Making a difference while making a profit
June 6, 2013 — Can for-profit health ventures be an effective way to improve the health of poor people around the globe? Teams of students at Harvard School of Public Health (HSPH), Harvard Business School (HBS) and Harvard Kennedy School (HKS) sought to answer that question during a semester-long course during which they worked with partner organizations in Nicaragua, India, and Cambodia.
In the process, they witnessed the power of private delivery mechanisms for improving health—and experienced the messiness that is the real world of public health in resource-poor countries.
For the seventh year, Antares—a collaboration between HSPH and HBS focused on harnessing private enterprise for public health—has brought together three cross-disciplinary teams made up of four students each as part of a semester-long course that includes a five-day field experience. The teams worked with partner organizations in developing countries that are implementing self-sustaining models for providing health-related services to the poor and made recommendations for improvements. The student teams then presented their findings in April to an audience of peers, mentors, friends of Antares, and faculty at HBS.
Antares is co-directed by David Bloom, PhD, the Clarence James Gamble Professor of Economics and Demography at HSPH, and Michael Chu, a financial strategist and senior lecturer at HBS. Their idea is to cross-pollinate doing good socially with doing well financially by training cadres of students who understand that ventures providing health services to the poor based on business models might be more sustainable than those based on philanthropy or in the public sector.
As Sebastian Rodriguez-Llamazares (HSPH, MPH ’13) and admitted “public health romantic,” learned first-hand, maximizing profits can be a sustainable way of benefiting the poor of the world. Such lessons are the heart of Antares.
Read more about each student project:
Coupon Books Empowering Women To Be Healthy – Nicaragua
Calling for Care – India
Rural Sanitation: Water Filters and Latrines – Cambodia
Coupon books empowering women to be healthy
This is the sixth year that Antares has partnered with Pro Mujer, a Latin American nonprofit that seeks to empower women through microfinance, business training, and healthcare support. This year’s project was based in Nicaragua, one of the poorest countries in the region with significant health gaps and only 6.3 percent of people insured. The students’ task was to evaluate Pro Mujer’s new healthcare program piloted in the last year in Leon, Nicaragua: for preventive healthcare services, including Pap smears, dental check-ups, and discounts for optical services and other specialists.
“We think that Pro Mujer has great, but unrealized, potential to impact healthcare in the five countries in which they operate—Nicaragua, Mexico, Peru, Bolivia, and Argentina,” reported Jenna Troup, an SM ’14 candidate at HSPH. Pro Mujer has 250,000 microfinance clients, but sees many fewer of its clients in their health clinics.
Other students on the team were Patricia Ceballos Carrascosa (HBS, MBA ’13) Paloma Merodio (HKS, MPA ’13) and Sebastian Rodriguez-Llamazares (HSPH, MPH ’13). As part of the presentation, they took turns discussing the company’s background, business model, and their recommended strategy and implementation.
The team discovered that Pro Mujer’s new healthcare program was popular with Pro Mujer clients and that clients might be willing to pay more for the services they are able to access. However, if Pro Mujer achieves its health-based goal of greatly increasing use of the coupons, the team calculated that the program on its own would not be financially sustainable. Currently, a relatively low percentage of Pro Mujer’s clients use the coupons they have purchased. If more clients purchase the coupon books and use all of the coupons, the program will lose money.
To truly impact health yet make the program self-sustaining, the team proposed a few potential solutions including cross-subsidies from the microcredit side of the organization or increasing the price of the coupon book. Pro Mujer leadership has to find the balance between keeping the price low enough to encourage their clients to buy the coupon books, yet high enough to sustain the program with greater usage and sufficient profit. Also to encourage greater use of the coupons, “Pro Mujer needs to communicate more information in the packet so it’s clear where to go or how to schedule appointments,” pointed out Merodio. The team was pleased to learn that the integration of the microcredit and health sides of the organization is working well—over 90 percent of clients who have purchased the coupon book did so with an extension of credit or by using money from their savings.
Pro Mujer staff is committed to all three arms of their mission, the students determined, but staff receives twice the incentive to extend microcredit compared with selling the healthcare package. The organization needs to better align with its missions and sell both credit and healthcare together, they advised Pro Mujer leadership. They also recommended changing the title of the person in charge of credit, training and healthcare. Currently she is called the Credit Officer, but a title like Empowerment Officer might better reflect and align all aspects of her job.
Moreover, the students thought the company could leverage their current microfinance clients, who meet in groups every 14 to 28 days in someone’s home to go over their loans and finances and to pay their monthly loan installments for their healthcare program. Incentivize the women to use the clinic too, the students suggested. Perhaps they could have a contest and if 100 percent of the group, say, get a Pap smear, offer microcredit prizes.
The group’s recommendations:
• Define and ensure a sustainable business model
• Focus on prevention but enable access to treatment (there is more of a willingness to pay for treatment than prevention)
• Take advantage of an integrated alignment of services
In the audience, Santiago Ocejo Torres, MD, MPH ’10, MBA ’14, identified himself as a former Pro Mujer staff member (Country Director of Health and Human Development Services, 2011-12), and said that staff discussed issues like incentives all the time. “I’m impressed that you keyed in on that and love the idea of changing the name of the Credit Officer,” he commented.
