Here we set out:
- Lessons learned by EfD exploring and/or supporting ventures over the past 5 years; and
- examples of best practice and lessons learned by other organisations with experience of success and/or failure scaling up sustainable business models
EfD lessons learned
Penda’s success provides lessons for others about how to design and implement high quality, affordable, financially sustainable and scalable healthcare services in sub-Saharan Africa. There are several key ingredients:
- Understanding what “high quality care” means for patients Consistent implementation of internationally and nationally approved care protocols are essential but not sufficient. In addition patients are concerned with where the services are provided and with the quality of service e.g. booking visits, waiting times, friendliness, follow-up etc. Patients’ views about the quality of service are important in their own right but also because positive views are necessary in order to grow and maintain demand for the services. Regular monitoring of, and responsiveness to patients’ views is a key ingredient for success.
- Affordability of care Charges for services must be set at a level that will attract enough patient visits to maintain high clinic utilisation rates - another key ingredient for success. Appropriate charges must be assessed taking account of the income level of the relevant community and their ability and willingness to pay for healthcare. If charges are set too high, only higher income families will visit the clinic, so the clinic will not provide services to the target audience – lower income families – but also there will be insufficient demand hence insufficient revenue to cover the costs.
- Cost recovery But charges must also be set high enough to generate the revenue needed to cover the costs. To square this circle requires keeping costs low, consistent with maintaining quality, and maintaining high flow of patients through each clinic to keep down unit costs. Healthcare is a people business, so recruiting and developing staff while keeping staff costs per patient visit low is also a key ingredient. Penda achieves this by recruiting, training, mentoring, appraising and developing a relatively high share of healthcare assistants where qualified and competent to provide the relatively limited range of primary health care services provided by the clinics, supplemented as needed by doctors and more experienced nursing staff. Staff pay is kept broadly in line with public sector staff, except for lower non-cash benefits which are offset by offering higher job satisfaction and a better work environment. By keeping costs per clinic low and clinic utilisation high, revenue from levying affordable charges is sufficient to cover the costs of each clinic and make a contribution to corporate overheads.
- Scale By replicating the model across a rapidly growing number of clinics, not only do the healthcare benefits accrue to many more families but the aggregate contribution of the clinics to corporate overheads will cover all corporate costs when, in Penda’s case, 25 clinics are fully in operation. Thereafter, surpluses can be used to continue to grow the number of clinics and the range of services in more locations.
The main lessons to be learned from Jacaranda’s different model of care are:
- Cost effective skills development Mentoring public sector health workers about how to adopt a model of care that has been shown to result in excellent outcomes in a private sector setting is a more effective and less costly way than conventional training programmes.
- Sustainability There are indications that the mentoring results in sustained improvements in how care is provided in public sector providers (although formal evaluation over several years will be necessary to demonstrate for certain). Financial sustainability of such programmes necessarily depend on ongoing funding from government. Jacaranda have shown that the Counties are willing to co-fund a portion of the extra costs involved, but not 100%. Therefore, even though cost-effective, these programmes will continue to rely on co-funding from donors and private sector supporters.
- Scale Initial support from just one or two Counties in a decentralised country like Kenya followed by successful implementation in those Counties has provided a platform on which support from additional Counties has been secured. The programme has been scaled up successfully because of the early success and the willingness of additional Counties to co-fund further expansion. Whether such an approach can work in a country with a unitary healthcare system remains to be seen.
Surprisingly few of the agricultural opportunities screened by EfD have met our minimum criteria – sustainable and scalable agri-businesses and substantial improvements in farmers’ incomes. A key lesson learned is that all-too-often our review has shown that the sponsor cannot answer in the affirmative the following question:
Will the intervention result in an increase in farmers’ gross incomes sufficient to cover the direct and indirect cost of operations and generate a meaningful increase in net incomes?
- If the yield increase is small and the price received at the “farm-gate” is low, the increase in revenue per hectare after deducting the increased direct costs will generally also be low.
- At what scale of operations will the intervention be sustainable net of indirect and direct costs? Is there a realistic staffing, operations and financing business plan to achieve the minimum scale?
- If the intervention generates a positive margin in large part because credit is provided at no or low cost, will the business remain sustainable when operating at larger scale and hence requiring larger amounts of working capital from commercial sources?
- Are there cost-effective means of reducing farmers’ risks e.g. rainfall, pests, input/output price volatility etc.; and if yes what is the impact of the associated costs on financial sustainability?
EfD remains keenly interested in identifying agricultural opportunities that have thoughtful answers to these questions.