Using Technology to improve lives in Africa -- An Example.....

Leap Frogging – Africa in the New Digital Age…Healthcare

The sim card is definitely up there as one of the greatest inventions of the 21st century – it doesn’t really get enough credit, but certainly without the sim card, it is hard to imagine all the exponential growth in data, mobile telephony and web services….Onno Schellekens, CEO CarePay International

The sim card – the tiny little chip we put in our phones that connects us to the ubiquitous cell phone towers and to each other has unchained us and made us location agnostic, freeing up time, schedules and enabling on-the-go mobile transactions and interactions. In Africa particularly, where fixed telephone lines and other distribution, travel or reach infrastructure is for the most part poor, this small chip in a mobile phone has changed and impacted our lives positively in diverse ways. ?It has enabled last mile distribution in our pockets at near-zero marginal cost, to giving us the power to transfer value in near real time and even alter the balance sheets of banking and other financial institutions, and numerous other capabilities with just a few keystrokes, and from almost any where.

Recognising the power of mobile telephony, coupled with the convergence of various other technology innovations such as Cloud, Data, Artificial Intelligence(“AI”) – Companies such as CarePay -- a Healthcare digital-tech company (which I lead in Nigeria) have been working diligently to bring the convergence of these technologies to bear on critical sectors of the economy – In the case of CarePay, on improved healthcare access.

Recently CarePay Nigeria signed an Agreement with MTN Nigeria -- The largest Mobile Telephone Network Operator in sub-Saharan Africa with 80 million subscribers. This Agreement links the digital healthcare retail marketplace and platform CarePay is building out in Nigeria with MTN’s 80 million subscriber base all over the country. This is a landmark and “game changing” partnership. A similar agreement signed between CarePay and Safaricom in Kenya was ranked by Fortune Magazine as one of the top ten partnerships most likely to positively impact the world.

Healthcare and healthcare access have chronically and perennially challenged African Governments. Pooling of healthcare costs, bringing costs forward rather than paying at point-of-care, improving access to healthcare via better designed and priced health insurance products, attracting institutional capital into the healthcare ecosystem, enabling better underwriting, development and distribution of healthcare products have been a nigh-on-impossible nut to crack and has been the mission of CarePay in the African countries where we currently operate – (namely Kenya and Nigeria).

CarePay is focused on creating a digital retail marketplace for all participants in the healthcare ecosystem to operate in a “trust-based” platform. It is important to point out the use of the phrase “trust based” – without trust-based systems or platforms, with transparent and enforceable contracts and value exchange systems and indeed economies and societies will fail. Trust is the thing that binds everything together. Carepay therefore, in addition to creating the digitized retail marketplace, also seeks to create a network effect that enforces health insurance and care delivery contracts and standards – standards of care, product underwriting and distribution standards, care and claims payments, including working capital cash advances to providers, beneficiary identification and fraud elimination and a host of other adjacencies that embed trust and underpin the new healthcare retail marketplace.

Absence of trust is one of the main reasons people shy away from buying health insurance on a retail basis in Africa (only about 4% of the population of Nigeria is covered by Health Insurance, and this is almost exclusively done by Corporations for employees). They simply do not trust that when it comes to the moment that they have to trigger the care provisions in the health insurance contract – at the point of need -- that they will get the prepaid standard of care. Accordingly, most would rather go out on a limb and deal with the medical expense at the moment of need, rather than pre-pay for medical coverage (insurance) – often times they don’t have the money in that moment, and therefore have to rely on cheaper alternatives – (no wonder alternative and often exploitative forms of healthcare proliferate to the detriment of the population). A corollary problem is that provider incomes become volatile, lumpy and unpredictable – the very cashflow characteristics that institutional grade capital, shy’s away from, consequently starving the sector of much needed appropriately priced capital for sustained growth.

