While some may feel uncomfortable making money from the poor, social enterprise and emergency ambulance operator Ziqitza, estimates it has saved thousands of lives
Set up in 2005, Ziqitza, an emergency ambulance operator, brings affordable healthcare to some of India’s poorest people. The social enterprise operates around 1,250 ambulances across 17 Indian states. By its own calculations, its cross-subsidised model has helped 3.2 million people get to hospital, saving thousands of lives in the process.
This is just one of a growing number of social enterprises using innovative strategies to give India’s under-served poor access to quality healthcare. Other notable examples include Narayana Hrudayalaya hospitals and the eye care providers L V Prasad Eye Institute and Aravind Eye Care System.
India spends 4% of its GDP on health (less than half that of the UK), meaning government-run hospitals and clinics are invariably over-stretched and under-resourced. Those who can afford it, go private while the vast majority of India’s 1.2 billion people rely on the state.
The idea of using market-based solutions to help provide affordable healthcare to the poor makes “perfect sense”, according to Ajit Mahadevan, India country director for the impact investment fund Acumen. Over the last decade, the US investor has ploughed around $16m into 10 pro-poor healthcare providers across the country.
“There are willing customers out there for low-cost, quality health services, but they are not getting serviced”, says Mahadevan, who insists that Acumen’s goal is not to make a “fat return” but to reinvest any returns in a revolving fund for other social enterprises.
He accepts that some may feel uncomfortable about the idea of making money from the poor – a criticism that India’s microfinance sector has faced. But as long as the services and products remain affordable and high quality, he sees no problem. Treating patients as “valued customers” gives them dignity too, he argues. What’s more it offers the poor the rare opportunity to hold their health provider to account.
Business viability
When it comes to serving the poor, the returns are invariably too low or the effort too high to interest mainstream businesses. Hence the need for a values-based approach that sees revenue generation as a means, not an end, says Ziqitza’s co-founder and chief executive, Sweta Mangal.
“Private ambulance services that are out-and-out commercial will only provide a service to you if you are willing to pay for it. But my objective as a social enterprise is first to save a life and second to be [financially] sustainable.”
Tiered pricing is one way to achieve such economic sustainability. By charging rich patients more, health service providers can generate cross-subsidies for the poor. Ziqitza’s method of distinguishing between the two is whether they ask to go to a private or government hospital: crude perhaps, but an accurate benchmark of relative income for the most part.
Public-private partnerships present a second possible option. Ziqitza has a contract to deliver ambulance services for the states of Bihar, Orissa and Punjab and generates extra revenue from corporate advertising on the sides of its vehicles.
Keeping costs low offers another obvious route to economic viability. Asian Health Alliance (AHA), a low-cost provider of diagnostic services in the state of Karnataka, benefits from lower business rates and real estate costs because it operates primarily in semi-urban and rural areas. It also runs courier services, avoiding the cost of expensive middlemen by picking up samples itself. AHA’s costs are 25-30% lower than the sector’s larger players – savings that it can use to offer cheaper services.
Achieving scale
It’s not all sacrifice, however. Pro-poor health companies tap into new markets that mainstream operators have ignored. “Everyone wants to go to a bigger market to do business”, says Mohapatra. “But the rural market is equally big, but it’s very widely distributed so it takes a lot more effort.” AHA currently services 150 patients per day, all of them earning less than $2.50 per day. It hopes to reach 1,000 patients within two years.
The biggest challenge for social enterprises in India’s healthcare sector is scale. With scale comes wider social impact and greater aggregated revenues (a critical factor if your charges are kept intentionally low to remain affordable). And helping social enterprises scale is where Acumen and similar impact investors, such as Intellecap and Unitus Seed Fund, come in.
Back in 2007, Ziqitza was able to expand the ambulance fleet from 10 to 100 thanks to a $1.5m investment from Acumen. The fund has since invested a further $1.2m. Likewise, a $750,000 investment in AHA last year means the company can now take on new staff and expand its network of collection centres.
Acumen’s Mahadevan insists it’s not just cash that impact investors bring to the table. “Of course, they (social enterprises) need money”, he says. “But there’s a big difference between those who just bring money and those who bring advice and connections too.”
