Creating Tomorrow: Building Africa’s next generation of multibillion-dollar healthcare businesses & Lessons from the 5 Laws of Loonshots.

At the end of each year, business managers review the previous year’s sales and financial performance. They get a performance appraisal from their boss and then develop a plan of action for the next year with projections. The January rolls around and they get another “bite at the apple”. For those who do not meet their targets after 3-4 years, they generally find another company, get hired and try it again. The more successful ones become senior managers and maybe even CEOs. Most people build a very successful 20-30-year career this way! It is very noble path to take care of your family and I am not knocking the hustle!

I am wired differently. I am a social entrepreneur with an internal burning desire to directly make the world (Africa) a better place through healthcare. I am leading a healthcare technology services company in West & Central Africa, one of the most challenging sub-regions on the continent. Every 12-month cycle for the past 3 years has felt a like 3 complete lifecycles. You raise just enough very expensive private capital to go to market, then test your business model, but then as soon as you “Fail Fast” and learn enough to “Pivot” you need more funds and then you start the process all over again. Most people agree this can be a highly inefficient process. It is frustrating to all stakeholders and inherently designed to create far more failed businesses and possibly leave behind more damaged entrepreneurs in far worse financial state than when they started. Yet this is the environment within which most entrepreneurs in Africa or most emerging countries must operate. 

So when it is 3am in yet another hotel room in mid-December on the road, and you look back at the millions of airline miles traveled, months spent away from your wife and young children, hundreds of days working late into the night, missed sales targets, frustrated staff, clients angry due to large projects delayed, suppliers asking for outstanding payments and investors saying why are we not yet making a profit, you do what all committed entrepreneurs do.

You finish writing the strategy and action plan for the next 12-months, validated by the learnings from the previous 12-months. You convince yourself that THIS TIME you got it! You will spend just enough in operations to acquire paying customers and generate enough revenue to be profitable so you can “break-even and scale.” You really believe it and so will some new investors and a few of your existing investors. They will commit additional capital and this time some banks may even extend debt financing. Your story this time is markedly less risky than the last time. So, with conviction and tons of luck, you gather yourself, rally the team in another motivational speech about purpose and prepare to test the new “business plan” over the following 12-24 months.

In truth, you are just starting yet another informed "market experiment" with a new set of assumptions.

So, the question is: How do we improve our overall probability of success? How do we make this process more efficient for all stakeholders? How do we create the next wave of multibillion-dollar companies from the healthcare industry in Africa?

This is not a new concept: Back in 2008, the IFC outlined recommendations in The Business of Health in Africa: Partnering with the Private Sector to Improve People's Lives (The Red Book) . These recommendations are yet to be wholly adopted and implemented by the right group of organizations at the scale and scope needed to create lasting change and transform the health industry in Africa.

At Yako our Business Model Innovation is premised on a "crazy idea": “Deliver Affordable Access to Quality healthcare to all Africans, rich & poor.” By design, an unintended consequence is that we will “Cure Diseases” and if we earn the right to capture a significant share of the market, we just might “transform the healthcare industry” in Africa and possibly globally. We started with the expressed goal to “change the world”, improve lives and give families a chance to live together longer and happier.

Given the unusual premise of our business model in Africa, coupled with the historical premise that healthcare in Africa is primarily led by government and donor organizations (translate: not seen as an attractive area for private sector investment) I sought inspiration from a recent book Loonshots: How to nurture the crazy ideas that win wars, cure diseases and transform industry. By Dr. Safi Bahcall. I wanted to see if we could customize the 5 Laws of Loonshots to the healthcare sector in Africa (and our business model) and improve our chances of making the healthcare sector as competitive as or more successful than the financial services industry in Africa.

