Summary:
Through the process of researching the Rwandan healthcare market, identifying the needs of the population and gaps in current services, and finally, aligning those needs with the expertise of the staff and the resources available to the Dream Medical Center, we were able to increase the forecasted profitability, decrease the projected time to get to a monthly cash flow positive position, and consequently, allocate more funding to other missions programs of Africa New Life such as child sponsorship, feeding centers, and pastoral training.
Background
The country of Rwanda, and its healthcare industry in particular, is uniquely positioned to experience a boom as the emerging middle class starts to consume healthcare similarly to what we see in the United States. Now, with over 20 years between Rwanda today and the 1994 genocide which left an estimated one million people dead and the rest in mourning, the nation has made a remarkable comeback; full of awe-inspiring stories. Now the country stands as a one-of-a-kind lesson in healing and forgiveness.
Maslow's Hierarchy of Needs states that if one's basic needs are met, such as water, food, clothing, shelter, and stable employment, only then can a person begin the process of pursuing luxuries that were once viewed as unattainable, or even unnecessary. So it is with the people of Rwanda and adequate healthcare services, especially preventative health services. There is an emerging middle class of Rwandans who have seen, through growing access to global media, the available services and solutions in other parts of the world, and they are now beginning to demand those services in their home country.
Learning the Market
In conducting our market research, we sought to first understand the current state of the population's general health. Even more, we questioned how that level of health compares with what we see in our own market, the United States. What are the biggest needs, and what can we leverage from a known landscape like our home country? This would expose for us the gap between what exists and what is needed.
Predominately we found that the country of Rwanda has different healthcare concerns than we do at home. Major epidemics in the U.S., such as diabetes and heart disease, aren't issues in Rwanda. In that region of the world, the population is virtually free of many health concerns that we have in the west which often stem from a lifestyle of limited exercise and poor dietary choices. However, in the area of women's & children's healthcare in Rwanda, there is still much room for improvement, and much work to do. Child mortality in Rwanda, while lower than other developing countries, is still very high at 5.2% compared to the current rate of 0.58% in the U.S. Factors that likely contribute to this elevated child mortality rate include lack of education on sex, family planning, and proper prenatal care. We quickly identified this gap in service as an opportunity for the Dream Medical Center to provide much-needed education to the local population.
Diagnostic services are also in dire need. Because of a lack of laboratory services and the widespread prevalence of inaccurate lab results, people die all too often of treatable illnesses such as malaria. If a patient is correctly diagnosed with malaria, treatment is fairly simple. However, the false negative rate (patients that are actually positive but present as negative) for malaria, while difficult to quantify exactly, has been estimated to be as high as 50%. This leads physicians to treat the symptoms instead of the underlying disease, allowing the malaria to progress to a fatal stage. This is especially an issue in vulnerable persons such as infants and the elderly.
Finally, through conversations with our target market, we discovered that appropriate bedside manner from physicians is virtually non-existent in the country. This is true to the point that in extreme cases, if a patient questions the physician’s treatment plan, or requests additional professional opinions, they can and will be discontinued from the care of that physician; leaving the patient searching for a new treatment provider. In most facilities, two way communication is not practiced, thought it is very much desired by in the country.
Matching capabilities with the market needs
The Dream Medical Center is fortunate to have an exceptionally talented executive medical director in Dr. Sam Kagali. The combination of his medical expertise and overwhelmingly positive feedback from patients sets him apart and makes him a tremendous resource to the organization. He is also a devoted Christian and applies his faith openly to his practice which, once again, sets him apart from other physicians in the country. Most physicians tend to operate with a hierarchical mentality that ignores patient feelings, minimizes the desires of the patient, and elevates the physician to "demi-god" status within the facility.
It is anticipated that one of the largest competitive advantages that the Dream Medical Center will have is the compassionate care that they will provide to their patients. With an ear to listen and a willingness to take the time to properly serve those that come to them, they will differentiate themselves from the other hospital networks in the country. By operating with this mentality, the Dream Medical Center can become a facility that is known as the "Hospital that Hugs" and when given a choice, the highly sought-after middle and upper class target market will chose the Dream Medical Center over other available options. As a service-based organization serving a population with a choice, this became a very large focus of the messaging we developed and the go-to-market strategy.
Additionally, services such as prenatal 3D ultrasounds and administration of epidural anesthetic during childbirth, which are available throughout the U.S., largely do not exist in Rwanda. By offering these two services as part of their standard of care, the Dream Medical Center will set itself apart and be seen in the region as a technologically advanced facility. This differentiation expands the target market beyond Rwanda to its East African neighbors, including Uganda, Democratic Republic of Congo, Kenya, and more. Through simple market research, interviewing the target demographic of middle class women of child-bearing age, we found that there was a relatively large cash price for each of these services that women were willing to pay at the point of care. This will assist with the cash flow issues within the startup phase of the Dream Medical Center, as well as increase overall revenue.
It is important to note that while we recognize the need for reliable diagnostic services, as previously stated, these services will initially be limited to include a small laboratory with essential capabilities during Phase One of the Dream Medical Center's launch. The limited resources of the Dream Medical Center, which is funded by the nonprofit, Africa New Life, have necessitated the decision to focus in on the women’s and children’s division as Phase One. Once this phase is complete, expanding laboratory services will be a key initiative.
Results
When the business plan and pro forma forecasts were adjusted to reflect a sharpened focus as a women’s and children’s hospital, and the additional services of epidurals and 3D ultrasounds were included, it became clear how great of an impact these adjustments will make on the future of the facility. First, the addition of cash-based services with collections at the time the services are rendered will assist in overcoming the issue of the time lag associated with getting "into network" with the insurance providers. Similarly to the U.S., third party payers dominate the healthcare landscape in Rwanda and providers must be accepted into a health insurance network in order to be reimbursed as such. Based on the experience of other facilities that we met with, this will take roughly nine months from the time the first patient is seen. This originally led to an anticipated cash flow deficit in which the hospital would spend up to 9 months performing services and receiving zero reimbursement for the work being performed. Through the addition of these two, cash-based services, which do not have a fee schedule attached to them, the Dream Medical Center will reach their break-even point on the facility much quicker. In fact, the forecasted monthly cash flow positive timeline was decreased from just over 3 years which was initially predicted, to a new timeline of only 13 months. Additionally, by adding an estimated 13% additional revenue with very minimal start up and reoccurring costs, forecasted EBITDA increased by over 40% once the two services and the hospital are fully operational.
About the Author:
My name is John Constantine and I am a healthcare executive living in suburban Atlanta. Throughout my career, I have been able to drive growth repeatedly in a variety of capacities. As a sales leader, I have built, expanded, and improved high performing teams to promote expansion and profitability. As a marketing executive, I have led teams in the creation and launching of new brands and products. I have managed inbound lead generation campaigns and created online and print branding standards that stand out from the pack and engage employees to take pride in their organization. As an executive of strategic initiatives and a field operations leader, I have implemented programs and processes that have differentiated my organizations and provided predictable revenue forecasting to the C-suite; all the while increasing productivity and accountability of the front-line team members in the organization.
To learn more, go to http://www.johnaconstantine.com/