indelivery - which require genuine input from customers, working partnerships withdistributers, and getting economic incentives right - are often more important thanelegant designs.”59 Challenge: Breaking the quality perception barrier: Convincing the poor to purchase a new product or service is generally quite difficult, as they tend to be risk-averse and wary of innovation. There is frequently a difference between a consumer’s perception of quality (often provided by “quacks”) and actual, clinical quality (often provided or enhanced by technology).Any disruptive model requires a shift in mindset to break the quality perception barrier.One rural telemedicine model in South Asia, for example, spoke of the difficulties inconvincing patients that the doctor on the computer screen was a genuine doctorinteracting with the patient in real time -- and not merely a video that is played for everypatient.60 As Acumen Fund notes: “No matter how great an invention is, the businesshas to function in the real world where dealers, distributors, business partners,employees, and especially customers must vote in favor of your product each and everyday.”61Case Study:Click Diagnostics (Bangladesh, Botswana)ClickDiagnostics is a global mobile health (mHealth) organization that focuses onaddressing the challenges of accessibility, affordability, and shortages of trained health59 Acumen Fund, 2011.60 Interviews with Indian social enterprise, February 2012.61 Acumen Fund, 2011. [27]
  28. 28. professionals. Its platform of mHealth products consists of medical services, patientmanagement, administration and planning, and mPayment and financing.mHealth and Women’s HealthWomen’s health care is a large focus of ClickDiagnostics’ work. The organization haspartnered with BRAC Manoshi in Bangladesh, where ClickDiagnostics designed anmHealth system specifically focused on maternal, newborn, and child health. InBotswana, ClickDiagnostics designed an mHealth system focused on cervical cancerscreening, as well as HIV clinical staging, mobile tele pre/post-oral surgery, tuberculosisscreening mobile tele-dermatology, and mobile tele-radiology.62Telemedicine plays a large role in the Botswana model, which revolves around a juniordoctor or nurse in a rural clinic capturing patient information through Orange’s 3Gmobile broadband, GPRS, and EDGE telecommunication networks. This informationcan then be sent to a medical specialist in Gaborone or the US, through the Botswana-UPenn Partnership Program.6362 Click Diagnostics company website. “Orange (Botswana) and Botswana-UPenn Partnership Pioneer Mobile Phone Telemedicine,” The Botswana Gazette, July 9,2010. [28]
  29. 29. 6. SCALING UPThe Need for ScaleThe importance of scalability lies in a pro-poor business’s ability to reach and improvethe lives of significant numbers of people living at the economic base of the pyramid.Scale is important due to the sheer magnitude of global health challenges, whichrequire solutions to reach millions of low-income individuals.The Challenge of ScaleHowever, by definition, scale is difficult to reach and takes a long time-frame to achieve.As stated by Monitor Inclusive Markets: “Only a handful of enterprises in low-incomemarkets are commercially viable and operate at scale, even in a huge potential marketlike India, with its more than 700 million living at or below the poverty line. There andelsewhere, Monitor investigated many celebrated enterprises, most of which served atbest a few thousand customers or employed a few hundred producers. Only a smallhandful -- mostly well-publicized ones like Grameen Bank and Aravind Eye Care --attained a scale sufficient to transform a “business model” into a “solution.”64 Finding: Governments are essential to catalyzing market-based models for health care and supporting scale-up.Governments can support entrepreneurialism and commercialized models for carethrough “social innovation,” which can refer to establishing an enabling policyenvironment or supporting local businesses through microcredit or microloans.Government’s role in supporting market-based solutions for care—by way of financingor policy—is a key factor in reaching scale, and thereby achieving sustainability. AsAcumen Fund reflects, “Governments rarely invent solutions, but they can scale whatworks.”65 More specifically, Acumen points to the successes it has seen with publicagencies partnering with its investees without creating market distortions: “governmentministries setting up innovative subsidy schemes that allow fledgling businesses to getoff the ground; state governments becoming major customers for some of our mostsuccessful companies, providing the capital needed to scale while maintaining the coreinnovation and quality of services upon which the company was founded.”66Indeed, the power of the government to help grow pro-poor businesses can be seen inGreenstar Social Marketing Pakistan, which has partnered with the Government ofPakistan to increase distribution and reach of its family planning products and services.Similarly, LifeSpring Hospitals is a joint venture whereby HLL Lifecare Limited, agovernment enterprise, is a 50% equity holder, alongside Acumen Fund. This64 Karamchandani et al, 2009.65 Acumen Fund, 2011.66 Acumen Fund, 2011. [29]