1.    Rule #1: Design Market Experiments (aka Die 3 Times): Pick a market segment and start: Clinical Services, Health Infrastructure, Medical Technology, Pharmacy, Information Technology, Human Capital and Payment/Insurance. Ours is Medical Technology Solutions. We started with trying to acquire existing diagnostic centers and using medical equipment and telemedicine technology solutions to optimize operations – could not find the right centers to buy at our offering price. Then we tried to use a combination of telemedicine-based screening platforms from India, point of care blood test solutions from Europe and diagnostic imaging technology to create a link between private doctors with clinics on the mainland of Lagos and specialty cardiologists and oncologists on the island part of Lagos. We have screened over 4,000 patients to date, found over 50% with abnormal ECGs and blood tests and 2%-5% critical, yet unable to refer them to specialists for follow-up care. (Data from Nigeria and Cameroon). The need is real, the patients need access to affordable specialty care, the general practitioners and family doctors clearly need help to refer the patients, stand-alone diagnostic centers are barely making a profit and almost all the 7 specialty hospitals with cardiology centers or cath labs in Nigeria are operating well below capacity and cost of acquiring and maintaining medical equipment is extremely high, so most hospitals cannot afford new medical equipment. (That was not a typo, Nigeria with a population of 180m has less than 7 cath labs. Global average is 1 cath lab per 2.9m people, so Nigeria needs at least 60 cath labs. Cameroon, population of 24m has 1 cath lab that is currently inaccessible for the entire country and needs 9 to be at global average). It is quite possible there is a need for a system approach rather than just a client approach. So, the third version of our "market experiment" is to create an "Integrated Care Ecosystem" where we target larger pools of patients and manage the patient journey and experience from screening through diagnosis to treatment along a digital platform connected to a chain of well equipped standardized clinics and specialty hospitals. The objective is to leverage supply chain efficiencies, lower cost of capital and economies of scale to create win-win-win for the various stakeholders involved in the ecosystem. (Early results will be out by Q3-2020).

Business model Innovation Challenge: "How can we apply the lessons from the very successful Aravind Eye Care Model to eliminate deaths from Non-Communicable Diseases (NCDs) such as: Cardiovascular Diseases, Diabetes, Cancer and Chronic Respiratory Diseases across Africa?" - David Green, Social Entrepreneur, Co-Founder Aurolab, Deutsche Bank eye Fund, Vice President, Ashoka.

2.    Rule #2: Build a System to Solve a Big Problem (aka Mind the False Fail): There are 3 major pillars in healthcare: Access, Affordability and Quality. In classic math terms, Quality should be a constant, so you should only ever solve for the other two variables - Access and Affordabilty. At Yako, our focus is to deliver Affordable Access. We are a medical technology solutions platform. We offer customized medical equipment and technology services on a pay per use basis. Our mission is to save lives of patients at risk of NCDs across Africa. According to the WHO, deaths from Non-Communicable Diseases (NCDs): cardiovascular disease, diabetes, cancer and chronic respiratory diseases are likely to increase by 27% by 2030 (17% globally), 80% of deaths occurring in Low to Middle Income Countries (LMIC) and will exceed deaths from communicable, maternal, perinatal and nutritional deaths combined. In 2016, 617,300 people died in Nigeria from NCDs that is 1,700 per day. In Cameroon, the figure was 82,700 or 230 a day. “Imagine 5 full airbus A330s crashing over the skies of Nigeria and Cameroon each day! That is the scourge of NCDs in those two neighboring countries alone!” In a 2016 study by PwC Nigeria, less than 12% of all patients screened at primary care centers were referred to secondary (diagnostic) care and less than 0.2% for tertiary care. The system is not broken, it does not exist! We are clear there is a need to be addressed so each time we fail to get traction in our go to market strategy, we cannot change the focus on the Big Problem, but rather dig deeper to find out why we failed. Are we selecting the right choice of clinical partners and targeting the right group of at-risk patients, or are we in the correct setting to reach the at-risk patients? Where is it best to focus: public sector, private sector, corporate wellness, faith-based groups, HMOs, others? As narrated in Loonshots during one failed experiment during the development of statins, “Rats are a poor choice for evaluating statins which lower just LDL” so do not be too quick to dismiss a failed experiment without digging deeper.

3.    Rule #3: Set-up Mission Advisory Boards (aka Listen to the suck with curiosity (LSC)): You MUST be clear on the fact that your “business plan” will fail several times, but what you cannot do is lose sight of the mission. So, the traditional approach of putting together Advisory Boards may need to be modified to Mission Advisory Boards. These should be groups of business and industry experts empowered by the Board of Directors NOT to tell the entrepreneur what to do by always referencing some industry best practice or always saying: “this our local market is different” as a fallback, but rather to put a process that helps the company dig for the truth. To review the data from the "market experiment" and ask: “Why did this current approach suck?” “What are we missing?” Remember, “There are no experts in the future”. At Yako, we are constantly seeking out Mission Advisors we believe have the right balance of healthcare industry, medical technology development, local market knowledge, business management experience and the humility to recognize that they do not have all the answers. Our internal learning process will focus on the use of regular deep dive review sessions of our "market experiments" to understand why we fail or succeed. "Internal Learning" will serve as a critical asset to help us continuously improve on the patient (aka customer) experience.

