Can a franchise deliver global health?

by Anjali Sastry on November 20, 2010

Can franchises deliver better and more health care cost-effectively in places where current system fall short, and along the way equip a cadre of microentrepeneurs to spur economic development? We looked at the issues again this year: first, to explore what franchising entails, next, to study one chain of franchise clinic-pharmacies operating in Kenya and Rwanda, called CFWShops, and finally to lay out what we see as the most important questions. Check out the two previous blog posts linked above for more on each of the first two themes, and explore the new resources lined up below. Then take a look at the questions we identified in our discussion and tell us what you think.

To learn more about the experience to date: there are some useful recent resources.

SF4Health is an online community of practice hosted by the Global Health Group at the University of San Francisco: it’s the best place to go if you want to learn more about dozens of global health franchises as well as about the issues. Here’s how SF4Health puts it:

Social franchises use commercial franchising methods to achieve social rather than financial goals. Building upon existing resources in poor communities, social franchises network together private health providers to add new, higher quality services in exchange for training and support. The goals of social franchising are to improve quality, increase access to care, expand the affordability of services and to rapidly increase the number of delivery points for important public health services.

There’s a lot of material here worth clicking through. Their annual social franchise compendium is nothing short of encyclopedic.

A 2009 study by Dalberg explored the prospects for franchising in what they call “Frontier Markets.”  If franchising is a commercial approach to replication, scale, and efficiency, does it offer a business model for creating financial and social returns in the developing world? The study analyzed the benefits, opportunities, and challenges for franchising, looking at some potentially critical strategic and tactical adaptations for very low-income markets. Here’s the full report on Franchising in Frontier Markets and this is a high-level summary. And here is the related article, based on this study, by Steve Beck, with Wouter Deelder and Robin Miller, that we read for class. Beck and colleagues consider franchising for a variety of products and services, leading us to consider why a taxis appear more profitable than retail clinics. For an even broader look at business models for low-income markets in developing countries, take a look at “Emerging Markets, Emerging Models,” a detailed report by the Monitor Group analyzing the behaviors, economics, and business models of successful market-based solutions—financially-sustainable enterprises that address challenges of global poverty.

Back to CFWShops, or Child and Family Wellness Shops, called “good-looking, standardised ‘chains’ of shops [that] aim to sell health like McDonald’s sells hamburgers.” That quote is from a publication called Real Health News in a 2007 story titled Shopkeepers to deliver health to Africa (find the article on page 6). Copied throughout Africa, they could provide and sustain a million new health workers, the writers note.  The article points out that research on this and other implementation initiatives is essential.

What do the nurses themselves make of the franchises they run? For more on CFWShops (to accompany the many resources in my earlier post also linked to above),  learn from the franchisees themselves in Shopping for health care (from page 35 on in this 2007 newsletter): nurses and researchers tell how micro-franchising works in the field.

So, what are the issues we uncovered? We recognized how much we still need to learn as we asked, is the franchise model sustainable? How much of a contribution could CFWShops offer towards meeting the need for health care delivery in resource-constrained settings?  Here are just some of the issues that came up in class:

  • How can a franchise chain capture value from the higher quality it offers? (An excellent network can offer better services and goods, e.g. by eliminating counterfeit medications and refining its training and management processes.) Customers can find it difficult to directly assess quality of some aspects of medical care (prevention, diagnosis) whereas other aspects, such as wait times, are extremely easy to observe. How to capture the value of good service and products?
  • How to enforce contracts? What can be done when a franchisee does not perform well? What are the implications of the regulatory and business environment?
  • Does the arrival of a franchise inhibit more indigenous entrepreneurship?
  • How can goods and services that serve social needs fit with the drivers of value in franchise models?
  • How to maintain pricing and fee collection for medical service: a nurse can find it difficult to turn people away
  • Is there a marketing, advertising, and other brand benefit to the franchise network in serving the poor, who may not have much mobility or access to advertising?
  • Why ask trained nurses–already in short supply–to become entrepreneurs? Shouldn’t they be spending all their time caring for patients?
  • What’s the alternative for the customers? We recalled the IFC study that showed a large percentage of all income levels of the SSA market getting their medical care from sellers of medications and drugs (often not licensed pharmacists). Even if scope of care is limited, isn’t there value in having something–better than nothing at all?
  • How to leverage the franchise network as a learning organization? For instance, what sorts of data can be collected from the network? A survey of data issues in social franchising organizations underscored the widespread challenges in high-quality data collection.
  • What are the lessons from retail clinics in other settings, such as the US Minute Clinics and CheckUps? What about partial franchises, such as Greenstar, which we learned about in Social Franchising to Improve Quality and Access in Private Health Care in Developing Countries, the 2008 Harvard Health Policy Review paper we read (by David Bishai, Nirali Shah, Damian Walker, William Brieger and David Peters). Here’s a 2009 presentation on Greenstar that offers some more data.

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