As the global economy almost came to a collapse over the debate about the right to public health care insurance in the United States. I thought it would be an interesting moment to share the story of a successful for-profit business model to provide affordable health care services to underserved BoP communities in South Africa. Unjani Clinics, which means “How are you?” in Zulu are a sustainable fee for service based business model that provide basic health services such as basic eye care in refurbished containers operated as franchises by certified nurse practioners. It is a model that has gained steam and expanded from three to seven clinics in the last year. Those looking to figure out better ways to better serve the BoP with healthcare services should take noticed.
WHAT IS THE BUSINESS ABOUT?
Unjani Clinics are an interesting franchise model where health services are provided in reused 40 foot containers or “clinics in a box”. Because of their simple design and that they are made from recycled materials means the “boxes” can be built to order in less than four weeks and once placed in the community up and running in less than a day. The franchisee typically a female nurse practitioner receives a “box” along with necessary equipment, training and growth capital for a period of five years. The nurse is required to pay back 50% of the initial CAPEX over the five years in return for acquiring 20% ownership for each year which passes. The containers are placed in communities where little or no public healthcare services are being provided. The clinics only provide basic services such as vision screenings, HIV/AIDs, diabetes and hypertension management. Fees charged for these services are affordable and capped by the IHS to be within community budgets.
HOW DID IT START?
RTT Intelligent Logistics a large privately owned South African logistics company team up with Stellenbosch University Business School through the Base of the Pyramid Learning Lab and built the idea for Unjani Clinics in 2010. One of the first “Clinics in a box” was set up in September 2010 at the Wattville Adult Education Centre, near Benoni. Since then the idea has been expanded and taken up by Imperial Health Services (IHS) in its efforts to comply with larger South African transformation agenda. Specifically in the areas of socio-economic development and enterprise development.
WHAT IS THE SOCIAL NEED IT ADDRESSES?
At a system level Unjani Clinics try to alleviate through private initiative the overburdened South African public health sector which is overrun by the basic needs of patients who do not have the knowledge to self-medicate. In addition Unjani provides an avenue of empowerment for female entrepreneurs to transition from low-wage public sector servents to franchise business owners. Finally and perhaps most importantly the clinics provide access to poor and underserved populations at affordable prices that did not traditionally have access to quality services. The clinics try to fill that gap with a low-cost and consistent quality model.
WHAT IS THE BUSINESS MODEL?
- Value proposition – Affordable and high quality basic healthcare services where you need it without the long wait associated with public health services
- Customers – Mainly low-income underserved rural populations in South Africa, but also serves middle-income earners as well
- Distribution channel – Franchise model. Any accredited nurse willing to invest 5 years of their time to build a clinic in an underserved area can do it.
- Revenue streams – Fee for service. Clinics received about 8 patient consultants per day with average consultations running between 100-150 Rand. Some of the clinics have begun to develop additional revenue streams by providing additional services such as over the counter sales.
- Costs – Each clinic is extremely low-cost. For the franchisees they must pay back half of the CAPEX in monthly payments over five years. In addition there is the cost of the nurse and administrative assitant and the medical supplies.
WHAT ARE SOME CONCERNS I SEE WITH THE MODEL?
Quality assurance – I remember reading some research from Africa that even in poor communities, people respond to quality more than convenience. Thus it will be critical that for services provided quality is on par or better than alternatives including the waits they may require.
Price caps – With price caps on the services and medications it makes the clinics more affordable but runs the risk that they will be unsustainable. They will rely on the warm hearts of the good nurses who are willing to give up secure incomes and good jobs in return for doing good for the poor communities the clinics are set up inside.
Low hanging fruit – It seems that the health issues the clinic cover are basic and relatively easy to handle. What about the somewhat more sophisticated healthcare and counseling needs? This model won’t work.