As populations continue to grow, the demand for affordable healthcare has never been greater, and COVID-19 has only intensified the challenge of providing it. New ways of financing healthcare are desperately needed.
For example, small and medium-sized healthcare providers, such as pharmacies and small clinics, account for a significant proportion of healthcare provision across sub-Saharan Africa – but they find it very difficult to obtain loans to keep their businesses running, as traditional banks consider them too risky.
Fortunately, some lenders are now taking a different approach to financing small and medium-sized businesses (SMEs) in the healthcare sector. One of them is Medical Credit Fund (MCF), which provides the small, local-currency loans these businesses need. Despite the additional costs and risks associated with lending to SMEs, the fund has continued to stay committed to them, making small loans that suit them, averaging around $24,000.
This is already having a real impact, helping healthcare SMEs reach more than five million patients to date, and providing close to 5,000 loans to around 2,000 clinics across Kenya, Ghana, Nigeria, Tanzania and Uganda. More than half the patients visiting these clinics are from low to very low income groups.
MCF also combines its loans with expertise to increase the quality of care. With each loan, the borrower undertakes a healthcare-quality assessment, and then receives support to create and implement an improvement plan. As a result, 80 per cent of clinics taking up the loans see a rise in the ‘SafeCare’ ratings that indicate their quality of care.
Medical Credit Fund
Kenya, Ghana, Nigeria, Tanzania, Uganda
• Helped healthcare SMEs reach more than 5 million patients
• Distributed close to 5,000 loans to around 2,000 clinics
• 57 per cent of patients visiting the clinics are from low to very low income groups
Medical Credit Fund has helped healthcare SMEs reach over five million patients.
Another healthcare challenge that requires a fresh approach to financing is the difficulty of getting medical products into the hands of the patients who need them. In Africa and South Asia, bureaucracy, poor understanding of demand, and financial risk are just some of the problems facing pharmaceutical companies. High-price, low-volume models are often the result, putting healthcare out of the reach of many people.
Healthcare markets need to be reshaped to address these inefficiencies, and to get products or services into underserved markets faster – at lower prices, and at an assured quality. MedAccess, a social finance company dedicated to improving access to healthcare, is doing this through innovative finance tools, such as volume guarantees. Volume guarantees offset some of the risks companies take when introducing medical products into developing countries – and this enables them to make longer-term commitments to provide products at sustainable prices.
MedAccess recently teamed up with the Bill & Melinda Gates Foundation to support access to an innovative anti-mosquito bed net that contains two types of insecticides, one of which is completely new. This is important, because in many countries, especially in West Africa, mosquitoes have developed resistance to some insecticides. MedAccess worked with the German company BASF to accelerate the introduction of the new product, and with the price reduced by 40 per cent. Because of this, around 21 million cases of malaria will be prevented and 32,000 lives saved.
Another volume guarantee, with medical manufacturer Hologic, enabled increased access to and reduced prices for viral-load testing systems, a technology critical to the lives of people living with HIV. Prices are on average 30 per cent lower in some of the world’s poorest countries, which enables more machines to be purchased, and means better clinical outcomes for at least 500,000 people.
We first invested in Medical Credit Fund in 2017 to increase access to quality healthcare for underserved populations. Since then our initial investment has been supported by funding from our technical assistance facility, British International Investment Plus.
MedAccess is a wholly owned subsidiary of British International Investment, set up with the aim to provide innovative social finance that expands and accelerates access to life-changing medical supplies in Africa and South Asia.
Africa and South Asia
• The firm is helping to increase access to a new type of anti-mosquito bed net, at a price reduced by 40 per cent
• MedAccess is also increasing access to viral-load diagnostic testing systems, at a price reduced by 30 per cent
MedAccess' volume guarantee has increased access to an anti-mosquito bed net, at a 40 per cent lower price