Penda Health

Characteristics

Country ! Kenya

Target Population! General population!! ! Women! ! Pregnant women! ! Families! ! Infants and young children, ages 0 to 4! ! Children and youth, ages 5 and older ! ! Poor/low-income

Geographical Reach ! Regional! Urban! Suburban/peri-urban! Rural

Organization Type! Private for-profit!Form of Care ! Primary care! ! Prevention!! ! Family planning and reproductive health! ! Pediatrics! ! Maternal and child health! ! Malaria! ! Diabetes! ! Nutrition! ! ! ! Electronic health records (eHealth)

Innovation Type ! Align with patients’ locations and behaviors! Right-skill the workforce!! Standardize operating procedures!Website! www.pendahealth.wordpress.com

“We believe that if we can prove profitability, we can convince the larger clinics that there is profit to be made by lowering prices and focusing on low-income patients. It is core to our concept of scaling not only our organization but getting the industry to step up their game.”

–Nicholas Sowden, Co-Founder“People should be able to vote with their pocketbooks or insurance cards, rather than having decisions made 10,000 miles away. I have been very excited about letting women drive decisions about our services.”–Stephanie Koczela, Co-Founder

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Description of Innovation

Penda Health (Penda) is a for-profit healthcare provider in Kenya. Penda was launched in 2011with the goal of bringing high quality, affordable, outpatient healthcare services to low and middle-income women and their families throughout East Africa. Penda utilizes a unique staffing model and a focused set of services that address key outpatient needs in order to bring down costs and consequently lower the price of services. Innovative marketing strategies and local partnerships allow Penda to establish important relationships with the community that help them successfully integrate into the local health system. Penda has developed a business plan to drive scaling and replication of their primary care service delivery throughout East Africa. In February 2012, Penda Health launched their first clinic in Kitengela, Kenya with the goal of scaling up to 100 primary care clinics across East Africa by 2020. This first clinic has provided care to over 6,000 patients in early 2013 and is quickly approaching cash flow sustainability. Penda plans to open three more clinics in 2013.

Access Quality

Cost

Penda is conquering negative perceptions, one of the biggest barriers to healthcare access by providing empathetic and caring healthcare experiences.

Penda ensures high quality of care through standardized protocols, qualified clinicians, rigorous chart reviews, and medical performance management systems.

Penda has lowered costs by right-skilling providers, streamlining cash and inventory management with technology, and building strong supplier partnerships.

The Iron Triangle of Health Care

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Penda Health

“Living in Kenya, I attended dozens and dozens of funerals; it was enraging because people died for lack of good care. From my work in micro-finance, I had seen the impact that healthcare can have on families and the whole society. I wanted to come up with a solution. Penda was the vision.”

Stephanie Koczela, Co-Founder

Providing Value to the Patient, Community, and Health SystemMany middle- and lower-income people in East Africa lack affordable high quality healthcare. Women and their families often face a choice between low-quality care and going without care altogether. In order to address this need, Penda designed a care delivery model that can provide low cost, high quality care for a limited set of health concerns. In June 2011, Penda spoke to over 1,000 women across Kenya to explore how they felt about health, maintaining their health and their current options to do so. This informed development of an operating model to address Penda’s target patients’ needs. After opening the first clinic in Feb 2012, Penda fine-tuned the set of available services, including the addition of antenatal care and well-baby clinics based on patient interest. Penda has also partnered with the government for immunization services and is approved to provide government-funded vaccinations. In addition to providing healthcare services, Penda also conducts community health education at schools, churches, factories and local businesses. In 2012, Penda educated more than 10,000 people in their surrounding area on health issues, especially preventive healthcare. Penda’s attention to preventive healthcare and health education has helped increase community awareness of the importance of early screening for cervical cancer and breast cancer, two leading killers of women in Kenya. Penda also provides significant value for the health system, which is largely overburdened and underfunded. Through provision of care for basic health concerns, Penda is able to redirect patient flow from overtaxed health facilities to their clinic, reducing burden on the health system and freeing resources that can be used for these facilities to provide better care.