  30. 30. partnership has enabled LifeSpring to procure free vaccinations from the state ofAndhra Pradesh, a benefit which is passed on to the women that LifeSpring serves. Challenge: Establishing an enabling policy environment.Businesses targeting the BOP are often constrained by a policy environment thatinhibits the growth of the private sector. There is a need for governments and healthministries to invest in and commit to social innovation, which would strengthen the roleof the private sector while prioritizing the social needs of civil society.As recommended by Monitor Inclusive Markets: “Address regulations that discriminateagainst small and medium enterprises in terms of access to finance, ability to compete,subsidized competition, and other activities that distort the playing field.”67 Concurrentwith this, they also recommend that governments “encourage and provide incentives to[larger] corporations to share, extend, and adapt existing channels, since often they arethe owners of the best networks even to rural areas, and this will often cost less andtake less time than building new channels from scratch.”68Case Study:Ziqitza Health Care Limited (India)Ziqitza Health Care Limited operates emergency medical response services through itsDial “1298” for Ambulance in Mumbai and Kerela, and its Dial “108” for Emergency” inBihar, Trivandrum, Rajasthan, and Punjab. Dial 1298 was launched in 2005 inassociation with London Ambulance Service, a UK Government Agency, which helpedprovide processes, systems, protocols, and training assistance to Dial 1298.69 From tenambulances in Mumbai in 2007, Ziqitza currently operates more than 800 ambulancesin Mumbai, Kerela, Bihar, Trivandrum, Rajasthan, and Punjab, serving over 645,000individuals since 2005.70Public-Private Partnerships focused on ScaleA core component of their scale-up model has been the development of public-privatepartnerships through its Dial “108” for Emergency model. This began in Bihar in 2009.The Principal Secretary Health in Bihar designed the 108 emergency model, whichincluded partnership with the private sector as a main component. Specifically, acompetitive bidding process was utilized to select a private provider to operate the 10867 Ashish Karamchandani et al, 2009.68 Karamchandani et al, 2009.69 Center for Health Market Innovations, “Ziqitza – 108 Emergency Response Services.” Ziqitza Health Care Limited company website. [30]
  31. 31. emergency model, and an ambulance user fee of Rs 300 (approximately $6 USD) wasutilized to incentivize the private sector for better performance and prevent misuse. 71Through this competitive bidding process, Ziqitza was selected as the principalcontracted provider.Following Bihar, Ziqitza developed a similar public-private partnership model with thePunjab State Government, and began offering services in 2011. Since then, Ziqitza hasdeveloped public-private partnerships in Trivandrum and Rajasthan as well. Users ofthe emergency services either pay Rs 300 (as in Bihar) or are provided free services,based on the particular contract with the participating government.7271 Center for Health Market Innovations, “Redplan Salud.” Center for Health Market Innovations, “Redplan Salud.” [31]
  32. 32. 7. MEASURING IMPACTOutput vs. OutcomesAs an organization focused on both financial and social objectives, “success” for asustainable business rests on both profitability and social impact. While measuringfinancial performance is fairly straight-forward, measuring social impact is quite difficult.Most sustainable businesses and impact investors measure outputs, or the direct“product” of any activity delivered (e.g. number of safe deliveries or number ofvaccinations given to infants). Very few sustainable businesses or investors measureoutcomes, or the benefit or change resulting from the activity (e.g. decrease in maternalor infant mortality/morbidity).73The challenge of measuring impactA key reason for this is simply the difficulty and resource intensiveness such a rigorousstudy would take, when each social enterprise