Where Is the BOP Health Care Fortune?

Research shows that healthcare social enterprises are segmenting the BOP and leaving the bottom 50 percent of consumers behind.

The bottom of the pyramid (BOP) is a big market; that’s its appeal. Its allure lies in its potential for social impact, new customers, and profits. But like any big market, it can—and indeed must—be segmented by social enterprises that seek to tap that potential. I saw this put into action first hand in our recent global study of healthcare social enterprises. The market is getting carved up, and early front-runners are accessing the easiest profits, not necessarily serving the highest need. I don’t believe this system is intrinsically a problem—quality healthcare services to any part of the BOP are innately valuable. However, market builders and funders must be clear about which segment of the BOP their activities are benefitting, and they should innovate to ensure that those at the very bottom do not get left behind.

An Indian impact investor broke it down for me as follows:

• 50 percent of the Indian BOP live on less than $2 a day.
• 40 percent earn between $2 to $4 per day.
• 10 percent earn more than $4 per day.

The majority of the new wave of social enterprises targets those who live on $2 or more per day. This leaves 50 percent of the market ignored, or at least underserved, by the current social enterprise ecosystem. In one sense, this bias is not a problem, as the much-lauded Lifespring Maternity Hospitals demonstrate. During the last 5 years, it has become “the largest chain of maternity hospitals in South India, treating more than 70,000 patients and delivering more than 7,000 healthy babies.” The hospitals’ price point is one-third of the private cost at 4,000 rupees (about $70) per delivery. Unit level profitability is achieved through a pioneering public-private partnership, innovative land and building lease agreements, and efficient usage of para-skilled labor.  The model currently operates 25 hospitals, and its potential for greater economies of scale through planned expansion makes them an attractive prospect. In my opinion, Lifespring is an outstanding and groundbreaking social enterprise. It clearly selects a median BOP market and provides high-quality, essential services that were previously unaffordable to the BOP in the private sector. However, it remains fundamentally inaccessible for 50 percent of the BOP.

We encountered initiatives like this time and again throughout our research. The bottom of the BOP are more risk-averse, exhibit less health-seeking behaviors, require a lower price point for services, and are more dispersed, living in more rural areas that are unattractive to healthcare professionals. This is a tough market to serve, and consequently, fewer entrepreneurs try. It is natural for the social enterprise community to seek early successes, but I believe that this incentivises entrepreneurs to “cream off” the easier markets, drawing money and attention away from the more intractable problems in the sector. The enterprises that we did find at the bottom of the BOP—though limited in number—are exciting. Care Hospitals and the Byrraju Foundation are working to make their network clinics in 220 villages financially sustainable through a complex layering of services, including primary care, chronic care, point-of-care tests, micro-insurance programs, diagnostics, and tele-health. Experimenting with and managing this complexity takes time and money that is unlikely to meet conventional impact investing schedules or target returns.

I would like to see more collaboration between grant funders and social enterprise proponents to enable risk-taking in more challenging markets. Without this, natural standard incentives will reduce the potential of social enterprise models to reach those who need it most.

This article is the second post focusing on insights gained from a collaborative project that sought to examine how the Developing Countries and Market Access team of the pharmaceutical giant GlaxoSmithKline (GSK) could catalyze the replication of healthcare delivery models that have significant social impact, and simultaneously build markets and drive social change. The project was delivered by the International Centre for Social Franchising (ICSF), in partnership with Oxford University’s Said Business School. For background on the methodology of the project, read my previous Stanford Social Innovation Review blog post, “Big Business and Healthcare: It’s Not About the Money,” and the newly released public report on the research.

