The Micro-Franchising Model - An Effective, Scalable Solution

Overview

Despite the stunning advances in medicine during the last half century, over 25,000 children die each day for want of medicine that costs less than a cup of coffee.

A short list of infectious diseases treatable with inexpensive generic drugs accounts for 70-90% of all childhood illness and death in the developing world. Existing access to essential medicines for much of the poorest is woefully inadequate. A frightening percentage of the most vulnerable populations live hours, if not days from the nearest source of life saving medicines. Moreover, the current limited distribution often suffers from weak supply, a lack of rigorous quality control and unfair or simply inaccessible pricing. To address this yawning healthcare gap Scott Hillstrom and Eva Ombaka, Ph.D. founded The Child and Family Wellness Shops network (CFWshops) in 1997, adapting a traditional franchising model to the problem of distributing essential medicines in remote communities.

The Micro-Franchising Model - An Effective, Scalable Solution

The HealthStore Foundation's CFW model is a network of micro pharmacies and clinics whose mission is to provide access to essential medicines to marginalized populations in the developing world. The CFW outlets target the most common killer diseases including malaria, respiratory infections, and dysentery among others. They also provide health education and prevention services.

Why a franchise model? On average the 20 poorest developing countries spend less than $33 per person each year on health care compared to over $2,500 in the 20 most developed countries and $4,500 in the US. Even a doubling of public health funding would fall short of meeting the need. While public funding will always be needed, at least part of the full solution to the distribution of medicines must incorporate a sustainable market-based model with effective incentives. The CFW model incorporates all the key elements of successful franchising: uniform systems and training; careful selection of locations; and most importantly, strict controls on quality backed up by regular inspections. And importantly HealthStore uses the combined buying power of the full network to obtain quality medicines at the lowest possible cost.

The network operates two types of outlets; basic drug shops owned and operated by community health workers, and clinics owned and operated by nurses who provide a deeper list of essential medicines as well as basic primary care. As the franchisor, HealthStore can revoke a franchisee's right to operate an outlet if the franchisee fails to comply with the franchise rules and standards.

HealthStore's customers are primarily lower or middle-income women and children subsisting on agriculture, although people of all ages and incomes are treated. CFW outlets are located at market centers in agricultural areas of approximately 5,000 people.

The essential components of the HealthStore Foundation's CFW model include:

• A system of franchise rules and strict treatment standards that govern how the outlets are run and what drugs can be sold.
• A thorough training program that ensures every operator knows how to diagnose the target conditions and accurately prescribe the correct medicines. Base training is backed up with continuing education on clinical skills and management practices.
• A centralized procurement operation that drives down drug costs and ensures drug quality by qualifying all the medicines, buying only from reputable suppliers, and maintaining quality standards throughout the supply chain.
• A record keeping regime that compiles patient records and vital health statistics, as well as financial performance statistics for each CFW outlet.
• A consistent monitoring program that makes sure every outlet is operating to CFW brand standards.

Results to Date - The Model is Working

• In 2000, using his own funds, Scott and Eva lead the creation of the first 11 CFW drug shops in Central Kenya.
• In 2001, Management Sciences for Health (MSH) and HealthStore formed an alliance under which MSH supplies technical advisory services to The HealthStore Foundation®. MSH is one of the world's leading health development organizations with significant backing from the Gates Foundation.
• Since 2000, the CFW network has more than quadrupled to 65 locations comprised of 17 drug outlets and 48 basic medical clinics. This network treats an average of 40,000 customers and patients per month.
• Since inception, The HealthStore Foundation® has served over 2,500,000 patients and customers through its network in Kenya.
• The Ministry of Health for Kenya has incorporated the CFW network in its National Malaria Strategy.
• In 2011, The HealthStore Foundation’s CFW network served nearly 400,000 patients, customers, and school children.

The Path Forward - HealthStore's Key Strategic Goals

• Expanding the CFW Network in Kenya: Over the coming years, HealthStore aims to expand the CFW network in Kenya to reach over 1,000,000 patients per year.
• CFW in Rwanda: The Ministry of Health in Rwanda has signed an official Public Private Partnership agreement in which HealthStore plans to open hundreds of CFW Health Posts over the coming years in Rwanda, private outlets which will fulfill public goals.
• Improving the Model: The HealthStore Foundation® is working to continuously improve its CFW franchise system with the assistance of world-class franchise and health experts on its Board of Directors.
• Innovations: The HealthStore Foundation® is pursuing several key innovations to its CFW model, most notably the integration of a 3rd party payment system to target current subsidies towards bottom-up and output-based reimbursement of care at the franchisee level rather than top-down and input-based infusions of grants.

Just as Grameen bank proved in the 1980's that traditional bank lending can be successfully adapted through a micro-finance model to improve the incomes of the poorest of the poor, the success of The HealthStore Foundation® is demonstrating that 'micro-franchising' can be a key tool in improving their health.

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