is focused on doing business, serving itscustomers, and scaling up (see “Doing Business”, below). As Laura Callanan, wholeads McKinsey & Company’s research on social impact assessment and socialinvesting, states: “Social problems are complex, dynamic problems happening inuncontrolled environments. We are used to measuring financial results on a quarterlybasis in the corporate world. That just isn’t realistic when it comes to social impact. It’sa long-term endeavor. There are many factors to consider. The variety of detractorsand drivers of progress makes it very hard to know the exact role your work plays.”74Indeed, measuring impact remains elusive.75 There are few studies and independentrandomized control trials researching the impact of social enterprises and sustainablebusiness models. Greater evidence attesting to improved quality, lower costs, andbetter clinical outcomes will give more credibility to the space, particularly regarding thepublic health community who are often wary of market-based solutions, as well as toimpact investors looking to quantify the social return of their investment. Finding: There is a need to evaluate the impact and quality of businesses aiming to deliver care at the BOP.The path forwardIn recent years, a number of initiatives have launched to begin answering the question:“how much social impact has a particular organization generated?” These include73 “Monitoring, Evaluation, and Outcomes,” Be Better @ Funding74 Josh Cleveland, “SOCAP 10: Learning for Social Impact,” Next Billion, October 8, 2010.75 Working definition for “Social Impact Assessment” as put forth by McKinsey & Company is a “meaningful change in economic,social, cultural, environmental and/or political conditions due to specific actions and behavioral changes by individuals and families,communities and organizations, and/or society and systems. Assessment evaluates characteristics, practices, results, and/or valueof activities.” McKinsey white paper: “Learning for Social Impact: What Foundations can do”, April 2010. [32]
  33. 33. Acumen Fund’s “PULSE”, GIIN’s “IRIS”, and the Global Impact Investing Rating System(GIIRS).Additionally, a number of sustainable businesses have begun to measure output andimpact using external bodies. Understanding the need to measure and evaluate results,particularly in the health care delivery space, ClickDiagnosis has engaged in a studythat assessed the scope to which a mobile-based solution could improve maternal andchild health, specifically focusing on efficiency, cost benefit analysis, usability, and valuecreation.76 A 2008 study published in the Harvard Health Policy Review showed thatfranchisees of Greenstar Social Marketing Pakistan served a higher proportion of poorclients (35.1%) than government facilities (23.4%), and that Greenstar franchisesprovided higher quality services (24.9 = mean total quality) than both for-profit privatefacilities (15.2) and not-for-profit private facilities (18.1).77More recently, Changamka has partnered with SHOPS (Strengthening HealthOutcomes through the Private Sector project, funded by USAID) to begin evaluatingChangamka’s model. Specifically, the study focuses on evaluating the impact ofmaternity savings cards on access to quality care.78 This report, focused on outpatientcare and maternal health, will be available in the next three months.79 Additionally,Living Goods has engaged with The Poverty Action Lab towards an independentrandomized control trial, focused on how well Living Goods has been able to meet itsprimary objective of reducing mortality and morbidity for children under five. At the mid-line evaluation, researchers found that the price of malaria medicines were significantlylower in treatment areas, while quality was significantly higher.80 Challenge: Shift impact assessment from a backwards-looking exercise to one that allows organizations to learn and be more effective moving-forward.Practical MeasurementImpact measurement allows sustainable businesses to understand whether they aretruly meeting their social mission objectives, while it allows investors and policymakersto better understand where their investments and policies generate the most socialimpact. In its white paper on “Learning for Social Impact,” McKinsey & Company pointsto a set of five best practices to support a learning-driven approach to measuring76 Alam, Mafruha, Tahmina Khanam, and Rubayat Khan, “Assessing the scope for use of mobile based solutions to maternal andchild health in Bangladesh: A case study,” 2010.77 Bishai, David, Nirali Shah, Damian Walker, William Brieger, David Peters. “Social Franchising to Improve Quality and Access inPrivate Health Care in Developing Countries”, Harvard Health Policy Review, Volume 9, No. 1, Spring 2008.78 SHOPS website79 Phone interview with Sam Agutu and Zach Oloo, January 20, 2012.80 Phone interview with Joe Speicher, January 31, 2012. [33]