4.    Rule #4: Enter Co-Creation Partnerships with Industry (aka Forget culture: Create an innovative structure): These can be extremely valuable to both parties if done correctly. There is significant value is creating an environment of Dynamic Equilibrium where an established corporation enters a partnership with an early-stage company with the expressed goal to develop services or “products that work”. Critical to have mutual respect for the role each party plays and full recognition of the value of contributions of both parties. The focus should be on the transfer of quality information in both directions. Following my selection as an Ashoka Fellow, we have been privileged to have our company, Yako selected to participate in two such co-creation partnerships: Making More Health Accelerator with Boehringer Ingelheim and Accelerating Healthcare Access (AHA!) with Philips Foundation, each with a different focus. This is new territory for these organizations, and both continue to learn and evolve. For the start-ups involved, there has also been a lot of learning and introspection. These co-creation models of partnership are possibly one of the areas of greatest opportunity for innovation in healthcare in emerging markets. They require a far more balanced recognition of the value of contribution from both parties. Perhaps outlining from the onset that the goal is to build “Products or services that work” and set milestones based on designed market experiments could be a great way to improve these partnerships.

5.    Rule #5: Structure a Permanent Capital Vehicle (aka Be a gardener, not a Moses): Financial capital structure and performance incentives remain the single most powerful tools to drive behavior change across any industry. The healthcare industry is no different, yet in my view this tool has been very poorly used. In a 2016 report by Ernst & Young: Healthcare opportunity in Africa, Private Equity Perspective, experts point to the over $7bn of available private equity investments across 37 firms with a mandate to invest in healthcare in Africa. Recently the $1bn Global Health Fund by Abraaj ran into some issues with senior management but the underlying story was that for several years, they had access to the largest pool of capital but could not find “enough bankable deals” to invest in. A recent report by USAID Titled: Unleashing Private Capital for Global Health Innovations outlines the need for a catalytic early-stage innovator support facility combined with Blended Finance Instruments to drive innovation in healthcare at a global level. Later in 2020, the International Finance Corporation (IFC) is reportedly launching the Africa Medical Equipment Facility (AMEF), a $200m first loss credit enhancing tool targeting certain countries with poor access to care to select countries across West & Central Africa. The African Development Bank (AfDB) recently announced the launch of a $270m Social Impact Fund to support early-stage projects with investments of $2m - $5m. The AfDB is in one of the strongest positions to learn from all these lessons and recommendations and play a leadership role in driving private capital into the healthcare sector across Africa. (They are leading in education, agribusiness, financial services, information technology, energy, telecommunications and infrastructure). At the 2019 IMPACT!AFRICA SUMMIT by Ashoka in Nairobi, there were several social entrepreneurs with companies and projects that were strong candidates for impact capital. Clearly the issue is not the lack of bankable deals, but the right type of capital. For the business of healthcare in Africa to thrive, we need an ecosystem approach. A platform that supports early-stage innovation and learning, combined with blended capital and a long-term focus. Our idea is to evolve our company into such a platform, a company that manages a technology-based platform or Integrated Care Ecosystem supported by Blended Capital (a combination of grants, quasi-equity, supplier credit and long-term low interest debt) designed to help nurture healthcare Loonshots. We need long-term capital (7-10 year +) designed with the right incentive structures to help the entrepreneur and their entire team behave more like “a Gardener and not a Moses”. We need to make the ecosystem approach the New Normal!

"If the global community pursued Affordable Access to Quality healthcare with the same vigor and resolve that they pursued Financial Inclusion for the Unbanked - World Bank we would see a similar or possibly greater boom in innovation and customer service delivery in the healthcare industry across Africa. If a street vendor can operate a smart phone and expect all their personal and business banking information to be available and accessible through an ATM card or app on a smart phone, they can have all their healthcare information similarly available digitally on a smartphone or a smart card. We want to do for the healthcare sector what GT Bank has done for the banking sector in Nigeria. We want to create world-class standards or service and deliver Excellent Customer Experience." - Ngu H Morcho, Yako Founder, MMH Impact Investor Summit, Ingelheim, Germany.

At Yako, we have partnered with some large international and local healthcare organizations to develop the Integrated Care Ecosystem for Non-Communicable Diseases or (ICE-NCD Model for Africa) – A Loonshot!

The mission of the ICE-NCD Model for Africa is to is to build capacity to manage 10 million patients per day at risk of NCDs across Africa by 2025. We are currently raising blended capital to develop this platform further. We invite investors and organizations to partner with us to nurture this critical Loonshot.

We will save the lives of millions of people at risk of NCDs across Africa and possibly beyond. Along the way, we hope to transform the healthcare industry into a leading drive of economic growth across Africa. We should exceed expectations for BOTH financial and social Return On Investment (ROI).

Come join our mission: help us stop NCDs, save lives!

Let's Create Tomorrow!