NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Franchising private clinics is an exciting approach for improving the quality and affordability of private health services delivered to the poor. Formerly independent private clinics are brought into franchise networks that provide quality standards and training, improved supply chains for key health products, branding, and marketing. There is evidence that this approach improves quality of care and expands access to key services. With donor support and a growing customer base, these networks have been rapidly scaling up in many African and Asian countries.

Recently, franchisor networks such as Population Services International (PSI) and Marie Stopes International (MSI), convened in Mombasa, Kenya at the first-ever Social Franchising for Health conference, to discuss how to continue improving and expanding the model. One challenge they grapple with is their traditionally narrow focus on a few donor-prioritized interventions-especially family planning-despite their recognition that the model could be applied to a broader set of health services. Furthermore, while donor money covers network services such as training and may partially subsidize the cost of drugs or health products, patients still pay out-of-pocket for services-and the very poor may not be able to pay.

But insurance reforms being launched by governments around the world may offer a different model for funding health franchise networks-a model that may be more sustainable, include a broader scope of services, and further improve access for the poor.

An attractive newcomer has recently entered the picture

Low- and middle-income countries across the globe-such as Ghana, India, Indonesia, Kenya, Philippines, Nigeria, and Rwanda-are moving to develop national health insurance schemes. Though they differ in structure and maturity, insurance programs share a few goals: raise revenues for health, give purchasing power to the poor, offer services from public and private providers. Social franchises could be those private providers.

India’s RSBY program has enrolled 25 million families (over 100 million people!). Each has a smartcard entitling them to free services at thousands of facilities that are electronically reimbursed for care. Ghana’s National Health Insurance Scheme has registered 66 percent of its population-more than 15 million people. It also provides free access at the point of care to hundreds of private providers.

These programs are still rare around the world and they face numerous challenges. They need to minimize administrative costs, maintain fiscal balance, improve accountability, and ensure that they reach the poor.

In particular, health insurance programs grapple with how to verify that hundreds or thousands of providers actually deliver services they bill for and how to assess the quality of those services. With a LOT of new public money flowing to private providers, both supporters and critics of insurance schemes are understandably worried about accountably and quality.

Are social franchises just what national health insurers have always dreamed of?

Last June in Mombasa, Kenya, a group of health insurance policy makers-members of the Joint Learning Network for Universal Health Coverage-learned more about the franchise model. Many of them were quite intrigued-particularly by the promise of large-scale reach, ability to assure quality, and the networks’ efficient management structure.

One franchisor can efficiently link to hundreds of small private facilities in the network. Networks oversee the initial accreditation of individual providers, the development of standards of care, and monitor how well providers comply with standards.

Franchisors in turn can also enroll members into insurance schemes. This would be a boon for government, since reaching the poor is a big challenge and those working in the informal sector regularly collect premiums and process claims to reimburse clinics.

Is this a match made in heaven for social franchisors?

Interacting with government insurers could be a headache for franchisors used to operating independently. What’s in it for them?

If health insurers contracted with franchises, poor members enrolled in insurance could receive free care at franchisee clinics. This would drive up volume and provide a new stream of consistent revenues. More low-income people would get access to quality services-since the franchisee clinics would have to comply with standards, or be kicked out of the network and lose revenue.

Working with health insurers could also enable franchisors to broaden their service offerings. Currently, they typically offer services the poor can pay for out-of-pocket alongside subsidized services of interest to donors. But the business model and tools used by franchises could be applied to other health services.

Many national health insurance programs cover mainly inpatient hospital benefits, but insurers now feel pressure to broaden their benefits to include primary and preventive care. One barrier to broad benefits is the challenge of interacting with a fragmented mixed-quality outpatient delivery system.

So when’s the first date!?

Franchisors could begin conversations with countries that already provide broad benefits packages including primary and preventive care with mechanisms to pay private providers – such as Ghana and Rwanda. Schemes like RSBY in India, National Hospital Insurance Fund in Kenya, and PhilHealth in the Philippines, are considering expanding their traditional inpatient offering. Insurers in these countries could add primary care benefits provided by social franchise networks.

But to be attractive partners for insurers, franchise networks will need to commit to gradually expanding their service offerings. Providing a broader range of maternal and child health services-including safe deliveries-may be an important step. Franchise programs taking government-issued “vouchers” or coupons for care [Check out a past NextBillion post on this issue] could provide a stepping-stone toward integration with national insurance.

A marriage proposal may be on the horizon

Clearly, such partnerships will be full of complexity. But love is in the air.

Five months after policy makers discussed this topic in Mombasa, franchisors convened in the same location, with the same topic on the agenda, with new partnerships afoot. BlueStar Ghana and the country’s insurance program were rumored to be starting out together, as were BlueStar Pilipinas and PhilHealth. In addition, 300 Accredited Drug Dispensing Outlets (ADDO) were accredited by Tanzania’s health insurance fund.

The marriage of networked clinics with government health insurance is a vision of how health systems might be organized to improve the quality of care delivered by private providers, while also providing increased access to care for the poor. But like most cases of “love at first sight,” a long-term relationship will require patience, compromise, and hard work for the marriage to succeed.

Please like NextBillion on Facebook, follow us on Twitter and/or join our LinkedIn group.