Rob Katz

The Healthcare Infrastructure Conundrum

The new clinic is opening today. The town council, mayor and other bureaucrats have been summoned. Maybe the state health minister is coming to cut the ribbon. The company promoting the new chain of rural health clinics has sent its CEO, and maybe even its board chair, who has traveled from thousands of miles away in the west. The garlands have been prepared; chairs and a tent have been set up. This is progress.

The hospital waiting room is very, very crowded. The nurses and attendants wade through, taking notes and trying to triage patients into wards. The emergency ward is full – it’s always full – but maybe some patients can slide into the cardiac ward for today. Or to orthopedics? Where do we have those extra beds? Check the charts – we should be able to figure it out. But the charts aren’t done – the residents will fill them only in the afternoon, then we can shift patients accordingly. In the meantime, 14, 25, 30 beds lie empty in various departments while the emergency ward is – always – overcrowded.

Of these two fictionalized accounts, which is the reality of healthcare delivery at the BoP? The answer: both are. In the last 15 years, spurred on by the notion of a fortune to be made at the bottom of the pyramid by serving low-income patients, social enterprises and their backers have brought thousands of new clinics, hospitals, franchises and other frontline health infrastructure online.

As a sector, we champion these new entrants, and for good reason. They provide high quality services to customers who were previously unable to afford them, or unable to access them. This new infrastructure combats the poverty penalty and improves lives.

But it’s not as if the public sector hasn’t invested in infrastructure. Urban hospitals, rural clinics, healthworkers – all have been built and financed by developing country governments to the tune of billions of dollars invested. In terms of raw numbers, this far outweighs the amount of impact investment or venture philanthropy that has been pushed into the new infrastructure. But on sites like NextBillion, and in the broader social enterprise community, we rarely talk about the opportunity to improve what’s already been built.

This could be a critical error. It’s far easier to talk about the promise of these new clinics and hospitals, whereas a conversation about what’s not working and how to fix it dregs up questions of fault, mismanagement, etc.

My argument is simple: some private sector enthusiasm for healthcare could be directed toward management companies – contractors or private service providers – which can apply the tools of business to make this brownfield infrastructure work better, rather than continuing to pour money into high capex businesses building parallel infrastructure. To be sure, it’s less sexy and fraught with political and regulatory risk, but it has a tremendous potential that remains untapped.

If this post were about roads, then the answer would be clear: If you already have a road between two places, but it’s fallen into disrepair, then you fix it – that’s the cost-effective solution. Building a brand new road alongside the old one usually does not make sense. For some reason, the same logic does not seem to apply to developing world health infrastructure.

At the end of the day, the work we do – and talk about on NextBillion – is about delivering critical goods and services to the poor. The best use of a marginal $1 million investment is actually a critical performance question, and we should ask ourselves: is it cheaper and more effective to fix what’s broken, or simply to resign it to the trash heap of history and build anew?

Perhaps it’s a bit of both. I realize this is a controversial concept, so I welcome thoughts in the comments section below or you can respond via my Twitter account: @robertkatz

Health Care
Base of the Pyramid, infrastructure