Calling for care
In India there are only 6 physicians per 10,000 people but close to 100 percent of people have cell phones. Filling the healthcare gap, MeraDoctor, which means “my doctor,” offers a 24/7 physician-staffed call center. For a nominal annual subscription fee ($23.95 USD), its 10,000 current customers can call anytime and talk to a doctor. MeraDoctor’s goal is to have 1 million customers by 2017; they only need 100,000 customers to break even.
“Our goal was to help lower operational costs while maintaining quality as they scaled up,” explained Candy Liang (HSPH, SM ’13).
MeraDoctor was founded in 2010 by Ajay Nair, MD (HSPH, MPH ’07), a Mumbai-trained physician, and Gautam Ivatury, an expert in mobile phone-based financial and health services. This is the second year Antares has worked with them, and this year’s team also included: Will Cook (HKS, MPA ’13), Lindsey Crumbaugh (HBS, MBA ’13), and Yogeeta Manglani (HSPH, MS ’14).
After conducting interviews with doctors, nurses and customers, the students discovered that customers had a low understanding about healthcare quality. They use MeraDoctor because it is accessible at all hours and private. Most calls are non-emergency—cough, fever, or about sexual health—and the callers primarily want someone they can trust, and don’t mind whether it is a doctor or a nurse.
Having an all-physician staff was not a competitive advantage, the students concluded. MeraDoctor’s two closest competitors used both doctors and nurses to take calls. They discerned that 55 percent of the call volume could be handled by nurses, who are much more plentiful in India than physicians. If MeraDoctor staffed with a combination of nurses and doctors, they could reduce costs by 10 percent.
The students also investigated decision-support software that could improve diagnosis and productivity, assessing five vendor products and recommending one that would work best with MeraDoctor’s call platform. Though they brainstormed many other ideas—using texts for questions or prerecorded answers or interactive voice responses—they ended up focusing on two recommendations that were compatible with the founders’ mission: using nurses and implementing decision-support software, which together could achieve savings and maintain quality.
One of the valuable lessons from the experience, Will Cook pointed out, was that “we had to make sure we gave them what they wanted and what they needed.”
Rural sanitation: water filters and latrines
iDE, a non-profit nongovernmental organization with a market-based approach to poverty reduction, has had recent success in the rural sanitation market in first Vietnam and now Cambodia. Its two arms of business in Cambodia follow two different business models: a for-profit business selling ceramic water filters through sales agents who go to the villages (subsidized by the receipt of carbon credits) and a nonprofit donor-driven business selling latrines to rural households by commissioning local masons to build and market them.
Antares students were tasked to answer: How can iDE boost the sales of both water filters and latrines, and deepen its social and health impact for rural Cambodians?
Providing context, Azalea Ayuningtyas (HSPH, SM ’13) described Cambodia’s 20 percent prevalence of water-borne diarrheal disease, one of the major cause of its high rate of child mortality. Eighty percent of the country’s population is rural and 72 percent defecate in the open.
The team—which also included Andrzej Ejsmont (HSPH, MPH ’13), Brandi Burns (HBS, MBA ’13) and Jon McClain (HBS, MBA ’13)—uncovered three major problems. The supply of latrines was unreliable and varied region to region in part because the cost of the latrines was set at $35 USD. The latrines were affordable, but masons could often make more by building other products. The team also found that people stopped using the water filters because they didn’t know how to maintain them or that they could get a free replacement for a broken ceramic pot. Purchased latrines also went unused because buyers later found out that they needed a shelter to go around the latrine as well.
“We sat down with iDE leadership to see how they defined success,” explained Burns. They wanted to grow and expand the businesses, but they also wanted to be champions in global water, sanitation, and hygiene (WASH), she said. They had been using indicators such as numbers sold as metrics for success. “But if success was defined as having impact in the WASH sector, their strategy wasn’t working if people weren’t using the products,” said Burns.
Other insights emerged from interviews with customers. People wanted to purchase with their own, not borrowed, money, and their choice often came down to buying WASH products versus other daily needs like food. They disengaged when presentations went too long. Sales agents typically didn’t return to the same village to follow up with those interested.
The students then generated a list of prioritized commercial and health care initiatives. Their suggestions included creating micro savings options, shortening the length of community sales presentations, and allowing market supply and demand to dictate latrine price. They also recommended bundling latrine sales with hand washing stations, developing a fertilizer business model to address human waste management, and giving more maintenance information about water filters to iDE customers.
Cross-disciplinary approach working
The students universally felt that Antares had been an incredible learning experience. “It opened my eyes to the power of private delivery,” said Liang, who worked on the MeraDoctor project.
Students were exposed to layers of complexity, to each other’s professional tools and language, and learned how to build good functional relationships with clients. “Part of the value is that the students struggled with the messiness that is the real world,” said Beth Springer (HBS ’90), the iDE team’s technical advisor.
They learned that it was okay to push back with a client if the project is too narrowly focused, commented Terry Kramer (HBS MBA ’86) the advisor to the MeraDoctor group. He added: “The multidisciplinary, global challenges are dramatic in an area such as public health. It was energizing to see students from HBS, HSPH, and HKS come together to appreciate the diversity of challenges in this space, the need to apply multiple disciplines and an understanding of unique market challenges country by country to address these opportunities. The feeling of passion for what they worked on was outstanding.”
But perhaps the results of the Antares project were best summarized by another advisor, Tom Barry (HBS ’69): “Now we have a generation of students coming out of three Harvard schools who understand how to solve major social problems.”