Funded by The Private Sector Innovation Programme for Health (PSP4H) Exploring the Future of Healthcare Programming

Funded by Kenya Medical Association Symposium - Realigning Healthcare as a Business Ron Ashkin, PSP4H Team Leader Nairobi 17 th November 2015

Funded by Karibu Welcome Thank you for your invitation. We are delighted to have KMA as our partner in improving Kenya’s healthcare system.

Funded by What is The Private Sector Innovation Programme for Health (PSP4H)? A three-year action research project ( ) funded by the UK Government’s Department for International Development (DFID) to explore the markets in which poor people pay for-profit providers for healthcare DFID is the UK Government’s international development agency whose primary mandate is reducing poverty PSP4H exists “to improve the for-profit health market in Kenya, so that poor people get better value for money they spend on health”

Funded by Pro-Poor Private Sector For Profit PSP4H

Funded by Public Sector Health Care Delivery Public-Private Partnerships Private Sector Health Care Delivery Who Does?Who Pays? Public Sector Private Sector Public Sector Private Sector M4P

Funded by The Private Sector Innovation Programme for Health (PSP4H) PSP4H’s primary target group is low income consumers, primarily informally-employed daily wage earners, who pay out-of-pocket for healthcare The project partners with private sector organizations like KMA to identify and pilot innovative approaches, and scale them up if they are successful and viable PSP4H encourages the private sector to invest its own money to provide healthcare services to the target group (we are a consulting firm, we don’t give money) Evidence and lessons learned are documented and shared on

Funded by The Kenyan Population Pyramid, as Seen by Business 45% Cannot Pay 50% Can Pay Less 5% Can Pay Health Care Consumers Current Market Opportunity to reach 22 million

Funded by 83.3% of employment in Kenya is informal (e.g., juakali) This group is largely uninsured (single digits) These consumers have small amounts of disposable income (est. 100–300 Ksh/day); most pay out-of-pocket for healthcare 62% of healthcare spending in Kenya is in the private sector 76% of private sector healthcare spending is out-of-pocket Ergo 47% of total healthcare spending in Kenya is out-of-pocket This burden disproportionately falls on low income groups The working poor often do not receive value for money in health care – “The Poverty Penalty” From Our Research: Who is the Target Group?

Funded by The Poverty Penalty The working poor often do not receive value for money in healthcare

Funded by Why are For-Profit Private Healthcare Businesses Interested in Serving Low Income Consumers? For-profit private healthcare businesses have an imperative to grow – growth is not an option However, in many cases, their current market is limited Only 5% – 7% of the population has clear ability to pay This “top end” is becoming saturated Businesses can expand their customer base by going “down market” as a mainstream strategy As shown, low income Kenyans already pay out-of-pocket for health care – the money is there At 83.3% of employment, our target is actually the MASS MARKET Businesses that understand this will thrive

Funded by The Gap The Business Imperative to Grow by Expanding Downmarket £ £ £ £ £ The Investment Funds to Fuel Growth £ £ £ £ £ WHAT BUSINESS MODEL??? Action research by PSP4H fills the gap

Funded by Network of Licensed Pharmacies: KPA Pharmnet A commercial retail model that organizes independent private pharmacies owned by registered Kenya Pharmaceutical Association members into a network under a common brand – over 300 members With access to reliable and affordable essential medicines from quality assured suppliers

Funded by Network of Diagnostic Laboratories – AKMLSO Labnet Access to reliable diagnostic testing facilities is among the major challenges in Kenya PSP4H is working with Association of Kenya Medical Laboratory Scientific Officers (AKMLSO) to strengthen the laboratory system in Kenya through development of a branded laboratory network called Labnet

Funded by Observations and Initial Lessons Partner engagement is key Go with existing organizations and support early adopters like KPA, AKLMSO, KMA As opposed to creating initiatives and convincing partners Leverage these networks Networks overlap – enable proper path to treatment Network effects are key to scale – reaching the mass market Leverage existing human resources Leverage existing regulatory framework

Funded by What is the Market Problem in Healthcare? Poor access to quality healthcare due to: No consumer distinction between qualified and unqualified providers No clear consumer distinction between levels of care Widespread consumer habit of self-diagnosis Unqualified/unlicensed personnel Highly fragmented sector Lack of consumer trust High markups and inconsistent pricing

Funded by The Solution A clearly identifiable place to access quality healthcare at an affordable price - franchise networking strategy: Organizes the independent physicians `market Causes change for the better Signals quality to consumers Edges out substandard market players A branded KMA network offers opportunities for: Standardizing quality Mitigating unfair competition from unqualified market players Value for money to consumers Overall better health outcomes

Funded by Benefits of Network Membership A unifying logo and brand Symbol of quality that enhances consumer brand loyalty Training in business skills Fill a knowledge gap not currently covered Quality manual and checklist Adherence to mutual high quality standards Pooled procurement Bulk purchase discounts where applicable Demand creation Consumer awareness of the proper path to treatment Peer networking and supervision

Funded by What’s Next for KMA? Strategic planning with KMA Identification of market problems and opportunities Establishment of KMA branded network Recruitment of members to network Creation of member services portfolio Branding Creating logo and brand identity Creation of quality assurance programme Training and capacity building

Funded by Internet and Social Media Check out our Web Site – The M4P in Health Portal (research reports and briefs are freely downloadable): or Join our LinkedIn Group ‘M4P in Health’: Follow us on