  34. 34. impact:81 1. Hear the constituent voice 2. Assess to learn and do: assessments should be undertaken in a spirit of inquiry, asking “what do we want to learn?” 3. Apply rigor within reason 4. Be practical: where possible, use tools that already exist 5. Create a learning cultureAs the McKinsey report emphasizes, impact measurement must begin with asking theright question. It quotes Jackie Williams Kaye from The Atlantic Philanthropies, whosays: “People assume that the question of interest is ‘Did it work?’ Well, that could bethe most useful question to explore, but it also could be ‘How did it work?’ or ‘How will itwork?’ or “Does it work every time?” or “Why did it work?”Case Study:RedPlan Salud (Peru)The Instituto Peruano de Paternidad Responsible (INPPARES) is the largest private,non-profit provider of family planning services in Peru. In 2002, INPPARES launchedRedPlan Salud (RPS), a network of midwives that serves lower-income, able-to-payclients. RPS providers are licensed midwives with pre-existing clinics serving low-income women in urban and peri-urban areas of Peru.82Monitoring and EvaluationRPS focuses on monitoring and evaluation to ensure quality assurance on its products.This consists of collecting monthly information on the products sold and servicesprovided by midwives through a reporting form delivered to headquarters. Additionally,every other year, RPS conducts surveys around member midwife satisfaction with theRPS network and client profile gathering (including the frequency of registeredservices).8381 McKinsey white paper: “Learning for Social Impact: What Foundations can do”, April 2010.82 Clinical Social Franchising Case Study: RedPlan Salud, Instituto Peruano de Paternidad Responsable(INPPARES), The Global Health Group, University of California, San Francisco, June 2011.83 Clinical Social Franchising Case Study: RedPlan Salud, Instituto Peruano de Paternidad Responsable(INPPARES), The Global Health Group, University of California, San Francisco, June 2011. [34]
  35. 35. 8. DOING BUSINESSStill a Business...The same challenges that apply to traditional businesses also apply to sustainablebusinesses that seek to address health care needs with market-based solutions. Theseinclude a myriad of operational, pricing, distribution, and financing challenges -- with theadded complexity of balancing direct social impact. The innovation comes in thinking ofthe poor as business partners and customers. Low-cost models of delivering healthcare are not merely stripped-down versions of existing models, but rather a whollydisruptive model of care....Working in Innovative Ways to Address the BOPAs the World Business Council for Sustainable Development states in their “Doingbusiness with the poor field guide”: “Companies may have to develop new ways ofpackaging, marketing, distributing, advertising, and charging -- the same old businessproblems, with new solutions... Normal business principles apply and are essential tothe success of sustainable livelihood ventures in the same way that they are forconventional businesses.”84 The field guide continues with a discussion of three soundfoundations of sustainable businesses:85(1) Focus on your core competencies when adapting your business model(2) Partner with external resources that offer complementary expertise(3) Localize the value creation by harnessing local intelligence and capabilities Finding: The same challenges that apply to traditional businesses also apply to “sustainable” businesses that seek to deliver maternal and child health care at the BOP.The importance of business fundamentalsIn their report, “Emerging Markets, Emerging Models,” Monitor Inclusive Marketsdescribes the “all-too-common” problem for companies developing pro-poor productsand services: a company believes that “a superior product would sell itself, thus ignoringbusiness fundamentals”, for instance “failing to think through its distribution model andpricing.”86 The report continues: “A great product idea married to a noble mission,however, is rarely enough to make meaningful progress in the face of massive socialchallenges like improving the lives and livelihoods of billions worldwide living inimpoverished conditions. Success requires business models that work in the particularcircumstances of the bottom of the economic pyramid, where consumers and channels84 World Business Council for Sustainable Development, “Doing Business with the Poor: A Field Guide”; Learning Journeys ofLeading Companies on the Road to Sustainable Livelihoods Business.85 World Business Council for Sustainable Development, “Doing Business with the Poor: A Field Guide”; Learning Journeys ofLeading Companies on the Road to Sustainable Livelihoods Business.86 Monitor Inclusive Markets, “Emerging Markets, Emerging Models: Market-Based Solutions to the Challenges of Global Poverty”,Ashish Karamchandani, Michael Kubzansky, Paul Frandano, March 2009. [35]
