The HealthStore: Using Micro-Franchising to Improve Access to Life-Saving Medicines

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The HealthStore: Using Micro-Franchising to Improve Access to Life-Saving Medicines

United States
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Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

On average 25,000 people die every day in developing countries for want of basic medicines that cost less than a cup of coffee. Most of the victims are under five. 70% of childhood illness and death is caused by a short list of diseases which are inexpensively treatable and preventable. A HS patient is typically a lower income rural farmer. Currently HS sites are in small, rural market centers serving populations between 5,000 and 10,000 people, with a density of 500 people or more per sq km. The HealthStore targets villages with inadequate access to essential medicines, underserved by the existing public and private health infrastructure. HS measures access based on proximity, affordability, quality and consistency of in-stock availability. In Kenya, 56% of the population lives more than an hour away from a health facility. Even where drugs are available, they are too often overpriced, of poor quality or given inappropriately. Drug shortages at public facilities are a chronic problem throughout Kenya. It is common for rural villagers to spend a full day and up to $2 in transport to a government dispensary only to find, after waiting in a long line, that vital prescriptions are unavailable. Studies show that private independent drug sellers often stock counterfeit or out of date medicines and rarely provide competent diagnoses.

About You
Location
Project Street Address
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Your idea
Sector of activity

Healthcare

Other sector of activity
On the mosaic diagram, which of these factors is the primary focus of your work?
Factor

High volume business based on small (even tiny) individual transactions

Principle

Leverage the power of communities as both consumers and producers

Innovation
Description of your products or services:

On average 25,000 people die every day in developing countries for want of basic medicines that cost less than a cup of coffee. Most of the victims are under five. 70% of childhood illness and death is caused by a short list of diseases which are inexpensively treatable and preventable. A HS patient is typically a lower income rural farmer. Currently HS sites are in small, rural market centers serving populations between 5,000 and 10,000 people, with a density of 500 people or more per sq km. The HealthStore targets villages with inadequate access to essential medicines, underserved by the existing public and private health infrastructure. HS measures access based on proximity, affordability, quality and consistency of in-stock availability. In Kenya, 56% of the population lives more than an hour away from a health facility. Even where drugs are available, they are too often overpriced, of poor quality or given inappropriately. Drug shortages at public facilities are a chronic problem throughout Kenya. It is common for rural villagers to spend a full day and up to $2 in transport to a government dispensary only to find, after waiting in a long line, that vital prescriptions are unavailable. Studies show that private independent drug sellers often stock counterfeit or out of date medicines and rarely provide competent diagnoses.

Description of the operational model:

HS employs a franchise system, one of the most successful private sector business models, to address a significant public health issue. The incentives, controls and scale of the franchise model allow HS to deliver high quality primary care at very low cost. HS currently operates a network of 64 independently owned and operated health outlets in Kenya employing the same principles driving successful multi-national franchisers. Health workers run their own outlets under a tightly controlled license from HS. The franchise system creates performance incentives through ownership. Each outlet is geared to provide a living income for its owner, ensuring sustainability. HS maintains consistent quality and care through tight franchise systems and controls and achieves efficiency through scale and standardization across the entire network. At scale, the cost to improve access to basic medicines with the HS model will be less than US $1 per person per year. The HealthStore ensures consistent quality and care through tight franchise systems and controls: ? Using rigorous systems and training ? Maintaining a consistent brand image across all outlets ? Enforcing careful selection of locations and operators ? Employing strict controls on quality, care and service backed up by regular inspections. ? Revoking or replacing franchises that do not consistently comply with standards.

Impact
Description of the financial model:

The HealthStore achieves efficiency through scale and standardization by: ? Leveraging the combined buying power of the full network to obtain quality medicines at the lowest possible cost and strictly controlled prices at retail ? Building significant scale that will reduce the cost to improve access to essential drugs to less than 75 cents per person per year CFWS focuses on a short list of infectious diseases: Malaria, respiratory infections, diarrhoeal disease, and worms, referred to as ?treatable killers?. Most treatments cost less than 50 cents at retail. Treatment is affordable to all but the poorest of clients. In Kenya, over 20% of CFWS patients are treated for Malaria. In 2005, Malaria treatments will likely approach 100,000 patients. CFWS outlets may also treat opportunistic infections associated with AIDS. CFWS policy is always to price at or below the cost of alternative sources. In future CFWS plans to evaluate mechanisms for partially or fully subsidizing preventative and/or treatment products for the absolute poorest customers. This might come in the form of subsidized vouchers.

