Healthcare Series: Integrated Healthcare for the BoP, the Role of Enterprise, Government
Healthcare delivery continues to be a focus for governments as well as BoP organizations given the numerous gaps in providing services and products to the BoP. Living Goods is an example of one organization working to improve healthcare delivery for the BoP in a sustainable manner.
Living Goods, a social enterprise with more than 600 independent sales agents, uses micro-franchising to distribute products door-to-door in the developing world. It’s focused on a critical and often over-looked issue at the base of the pyramid: access. Living Goods sells its products at prices affordable to the poor – typically between 10-30 percent below retail. The high cost of transportation, frequent product stock outs, inadequate quality control and inefficient distribution systems all prevent the poor from accessing affordable health products that can dramatically improve their lives. The global market is saturated with products that can save and change the lives of those living at the base of the pyramid. But these products do little good if they don’t reach a significant proportion of the people for which they’re designed. This is the gap Living Goods aims to fill by building an efficient, scalable, and sustainable system for delivering products designed to fight poverty and disease in the developing world.
The Role of Government
At last year’s Net Impact Conference, Molly Christiansen, Manager of Health Practices and Business Development at Living Goods; and Steven Chapman, Senior Vice President and Chief Technical Officer at Population Services International; spoke about the importance of creating sustainable, reliable systems for health product delivery. Their discussion of health care delivery focused on several main themes, including quality control, health communication and public-private sector partnerships. They discussed these themes under the pretense of creating integrated solutions for health care delivery.
They suggested that delivery is currently fragmented due in part to the inherent differences in enterprises and businesses providing quality health goods through a fee-for-product model. They went on to explain how this model might conflict with government entities providing short-term health fixes for free and then potentially running out of equipment and supplies quickly. The speakers suggested that aligning the services provided by government groups with enterprise models improves health care delivery in two main ways:
- Government groups have greater access to financing bulk purchases of products which can then be contracted to NGOs or private sector groups for distribution.
- Enterprises (NGOs or private sector groups) have a comparative advantage in innovating how these products are distributed in a sustainable way.
Additionally, the speakers discussed how linking government groups with non-profits like Living Goods creates an opportunity for quality improvement mechanisms to be set in place. Government groups can help create a performance-based financing space where organizations propose health care distribution models using business strategies, and in the process, commit themselves to certain performance metrics tied to funding. These metrics might measure elements of the enterprise model like the general distribution of health goods or the economic improvements for community health workers (i.e., increases in income).
For example, in Rwanda, mayors meet with the president regularly and present the number of outputs they plan to deliver. At the end of the year, they are graded on their deliverables. Rwanda has found that accountability to follow through on commitments has increased and improved performance drastically as a result of the change in funding model. Individuals are no longer funded based on their promises to perform certain tasks, rather their funding is tied to the actual performance. As a final note, we might suggest that it is additionally important that governments require performance metrics to track both outputs and outcomes.
As seen with Mexico’s roll-out of universal health care, state governments were given funding based on the number of people that enrolled (an output), rather than changes in those individual’s health (an outcome). As a result, the biggest criticism of the universal healthcare plan is that there is not accountability for how state governments spend the money.
Beyond performance-based government support there is also discussion in many healthcare circles of the opportunity for the government to become more involved in providing quality standards, inspection, infection control and reducing counterfeits in health care delivery. Governments that play a role in the franchising and quality control of health care products can in turn consolidate redundancies in services and ensure consumers are getting the best products available. However, more research needs to be done on this type of government involvement particularly within countries with stability and/or more systemic corruption to determine effectiveness.
The accountability suggested in the performance-based financing model above also creates an opportunity for innovation that might bolster performance. This might mean using mobile technologies to track inventory and report sales of products; thereby improving availability of more products to sales representatives (i.e., community health workers in the Living Goods model). This also might mean improving technologies to better serve particular populations with specific health needs. For instance, using mobile health technology, a community health worker (CHW) may receive information on prenatal health care over text message and provide this information to pregnant customers coupled with their sales of nutritional supplements and vitamins. The integration of health information and effective health communication with sales of health products improves health delivery efforts two-fold: improving the efficacy of the product through appropriate and consistent use, and while educating a population on prevention and future health care practices. Furthermore, in some instances, mobile technology has the ability to increase reach as behavioral change messages no longer need to take place person-to-person such as with Johnson & Johnson’s text for health platform.
Outside of the opportunities identified through this discussion, several challenges were acknowledged.
Organizations still appear to struggle with effectively marketing innovative product packages or portfolios to the BoP. Living Goods markets its products in part by asking CHW’s to use the products themselves as well as share the benefits with neighbors. Other organizations such as E Health Point try to integrate more products and services together, offering access to clean water coupled with healthcare, for instance.
Likewise, transportation and location can be a challenge for distribution of health goods. Living Goods sells its products at the doorstep of the poor, which saves customers transport costs that can easy eclipse the product price alone. PATH, another leading global health organization, has developed needle-free injections, which reduce distribution challenges by decreasing the demand on transportation via the cold chain. Still, other organizations are experimenting with task-shifting in order to move skills to health workers with minimal training, or designing ways to get around transportation limitations so users don’t have to go to a facility to get products or treatments to distribute.
A final challenge discussed as a part of this larger discussion was micro-consignment models. Micro-consignment models also are emerging as ways to introduce more expensive products and larger product portfolios to the BoP. Micro-consignment models involve offering products to entrepreneurs without charging them for the cost of the product up front. The seller pays for the product once they’ve sold the product. However, distribution and marketing will likely continue to be challenges for enterprises seeking to deliver healthcare for the BoP and an opportunity for further innovation, so stay tuned for some unique solutions.
Questions to Consider
Given that universal healthcare coverage is difficult to obtain, there will always be opportunities to improve health care delivery. As governments continue to play financing and regulatory roles, enterprises will continue to complement the government and donor-based health interventions (such as advanced market commitments for vaccines, read more here, and the Global Fund for AIDS, TB and Malaria) to address the gaps in delivery.
As always, it will be interesting to see the innovation that enterprises will bring to delivering healthcare for the BoP. We realize this discussion on government and enterprise accountability only addresses the tip of the iceberg of current opportunities and challenges. The following are some of the questions we plan to research moving forward, and would love to hear your thoughts:
What type of models do you think will be most successful?
What type of partnerships do you see working well in different countries? Which aren’t working well?
How do you feel the challenges (marketing mechanisms, cost sharing models, and transportation and distribution models) can be addressed?
How is the role of government and enterprises different in the healthcare context than in other contexts in which BoP ventures operate?
How, if at all, do you think closer relationships due to ties to funding between governments and enterprises will affect BoP models?
How are funding relationships brokered particularly within countries with systemic corruption? Are they pursued?