  36. 36. to reach them are not only extremely price-sensitive, but also cut off from news andfacts that might help.”87In particular, Monitor discusses Servals’ Venus burner, a clean burner that uses 30%less kerosene than conventional models. Despite management expectations, sales ofthe Venus burner remained low upon launch. The biggest drivers of this low penetrationrate were distribution challenges and an expensive price point relative to competitors(as the company had priced the product double traditional burners, due to its fuelefficiency).88Once the company focused on business fundamentals such as pricing and distribution,however, sales of the Venus burner grew tremendously, crossing one million units in2008. Specifically, the company reengineered the burner, revised price to be morecompetitive, and improved dealer margins.89 What Servals’ Venus burner shows is thatdespite innovative technology and a core mission focused on improving lives, businessfundamentals must be in place for the company to thrive.A Delicate Balance: Aligning IncentivesAt the same time, what differentiates pro-poor sustainable businesses from traditionalbusinesses is this core mission. Sustainable businesses must delicately balance theirbusiness objectives with their social objective; successful ones ensure that incentivesare aligned to meet each of these goals. Successful sustainable businesses watchwhether either of these objectives -- whether social or financial -- are out of balance,and make appropriate changes.For example, LifeSpring Hospitals began with a model of cross-subsidization.Customers who could afford LifeSpring’s semi-private and private wards cross-subsidized poorer customers who stayed in LifeSpring’s general ward (a typicalLifeSpring Hospital comprised of 70% of beds in the general ward). Because overallprofitability rested on ensuring high occupancy of its semi-private and private wards,however, LifeSpring found a conflicting set of priorities and incentives: while LifeSpring’ssocial mission targeted women staying in the general ward, its model for sustainabilityrested on women staying in the semi-private and private wards. This led to differencesin approach to how women were marketed to and targeted, dividing the time ofimportant resources such as community outreach workers.To avoid mission drift and remain focused on its core set of customers, LifeSpringultimately shifted its model from a cross-subsidy approach to a “general ward-only”model. In doing so, it engaged in a rigorous activity-based costing analysis to further87 Monitor Inclusive Markets, “Emerging Markets, Emerging Models: Market-Based Solutions to the Challenges of Global Poverty”,Ashish Karamchandani, Michael Kubzansky, Paul Frandano, March 2009.88 Monitor Inclusive Markets, “Emerging Markets, Emerging Models: Market-Based Solutions to the Challenges of Global Poverty”,Ashish Karamchandani, Michael Kubzansky, Paul Frandano, March 2009.89 Monitor Inclusive Markets, “Emerging Markets, Emerging Models: Market-Based Solutions to the Challenges of Global Poverty”,Ashish Karamchandani, Michael Kubzansky, Paul Frandano, March 2009. [36]
  37. 37. lower its operational costs, although it also raised prices to ensure the general ward-only model was profitable. Continuing beyond the pilot and roll-out period, LifeSpringengaged in socioeconomic analysis of its customer base to ensure that it was stillreaching its target group of women living in families making between $2-5/day (typicallythe wives of auto rickshaw drivers or vegetable sellers). Challenge: Accessing capital, determining legal structure and hiring talent: Arguably the most prevalent difficulty faced by aspiring profitable businesses in the developing world is accessing capital beyond start-up and angel funding. Coupled with this, talent is a key challenge faced by social businesses.By far the most common challenge cited during this study is the difficulty that aspiringsustainable businesses face in accessing capital beyond start-up and angel funding.Many CEOs we spoke with cite that they spend 50% or more of their time raisingcapital, which can be difficult for early stage ventures