GRAVEYARD OF HOSPITALS

Lagos is the graveyard of hospitals in Nigeria. Hospitals and clinics in Lagos have a high mortality rate with many failing during the lifetime of their founders and many more after the demise of their founders. Countless carcasses of once thriving hospitals and clinics now lie boarded up and crumbling in inner-city neighborhoods and high streets of Lagos. Fading signages serve as tombstones; memorials of once glorious practices which provided healthcare and jobs.

There are only a handful of medical practices founded in the 1960s or 70s which remain in operation. Most practices in operation were founded in the 1990s or early 2000s. These are aging along with their founders and likely to expire before or soon after the demise of their founders. After the founders’ demise, friends and relatives bury their bodies accompanied by elaborate ceremonies but soon afterwards in less elaborate and inauspicious moments without pomp or pageantry, employees and patients fizzle away and the practices are boarded up signaling the effective burial of such practices.

Many Nigerians are served exclusively by private practices. In many instances the demise of these practices limit the access of their patrons/clients to healthcare. Some patrons may no longer have access to healthcare and many others will no longer have access to their medical records which are likely to be paper based and stored within the bowels of the boarded-up practices. Job losses also result and for many semi-skilled Nigerians employed by these practices it may be difficult to secure another gainful employment to meet their personal and family financial needs.

This situation isn’t peculiar to Lagos; it is typical of the healthcare landscape in Nigeria, as all practices are subject to the same intrinsic and extrinsic factors which hinder their survival beyond the lifetimes of their founders. These factors include:

1.  Subsistence vision of founders

Most practices are set up to meet the subsistence needs of their founders. Rarely are practices set up primarily to meet market needs. Even more rare is to have a practice set up and resourced to track and meet growing market needs. Once the practice can continually meet the personal and family obligations of the founder, he/she never bothers about the posterity of the practice. This is especially true once the founder’s children have graduated and are gainfully employed.

2.  Lack of or inadequate separation between the identity of the founder and the organization

Prior to the onset of the National Health Insurance Scheme in Nigeria in 2005 it was typical for practices to operate using the personal bank accounts of their founders and remain unregistered with the national business registry (Corporate Affairs Commission). These practices are usually named after their founders and in instances when the practices are not named eponymously, the founders are identified by the names of such practices. This co-mingling of the founders’ persona and the corporate identity of the practice makes it difficult to separate the assets of the founder from those of the hospital/clinic consequently after the demise of these founders who frequently die intestate squabbles or disputes associated with asset inheritance frequently cripple or render such practices inoperable. It also makes it difficult or impossible to achieve a sale of the practice during the lifetime or after the demise of the founder as the founders and their family members are emotionally and economically attached to the practice.

3.  Inadequate management expertise and organization structure

Many founders have minimal or no management expertise. Leadership is frequently confused with management capacity hence medical entrepreneurs rarely hire skilled management personnel to work with them. Even more rare is a partnership between a medical entrepreneur and a business co-founder consequently, these practices are poorly organized and operated. Staff are hired based on their affordability than their technical capabilities. Frequently staff operate without organogram, job descriptions or performance reviews. All staff report to the founder and take instructions from him/her. Once the founders are weakened by old age, illness or at their demise, dysfunctional organizations emerge which are unable to function or survive.

4.  Lack of succession planning or unrealistic succession planning

Many medical entrepreneurs fail to articulate a succession plan that ensures the continuity of their practices. Some founders expect their children or close family members to become physicians and take over the management of their practices. In some instances, they succeed in achieving the first objective of having a second generation of physicians however these physician descendants may pursue different career paths within or increasingly outside the country. This unrealistic succession plan hinders the founders from growing and incentivizing successors within the ranks of their employees or seeking out non-family members as successors.

5.  Disruptions and harsh business climate

Medical entrepreneurs are rarely prepared nor open to social, technological, economic, and political changes. They are conservative and resist change, which in some instances may be of benefit to the industry or the population. The de-industrialization of the 1980’s resulted in the demise of practices which were dependent on the industrial corporates while the emergence of managed care industry has placed many practices on life support as robust retainer fees and reimbursements have been discounted by the intermediating HMOs. The emerging digital disruption of the 4th industrial revolution may imperil many practices and hasten their demise before or soon after that of their founders, as many practices are yet to adapt to emerging disruptive business models or leverage digital tools and innovation for patient care and customer engagement. In addition, medical practices are subject to the same harsh economic climate which constrain the growth and hasten the demise of other establishments. Inconsistent economic and health sector policies, declining incentives, multiple taxation and over regulation by a multiplicity of professional regulatory groups contribute to the stunting of the growth/development of private medical practices. Frequently by share willpower and relationships with government officials, founders may ensure the survival of practices during their lifetime however at their demise their successors may be unable to muster similar goodwill with government officials sufficient to preserve the operations of the practices.

To ensure that Lagos and other Nigerian cities and communities become thriving oases for healthcare practices rather than graveyards it is essential that:

1.  Medical education including residency should be reformed to include basic management and entrepreneurship education which will enable founders understand the necessity for impact goals, unique value proposition, succession planning, organization structuring and other critical business skills and competencies, ensuring the greater likelihood that practices succeed beyond the lifetime of physician owners. Medicine is built around a series of apprenticeships notably internship and residency programmes. It is essential that management education is integrated into these apprenticeships or emerges as an additional track available voluntarily or mandatorily. In lieu of this, physicians may seek out established and successful medical entrepreneurs with well-structured practices for mentorship, coaching and employment.

2.  Physician entrepreneurs need to separate the identities and persona of their businesses from their own individual personas and identities. They should subject their practices to fit for purpose governance and accountability requirements which are neither flimsy nor too elaborate.

3.  Physician entrepreneurs also must make deliberate choices such as identifying, grooming and incentivizing willing and competent family or non-family successors. It is also imperative that if possible management control and/or leadership is transitioned to these identified successors within the lifetime of the founder. Non-family members may include employees or third party buyers. Succession planning may also include the option of donating the practice to a community or public interest group.

4.  Physician founders and investors under the auspices of their professional trade associations such as the Nigerian Medical Association (NMA) and the Association of General and Private Medical Practitioners in Nigeria (AGPMPN) should make effort to engage proactively with government as partners in progress to request policies and incentives which facilitate the survival of their practices and businesses. In some instances, these associations may work closely with government executives or legislators to articulate bills or legislation which will make doing business easier. It is equally important that these professional trade groups partner with other non-medical trade groups such as chambers of commerce, the Nigerian Bar Association (NBA) e.t.c to articulate and solicit pro-business policies.

5.  Physicians need to embrace change. Each wave of change brings with it seeds of opportunity and peril. It is imperative to mitigate perceived dangers and exploit potential opportunities. It is essential that physicians constantly scan their landscape and beyond for emerging trends and innovations which may disrupt their businesses. It is essential that practices be resilient and plan to accommodate disruptive forces through co-opetition, innovation and inter/intra-sectoral collaboration.

Despite these recommendations some practices will die before or soon after the demise of their founders but I expect that the mortality rates of hospitals and clinics would decline preserving more practices long after the demise of their founders and ensuring that they contribute to providing access to healthcare services and jobs for current and future generations of customers and employees. We can look forward to having lots of hospitals such as Cleveland Clinics founded in 1921, Pennsylvania Hospital founded in 1751 and the Mayo Clinics founded in 1889 which have survived many decades after the demise of their original founders.

I welcome your comments and do let me know any practices which you think have been structured to outlive their founders.