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  • Alice Zheng's avatar

    BY Alice Zheng

    ON May 23, 2013 07:01 PM

    Hello, thank you for this interesting and thought-provoking blogpost.  Having worked with both the bottom of the BOP (nonprofit global health) and median BOP (summer with LifeSpring Hospitals), I struggle with this very question of how for-profit social enterprise could serve the true poorest of the poor. The only successful model I’ve seen is Aravind (actually nonprofit), which serves poor farmers for free via cross-subsidization. I also know of mission hospitals that become operationally sustainable by becoming a center of excellence in one service to subsidize others, or generate extra revenue by performing outsourced services for US hospitals. However, for-profit models specifically targeting the poorest of the poor does not seem to exist. After talking to colleagues and professors, I’ve come to a few preliminary conclusions:
    1) Perhaps for-profit models are simply not viable in the true BOP, and this population is best served by traditional nonprofit hand-out models or strengthening government services. If social enterprises can serve the median BoP in sustainable ways and leaves more aid dollars for the bottom 50% via nonprofits and government, that in itself is good!
    2) Perhaps one needs to prove the product/service upmarket first, then be able to refine and move downmarket.  Normal start-ups typically target early adopters first - less about reaping easy profits, more about proving the model before expanding. Perhaps LifeSpring would have failed if they started out only targeting those living on <$2/day.

    In essence, I completely agree that 50% of the BoP is not adequately served…I would push even further to say they are underserved by social entrepreneurship *or* existing government and NGO services. The question for me is - what is the best way to serve them? Are for-profit models really the answer?

    I would love to continue the conversation further at any time! My email is .(JavaScript must be enabled to view this email address). Thanks again for your blogposts!

    Alice Zheng
    Harvard Business School | MBA Class of 2014
    University of Michigan | MPH, MD Class of 2015

  • Abhinav Nayar's avatar

    BY Abhinav Nayar

    ON June 1, 2013 07:15 PM

    One way to include the “ultra poor” would be to allow accessing state sponsored health entitlements in this low cost hospitals. In India, the state offers mircoinsurance schemes to the poor (for eg. Rashtriya Swastha Bima Yojana and another one that the Karnataka state government offers) that the lowest income patients could use to pay for their treatment at such private hospitals. I think Vaatsalya Hospitals is experimenting with this.

    Abhinav Nayar
    Yale University | BA Ethics, Politics & Economics
    .(JavaScript must be enabled to view this email address)

  • BY Shezaad Zainulbhai

    ON June 10, 2013 01:26 PM

    Andy - very interesting take here. A couple of comments/reactions:

    1. Not sure I agree with you re: “creaming off” funding intended for the bottom 50% of BOP. I think there are different sets of funders for for-profit solutions aimed at the upper 50% of the BOP versus grant-making/donation-based/religious organizations aimed at bottom 50%. These are two very different types of funders with different aims and funding targets.

    2. I agree with Alice’s comment that perhaps there aren’t any viable for-profit solutions for the rural poor. There are many orgs trying, but none have hit profitability or even sustainability without somehow subsidizing their services.

    3. I think governments, for better or for worse, need to be a key partner in offering services for the rural poor and bottom 50% of the BOP. They are the only organizations with the resources and scale to do so. While they haven’t done a stand=up job so far, there are many novel solutions that governments can take to tackle the problem, including public-private partnerships. However, looks like care will have to be subsidized in these models.

    This is an interesting, thought-provoking and topical discussion, though. I have seen impact funds, for instance, destroy portfolio company value by pushing too hard to address the bottom 50% of BOP, where it wasn’t feasible to find an economically viable business model.

    This also personally interesting - I currently lead operations for Penda Health - a company that is building primary care clinics in Kenya that target the lower and middle income. We are in a constant battle to raise our average revenue per visit while serving the bottom 50% of the BOP.

    Would love to chat more about this and hear some of your insights! Drop me an email at .(JavaScript must be enabled to view this email address)

  • Dr. Mohsin Ali Mustafa's avatar

    BY Dr. Mohsin Ali Mustafa

    ON December 24, 2014 01:55 AM

    Hello Andy,
    This is a very interesting debate. I work for an impact assessment and BoP impact creation firm and we are currently engaged with a impact investment fund targeted towards healthcare in the Global South.

    The impact measurement piece is tangible for us. What is really challenging us is a sustainable BoP Health solution especially for the bottom 50 %. One idea we are playing with is that we are focusing our work on capacity building of providers to the BoP and concentrating our work on level 2 and 3 of the Health impact pyramid (

    We realize that our money spent will not be immediately recoverable from this population but the impact of our work would pay dividends in the long run to the community as a whole.

    This is a challenging question to think about but its answer would hold the key to many of the BoP problems.

    Dr. Mohsin Ali,
    Aman Foundation.

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