that are not yet profitable.Traditional investors typically have a target return and a target exit date, which can bedifficult particularly in health care companies with high start-up and capital expenditurecosts. On the other hand, traditional foundations typically are wary of donating toprivate sector providers (who may not even be able to accept grant funding given theirlegal structure). In the past ten years, there has been an increase in social impactinvestors such as Acumen Fund, Omidyar Network, SONG Investment Advisors, andBamboo Finance, who look for a blend of both social and financial returns, and offerpatient capital. Indeed, despite the economic slowdown of recent years, there has beenretained investor interest in social enterprise, likely due to the industry’s recession-proofnature, social objectives, and small size of deals.90 Aspiring sustainable businesseshave experimented with a number of legal structures that leverages financial capitalavailable -- some becoming a private corporation, some registering as a 501(c)(3), andsome utilizing a hybrid organizational model.At the same time, practitioners point to “The Blended Value Map” and what JedEmerson has called for to bring the impact investing industry to the next level:“We must move beyond the current capital chasm that contributes to preventingblended value ventures from achieving scale and blocks potential investors from movingnew forms of capital into the market... It is obvious that new investment instruments arerequired, new syndication opportunities need be advanced, and an evolved, integrated90 Deepti Chaudhary, “Investors back social initiatives, fund ventures,” Mint - The Wall Street Journal, October 5, 2009. [37]
  38. 38. capital market must be brought into reality--a market that pursues economicperformance with social and environmental impacts.”91After funding, the challenge of hiring talent came up most frequently during interviewswith leaders of sustainable businesses. All organizations face the challenge of hiringamazing talent; this challenge is one discussed by Google, General Electric, and othersfrequently. This challenge is exacerbated in the case of sustainable businesses, who,due to their low-cost business structure, are often unable to pay competitive top wagesin the low- and middle-income countries in which they work. Add to this the specificclinical requirements necessary in the health care sector and the relative dearth ofskilled medical professionals in sub-Saharan Africa and rural South Asia and thechallenges of hiring talent become clear.Case Study:Healthpoint Services GlobalAs a social enterprise, Healthpoint Services Global struggles with the same operationalbusiness challenges as any other enterprise -- with the added challenge of serving theBOP, profitably. In managing and scaling its eHealthPoint kiosks that provide cleanwater medicine, and health care services, senior leadership point to challenges aroundtalent, financing, and competition; as well as the need for flexibility and innovation in thismarket.92Business as Usual: The challenges of talent, funding, and competitionAs Healthpoint Co-Founder and CEO Al Hammond notes, one of the most difficultchallenges that Healthpoint faces is finding good, talented people willing to work in ruralareas.93 While growing businesses everywhere may face the challenge of attractingand retaining talent, the challenge is exacerbated in rural areas throughout thedeveloping world. Mr. Hammond suggests that being backed by a well-known investoror funder can help in attracting talent.A second key challenge that social enterprises face is around funding. As in traditionalbusinesses, most early stage social ventures are not yet profitable, yet as Mr.Hammond notes, an enterprise must be profitable in order to attract capital. Like otherleaders of social enterprises, much of his time is spent raising money. Healthpoint iscompletely funded by private investors, and is currently closing its third equity round.The enterprise expects to be profitable as a company in 2013.91 Jed Emerson, The Blended Value Map: Tracking the Intersects and Opportunities of Economic, Social and Environmental ValueCreation, 2003.92 Phone interview with Al Hammond, January 20, 2012.93 Phone interview with Al Hammond, January 20, 2012. [38]
