Improving Accessto Quality Care and Life-

Saving Medicines

Elements of Successful Franchising © MSA 2008

Michael H. SeidMember of the Board – HealthStore

Foundation

The HealthStore Foundation’s Mission

To improve access to essential drugs, basic healthcare, and prevention services for children and families in the developing world using a business that maintain standards, that scale geometrically, and that achieve economies of scale.

• Approximately 30,000 children die each day in the developing world because they lack access to medicines that cost less than a cup of coffee

• A short list of preventable and treatable diseases accounts for approximately 70% of childhood illness and death in a particular area

• Deaths occur because people lack access to high-quality essential drugs, diagnostic and treatment services, or preventative health products

The Public Health Crisis

Photo courtesy of Scott Davis

4

What is franchising

Franchising is simply a method of expansion and

distribution that ensures quality - consistently

5

What is a franchisor

• Grants right to use marks

• Sets standards

• Financial relationship

6

Franchising Provides

• Consistent Operations

• Brand Recognition

• Rapid Expansion

7

The “3 Point Test”

• Every successful franchisor including CFW must meet a 3 point test:

• Must Maintain Standards: so that patients are properly diagnosed and drugs are pure and efficacious, ensuring effective patient treatment

• Must be Scalable: so that there are many locations where patients can access drugs and services, each point of access maintaining consistent standards

• Must Achieve Economies of Scale: so that the cost per unit of service rendered decreases as the network grows

8

The Franchisor Provides

• To meet the “3 point test” franchisors provide– A Brand to its franchisees– A Brand Promise to its consumers– A high degree of consistency in each

and every location– Initial and continuing support, training,

monitoring, innovation and growth

9

The Franchise Relationship

• Contractual in nature• Franchisor contributes

– System and initial investment to start system– Positive and negative experience of the

franchisor - they survived the mistakes– Support of the franchisees

• Franchisee contributes– Drive, ambition and local skills and management– Capital

• The HealthStore Foundation® launched CFW as a franchise system in 2000.

• The CFW franchise system distributes essential drugs and basic health services in rural Kenya (2000) and Rwanda (2008).

• Each of the 70 drug shops and primary care clinics is owned and operated by nurses and health workers.

• CFW has served an estimated two million + or - patients and customers.

1111

Franchise Structure

• Initial and continuing support provided to franchisees

• CFW outlets are primarily rented storefronts in rural areas

• Outlets are geographically accessible to the communities they serve

• Branded and signed CFW

• Standardized design and equipment

1212

Local Ownership / Economic Development

• Each outlet is owned and operated by a nurse or community health worker (franchisees)

• Franchisees generate income to support their families

• Franchisees employ assistants and community health workers

• Franchisees follow franchisor pricing

guidelines • Franchisees in business for

themselves but not by themselves

1313

Supply Chain

• The franchisor procures high-quality medicines from approved sources on behalf of all franchisees

• Required batch testing using standard franchising protocols

• All medicines and supplies delivered by closed supply chain to franchisee

• Franchisees are prohibited from selling drugs from non franchisor suppliers

Storage room in Nairobi office

1414

Brand StandardsFranchisees are clinically assessed before training and brought up to brand professional standards

Standards are then maintained by effective clinical and business procedures supported by field consultants and advanced training

1515

Record Keeping

• Franchisee are required to keep detailed business and clinical records

• Records are analyzed and used by headquarters and field personnel

• Information is routinely provided to MoH

1616

• Each franchisee is assessed for clinical and business capabilities• Franchisees attend a four-week training program

– Brand standards – customer service– Clinical standards – drug management, diagnosis and treatment– Business management – record keeping, financial management– Marketing - community outreach

• Field consultants provide opening support and training• Continuing education requirements and opportunities• MoH standard treatment guidelines and updated protocols are

incorporated into the franchise systems • Operating and Clinical Manuals developed, reviewed by medical

professionals in country and U.S.

Training and Continuing Education

1717

• Community outreach and education programs strengthen the health-seeking practices of the community while providing marketing exposure for the local franchisee.

• In-clinic posters and other signage• Take home education material provided to patients on

disease, treatment, medication and follow up care

Marketing and Education

1818

Community Health Outreach • De-worming

• Promotion of clean water including demonstrations of water purification products

• Promotion, distribution, demonstration, and retreatment of bed nets

• Promotion of ACTs as per new MoH protocols on malaria diagnosis and treatment

• Free baby growth monitoring in the clinics

• Promotion and sale of low-cost hygiene products: soap, toothpaste, water purification solution, laundry detergent, etc.

1919

Total Patient Treatments

•All Other

•Bed Nets Sold

•Diarrheal Disease

•Worms and de-worming

•Respiratory Infection

•Malaria

Patient Treatments:

Clinics and Shops Open

349,018

145,305

14,542

18,064

40,033

77,763

53,311

 

62

Year2006

The Power to Reach Millions

20

Exploring Voxiva’s data system

• Data transmittal via cell phones, PDAs, or laptops

• Access and analyze data centrally

• Improve speed and focus of support

• Increased visibility into outlet performance

• Track epidemiological patterns in remote areas

• Aggregate data from all regions and countries

• Improve franchisee financial results

Data Management System

Diagram from www.voxiva.com depicting diverse devices deeding data into a central database

21

Third Party Payment System

• Top-down donor funding measures success through amount of grants received. Maintaining standards is not a driving incentive

• Developing an innovative health financing mechanism for use in communities served by franchisees will change paradigm

• Franchisees will be reimbursed for the full cost of drugs and services through a combination of a patient co-pay and 3rd-party reimbursement

• Donor funds will be focused to pay for care delivered ensuring system will sustain high quality standards to attract customers

22

Third Party Payment System• Franchisor will operate as any other franchisor in the

world earning its continuing revenue primarily on royalties

• Franchisor organization will remain small and efficient as is routine in franchise systems worldwide

• Patients pay what they can afford

• Balance paid by third party

• The money the world now spends on health in developing countries would achieve more by directing it through franchise systems enabled by third-party payment mechanisms (e.g. health insurance)

2323

CFWshops and CFWclinics

• Largest Franchisor in East Africa

• 70 clinics and drug stores• Provides access to essential

drugs, basic healthcare, and prevention services

• First clinic opened in Rwanda in May 2008

• Efficient, effective, expandable• Franchisee’s profitable• Multi-unit franchisee ownership• Local job creation

2424

Expansion into Rwanda

We will take advantage of lessons learned and mistakes made in Kenya

• CFW in Rwanda is designed to meet the needs of rural Rwandans and fill gaps in existing health infrastructure

• The Kenyan model will be leveraged and adapted to the market in consultation with Rwandan health experts and our franchise advisors.

• Our model in Rwanda will comply with all Rwandan regulations and existing systems.

2525

• Visit our website:

http://www.cfwshops.org

• PBS program NOW detailing our work in Kenya – it won an Emmy:

http://www.pbs.org/now/shows/321/index.html

The HealthStore Foundation®

29

Michael H. Seid & Associates (MSA)

94 Mohegan DriveWest Hartford, CT 06117(860) 523-4257(860) 523-4530 – Facsimilemseid@msaworldwide.comwww.msaworldwide.com