Engaging Private Sector Healthcare Networks to Serve the Mass Market
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1 Engaging Private Sector Healthcare Networks to Serve the Mass Market Ron Ashkin, Team Leader The Private Sector Innovation Programme for Health (PSP4H), Kenya
2 East Africa Healthcare Federation Conference 2016 Kampala, Uganda 7 th June 2016
3 The Private Sector Innovation Programme for Health (PSP4H) A three-year action research project funded by DFID Kenya (UKaid) to explore the markets in which poor people pay for-profit providers for healthcare The overall objective of the PSP4H programme is to learn lessons of how a market systems approach might benefit pro-poor health interventions, to inform future programming The project partners with the private sector to identify and pilot innovative approaches, and scale them up if they are viable DevTracker: To improve the for-profit health market in Kenya, so that poor people get better value for money they spend on health
4 PSP4H Key Messages Private sector partners can sustainably deliver quality, affordable healthcare services to the working poor It is possible to start at scale by leveraging existing networks, thereby increasing the poor s access to health services and products Market systems development in health can bring lower cost, better value healthcare products and services to the market, resulting in beneficial impacts on the health and pockets of the poor The for-profit private sector cannot be ignored if an overall healthcare system is to function well. The private sector can play a part in helping Government sustain the gains made in health and in development generally
5 Target Group Profile Low income consumers are PSP4H s target, mostly informally-employed daily wage earners These consumers have small amounts of disposable income (~ KSH/day) This group is largely uninsured (single digits) Most pay out-of-pocket for healthcare They often do not receive value for money in healthcare The Poverty Penalty
6
7 Target Group Profile Are these poor consumers passive beneficiaries waiting for handouts? NO They are active, savvy market participants who expect value for their hard-earned money At 83.3% of those employed, our target group actually constitutes the MASS MARKET Healthcare businesses that understand this will thrive
8 PSP4H Programme Activities Heavy market engagement with private healthcare players Ø 16 active interventions in seven healthcare market areas Ø Short time frame forced innovation in approach, e.g. quick intervention model PSP4H developed an approach we call starting at scale Ø An alternative to the conventional pilot-and-scale-up Working with networks in the private pharmacy (Pharmnet), laboratory (Labnet), and physician (Docnet) segments, PSP4H has fostered access to quality, affordable primary care already reaching millions of low-income Kenyans
9 65 Labnet Members
10 Case Study
11 The Market Problem Private drug sellers are often the first point of healthcare contact for low income consumers Why? Ø Convenience Ø Affordability Ø Socio-cultural norms Poor access to quality medicines due to: Ø Counterfeit and substandard drugs: ~30% overall, more at the bottom Ø High proportion of unlicensed outlets, unqualified personnel Ø No distinction between unlicensed and licensed outlets Ø Highly fragmented pharmaceutical retail sector Ø High markups % Ø Inadequate regulatory enforcement
12 The Solution A clearly identifiable place to buy real medicines at an affordable price Retail pharmacy franchise network strategy 1. Branding 2. Quality assurance 3. Pooled procurement 4. Consumer awareness A branded retail network offers opportunities for: Ø Signaling access to genuine medicine to consumers Ø Standardizing quality Ø Lowering prices Ø Mitigating competition from unregulated informal market players Ø Better health outcomes for patients
13 What is Pharmnet? A branded retail network of pharmacies owned or operated by members of the Kenya Pharmaceutical Association (KPA) Ø KPA is a professional association of pharmaceutical technologists licensed by the Pharmacies and Poisons Board Target market of Pharmnet Ø Low income market segment Ø Strategically located in peri-urban and rural areas Ø Majority of Kenyans reside in low income neighbourhoods and rural areas
14 Components of Pharmnet Network of retail pharmacies identifiable through a common logo Ø Organizes independent pharmacy owners into a brand recognizable by consumers, with the promise of quality assurance Pooled procurement distribution model Ø Nairobi Techpharm Ltd Ø Commercial subsidiary of KPA Ø Undertakes pooled procurement Ø Manages the operations of Pharmnet Ø Harnesses the buying power of the entire network Ø Procures genuine drugs at competitive prices from quality assured sources
15 Benefits of Membership A unifying logo and brand identity Ø Symbol of quality that enhances consumer loyalty Training in business skills and relevant clinical areas Ø Filling knowledge gaps to run a business successfully Quality manual and checklist Ø Adherence to high quality standards Pooled procurement Ø Bulk purchase discounts Peer networking and supervision Ø Enforcement of standards through audit Demand creation Ø Consumer awareness campaigns
16 Benefits to Key Stakeholders Consumers Ø Clearly distinguish Pharmnet pharmacies Ø Positive brand associations Ø Quality assured pharmaceutical products Ø Affordable prices Ø Increased access to real drugs and skilled advice Regulators Ø Leverage public sector s enforcement capacity Ø Identify unlicensed, unqualified pharmacies Ø Curb unethical clinical and business practices
17 Results to Date Pharmnet is already the second largest pharmacy network in Africa Ø 323 Pharmnet outlets now operating throughout Kenya Ø 156 new members trained on quality standards, awaiting enrollment and branding Ø Target of 1,000 outlets by 2017 serving 9 million Kenyans
18 Lessons Learned by Pharmnet Pharmnet leveraged on already existing retail pharmacies Using existing human resources Ø Avoiding the pitfall of many pilots which cannot scale up because the human resource cannot be replicated Huge presence in low-income neighbourhoods Ø No need to convince members to invest in these locations The business model is fully sustainable Ø The network is funded out of membership fees and margins on procurement Ø No need for grants or money incentive; the business is the incentive KPA members are already licensed and formally registered Ø Hence compliant with regulatory requirements Partner engagement is critical for success Ø Partner understood the market problem, came up with the network idea and requested PSP4H assistance to actualize it
19 This Is Disruptive Innovation Disruptive to the conventional business wisdom: Those who think only a lot of money can affect positive change in the healthcare system Those who believe that innovation only concerns technology - something with a microchip or on the internet 19
20 Internet and Social Media Check out our Web Site The M4P in Health Portal (download over 50 original research reports, briefs, cases et al.): Follow us on Join our LinkedIn Group M4P in Healthcare : me: ron.ashkin@psp4h.com
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