  39. 39. A third key challenge revolves around competition. Just as any other new businessmust focus on its key differentiator against entrenched competitors, Healthpoint mustdifferentiate itself from other available options, most notably informal providers oftenreferred to as “quacks.” As Mr. Hammond notes, “Quacks are tough competitors forwalk-in care, so we are moving towards higher-level services, such as chronic caremanagement and maternal care.”94 On developing Healthpoint’s package of services,he states that: “Another lesson has been around bringing a certain package of servicesto rural communities. We didn’t have this right when we started. We took those piecesapart and figured out what to improve and ways to do this efficiently. We’re not at theend of that process yet. We’re committed to figuring out how to do this sustainably.”9594 Phone interview with Al Hammond, January 20, 2012.95 Phone interview with Al Hammond, January 20, 2012. [39]
  40. 40. III. RECOMMENDATIONSDemandSocial marketing pilot campaign; Journalist training program1. The IWG could explore establishing a pilot program that tests if social marketingcould effectively translate need into demand in target regions. This could be achievedthrough collaboration with Development Media International, Population ServicesInternational or another organization involved in social marketing for global health.2. The IWG could also organize a journalist training program to leverage mediaalready reporting on maternal and child health in the wider effort to shift behavior andspending habits. This could be achieved by establishing a coalition of mediarepresentatives from various countries, much like the African Broadcast MediaPartnership against HIV/AIDS.Reaching the base of the pyramidCountry-wide insurance or health financing programs3. The IWG could review what is already known about performance-basedincentives for maternal and child health and engage with relevant stakeholders tospecify ways to scale programs that work. This could lead to the IWG overseeing atoolkit that would help health ministries assess the pros and cons of the variousfinancing mechanisms available to them.PartneringCatalyzing partnerships along the value chain4. As a possible extension of the Task Force on Sustainable Business Models, theIWG could lead an effort to structure strategic private-sector collaborations for maternaland child health across all areas of the value chain. It could also explore supportingwinners of grant competitions (such as Saving Lives at Birth) with incubation grants thatwould encourage partnership as a means of reaching scale.Local contextCountry-level, private-sector forums; Business councils5. The IWG could host country-level forums that engage local, private-sector actorsas well as government representatives around how they could jointly support context- [40]
  41. 41. specific, market-based solutions that reach women and children. It would be imperativethat these meetings proactively target local SMEs and regional companies that span theentire supply chain for maternal and child health in a given country.6. The IWG could also spearhead the organization of in-country businesscouncils—similar to those set up by the World Economic Forum for AIDS—which wouldbring together high-level representatives of companies working in maternal and childhealth.Scaling upScaling grant challenge winners7. The IWG could work with winners of grants and other early-stage funding—suchas Saving Lives at Birth—on the various routes the individual or company could take inorder to achieve scale. This could be addressed through various toolkits tailored to aspecific type of company, a specific category of service or a specific region/country, andit could be tied in directly with the recommendation around partnerships.TechnologyAssessment of mobile and other eHealth platforms for training, stock level managementand remote care8. The IWG could work with organizations like the mHealth Alliance, World HealthPartners and Dimagi—as well as companies like Intel, Abbott Labs and Vodafone—toestablish a suite of software tools for businesses to use as a means of training theirpersonnel, managing stock levels and even facilitating remote care. The IWG couldbuild on Dimagi’s CommCare training module for health workers, Abbott’s warehousestock monitoring tool, World Health Partners’ telemedicine program or a number ofother existing technologies that are being leveraged for maternal and child health.Measuring impactAccreditation program9. The IWG could spearhead an accreditation program for private health shops,pharmacies, etc. to ensure high-quality care throughout the maternal and child healthsupply chain. The program could put forth minimum required standards in the areas ofshop/facility location, personnel training, drug availability, drug quality, stock control andsanitation/hygiene. This approach could be modeled after Management Sciences inHealth’s ADDO program or the African Union’s health worker accreditation program. [41]