Client fees represent this approximate percentage of operational budget:

20%

Key operational partnership:

HS collaborates with the Kenya Ministry of Health (MOH). All HS outlets are licensed by the MOH. The organization works closely with the Kenya MOH on health education and outreach, particularly though free primary school health screenings. Liza Kimbo, CFWS? Kenya executive director, serves on the MOH coordinating committee for Malaria control.

Current outreach:

We are at the <i>Scaling Up</i> stage. In 2005 The HealthStore finds itself at a decisive inflection point akin to a late stage venture backed company. It has proven most of the key elements of its innovative model and is poised for rapid growth. Yet the organization is still small with a relatively modest budget.

How many clients have benefited from your product/service in total? Over the last year?:

On the program front things continue to go very well. We have served over 224,000 patients ytd through the end of June. This is over three times the number reported in the same period in 2004 and more than the total served in ALL of the prior year. Sales per outlet are up over 50% and visits per outlet are up over 100%. May was an all time record month.

What percentage of your clients is below the poverty line ($2 per day)?

<i>90%</i> A CFWS patient is typically a lower income rural farmer. Currently CFWS sites are located in small, rural market centers serving populations between 5,000 and 10,000 people, with a density of 500 people or more per sq km. CFWS? priority focus is on villages with inadequate access to essential medicines, underserved by the existing public and private health infrastructure. CFWS measures access based on proximity, affordability, quality and consistency of in-stock availability. Drug shortages at public facilities are a chronic problem throughout Kenya. It is common for rural villagers to spend a full day and up to $2 in transport to a government dispensary only to find, after waiting in a long, slow line, that vital prescriptions are unavailable. Studies show that private independent drug sellers often stock counterfeit or out of date medicines and rarely provide competent diagnoses.

What is the order of magnitude of the potential demand for your products or services? Which other low-income groups, countries or regions could benefit from it? Try to quantify (number of clients, market size in currency).

There is enormous demand for 1) Tripling the reach of The HealthStore network in Kenya and, 2) Launching the effort to replicate the health franchising model in other African countries most afflicted by these diseases. There is enormous demand for health franchising in developing countries. To respond to weekly appeals to replicate, The HealthStore?s vision is not just to build its own health networks, but to deploy this new sustainable model for providing quality healthcare in underserved areas that can be widely replicated by others. In this way HS will have a much broader impact than it ever would on its own.

Scale-up strategy:
How many low-income individuals do you plan to benefit in three years from now? How are you planning to scale up or replicate your solution? What are the major constraints to scale up?

These are the five key goals for building and strengthening The HealthStore Network in Kenya: 1. Improve the impact and sustainability of the outlets by increasing the number of patients treated, growing outlet sales, and improving franchise compliance. The HealthStore aims to increase average patient visits per outlet by 25% over the 2005 run rate and the average annual outlet sales by 30%. 2. Grow the number of outlets from 68 to 200. The combined increase in outlet productivity and growth will more than triple patient visits from the 2005 estimate of 350,000 per year to over 1,500,000 per year. 3. Develop and test a mobile clinic model serving more remote, sparsely populated areas. 4. Expand services, products and marketing efforts to improve childhood survival. 5. Continue to improve and document all aspects of the health franchise operating system

Which specific areas - and why - in your field would benefit most from investment by corporations, foundations, and other investors:

Donors can make a dramatic difference in the growth of a powerful new idea. It is a stage where a modest financial investment can produce dramatic returns in public health. Supporting the success and replication of The HealthStore can have a multiplier effect by unleashing pent up funding from governments, aid agencies, and foundations that are all hungry for workable, sustainable solutions tackling the crisis of infectious disease in poor countries. The HealthStore is not a panacea for the health crisis in the developing world, but it can make a dramatic difference in the lives of millions.

Sustainability
The organization: How does the initiative fit with your overall organization's strategic goals and priorities? How did the initiative start?

Scaling in Kenya and replicating in other countries comprises 90% of the organizations strategic goals for the next three years.

Organization's legal status:

The HaealthStore Foundation

Number of Employees:

under 20