Added to this, Payors/HMO take ages – sometimes up to 6 months to process claims – stretching provider working capital needs to break points – thereby compromising care delivery standards, worsening the the lack of trust between provider and patient….The enrollee doesn’t trust the provider or clinic, who in turn doesn’t trust the Payor or HMO to process patient claims quickly. The Payor/HMO typically does not trust the Provider regarding submitted claims – As you can see every party in the ecosystem distrusts the other – making it impossible for improvements in the ecosystem and for a retail marketplace for health insurance products to build up. – The result is an exponential downward spiral in healthcare delivery standards without a backstop – (no wonder there is a net emigration of medical care talent in Africa) – accelerating the downward spiral even more exponentially.

It is into this arena that CarePay has stepped-in to create a back-stopped trust embedded system and has been working over the past few years to design and develop a technology-based platform that arrests and reverses this downward spiral. Our Partnership with MTN Nigeria is clearly a massive step forward in this direction. With this partnership CarePay and MTN can offer health insurance companies the much-needed retail distribution capabilities at zero marginal costs for tailored and targeted healthcare and health insurance products, using a CarePay USSD short code (*254# -- in Nigeria and Kenya) – anyone with a mobile phone can buy healthcare coverage appropriate to their context and circumstance. An example might be – traveling by road from say Lagos to Onitsha, one can select, purchase, and agree to Terms and Conditions of Travel Accident healthcare coverage at point of departure (say the bus terminal), and be assured of adequately trained and equipped provider provisioning network along the route in the event that medical care is needed, at any time during the journey.

Furthermore, via the CarePay platform and working with digital lenders, clinics and hospitals can apply digitally for appropriately sized and tenured working capital loans – an algorithm works out the appropriate loan size and tenure based on visible, verifiable and historical patient encounters, payments and claims history. On the other hand, fraud is reduced on behalf of HMOs via fingerprint activation and SMS notifications enforcing a point of activation process of the health insurance contract. CarePay algorithms that get smarter each time will flag inconsistent activity and investigate flagged claims and encounters, meting out appropriate consequences including denial, reducing fraudulent claims. On the whole, this should at best create a positive environment for all participants – improving care quality, access to capital, health insurance underwriting, pricing and products, and virtually all aspects of the healthcare delivery spectrum.

As this retail marketplace takes root, contracted providers will get CarePay front-end interfaces in their clinics and facilities (approximately 350 clinics have since signed up). CarePay will also be working with Standards groups such as SafeCare to ensure attainment and compliance of standards with these contracted providers and hospitals.

Designing a digital healthcare retail marketplace is certainly a challenging endeavour. There are peculiarities in the industry (for example the person receiving care is not the person paying typically, and pooling of resources is required…after all we cannot all own our own individual clinics in the way we own our cars or houses). This, therefore, requires developing a deep understanding of all the possible user journeys and experiences, behavioural economics including adverse selection and free-loading issues – coding this out, infusing it with Artificial and Machine learning, while simultaneously negotiating commercial, mutually beneficial partnerships that work together to create a “leapfrog” situation is a big ask, and requires patience and capital – To work on this, CarePay raised $45MM in series A funding two years ago to work on this, and since has over 4.5MM enrollees and 5,000 clinics in Nigeria and Kenya. It is in this combination of “tech brawn” and “commercial savvy”, that our work at CarePay is really exciting -- In showing that in Africa, using technology it is possible to digitally re-create markets and eco-systems ?in a manner that embeds trust. – ?In this sense, our work at CarePay is pioneering.

The example CarePay has set is one we in Africa should look to for rapid, revolutionary “leap-frogging” and technology enabled growth. This model works for virtually all eco-systems and markets including, and especially education.

?Which other industries and ecosystems do you think are ripe for technology leapfrogging?

What other sectors of the Healthcare Ecosystem do you think companies should focus on?

Please leave your thoughts in the comments section.

?I am the Executive Chairman of CarePay Nigeria, Founder and CEO of Golden Tulip West Africa Hospitality Group and the African Hospitality Academy. I hold dual degrees in Architecture and Construction Management (University of Nigeria, and the University of Bath), and an MBA (with a focus on Quantitative Finance) from the Wharton School, University of Pennsylvania and a Doctorate from the University of Abuja. Prior to becoming an entrepreneur my work experience encompassed investment banking at CS First Boston, strategy consulting at Mckinsey & Co and real estate investments at GE Capital.