Health System and Policy ContextHealthcare services in Kenya are organized in a pyramid, with local dispensaries at the base and two national hospitals at the top. Public and private providers of health care and health insurance coexist, however systematic coordination of public health care strategies has been weak. Future improvements in public health care may enable the government to partner with private health care providers. However, this is not a current reality and utilization of private health care providers, such as Penda, remains a significant portion of the market share. Out-of-pocket expenditure as a percentage of total health spending is very high, at 42.7% in 2010. When considering only private expenditures on health, that

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“My real ‘aha’ moment came from doing a lot of research on family planning and how many women in Kenya want family planning but can’t access it. And learning about the staggering impact of family planning on health, education, even roads, government, everything. You don’t even need to convince women or change behaviors, they really want family planning options.”

Nicholas Sowden, Co-Founder

Penda Health

“Both of us wanted to provide healthcare where people are kind, where it is a pleasant experience.”

Stephanie Koczela, Co-Founder

rises to 76.6%. The high out-of-pocket costs are compounded by the lack of health insurance coverage in Kenya. Between 10 and 20% of Kenyans are covered by any health insurance and only 2 to 3% are covered for outpatient care. The National Hospital Insurance Fund (NHIF), created as a compulsory insurance program for civil servants, has undergone many transformations since its inception in 1966. NHIF is now open to all Kenyans 18 years of age and older, as well as their dependents, on a voluntary enrollment basis and offers expanded services, such as outpatient services, to certain groups. However, NHIF coverage remains low, especially outside urban centers, covering only approximately half of all those insured.Although Kenya has a relatively high number of healthcare workers in comparison with other countries in the region, there are large disparities in the distribution of healthcare workers among public and private facilities, the level of care, and geographic regions. Doctors and nurses are concentrated in urban hospitals and even still these hospitals are often understaffed. Healthcare workers and healthcare facilities are disproportionately located in urban areas, exacerbating the lack of access to healthcare in rural areas.

Disparate human capital distribution between public and private providers has led to understaffed public healthcare units that lack the capacity and necessary resources to provide quality care. Many doctors choose to work in the private sector where working conditions and pay are better. Penda has been able to capitalize on workforce preference for private sector employment, recruiting only the most highly qualified health professionals. Recent data from the Kenya Household Health Expenditure and Utilization survey indicate that utilization rates of health care have increased in the last two decades. However, high out-of-pocket costs associated with quality care together with high transportation costs and understaffed public healthcare clinics, dissuade many Kenyans from seeking medical care when ill.Penda has strategically built their model around the lack of health insurance coverage and, concomitantly, the lack of affordable quality health care for people paying out-of-pocket. Recent changes in Kenya’s NHIF, including proposals to build on the national health insurance scheme as a mechanism to achieve universal coverage, and expansions in the private health insurance sector, may prove promising for Penda. Penda stands to increase their reach and impact even further if health insurance is made accessible for all Kenyans.

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Penda Health

“We’ve learned that there is a strong perception around what quality healthcare is and this is not always what is recommended by medical studies and evidence-based medicine. We are working to understand what patients see as quality and how to merge that with what research says.”

Nicholas Sowden, Co-Founder

Operating ModelPenda has created an operating model structured around affordable, quality healthcare services. Penda’s focus on local partnerships, technology, efficiency, and well-trained staff, as well as a friendly service-oriented culture results in quality of care that is a step change from most health care in East Africa today.

Penda leverages local partnerships and local knowledge in their outreach and marketing strategies to create an operating model centered on the needs of their target population. Penda’s innovative marketing strategy has recruited stakeholders from throughout the community to take on an active role in their local healthcare system. Some key aspects of their marketing strategy include hosting free event days, handing out brochures at the market, sending thank-you cards and SMS texts to patients, and encouraging word-of-mouth referrals with service incentives. Penda’s health education events also spread the word about services offered by the Penda clinic; approximately 20% of attendees become Penda patients within a few months.

Penda’s focus on standardization of services for a limited set of health issues drives down costs while ensuring high quality. Patients are referred to another health facility if they present a health concern outside of the scope of Penda’s set of health services. Maintaining a narrow focus on high-prevalence health issues is key to the scalability and sustainability of Penda’s operating model. Penda recruits top providers, provides intensive and continuous training, and implements a system of clear, easy-to-use medical protocols to simplify the treatment of the vast majority of cases. The evidence-based protocols were developed with the help of medical specialists with experience in Kenya, building on Kenya’s Ministry of Health with more detail using resources such as the WHO. With the combination of Penda’s training and protocols, certified nurse practitioners and clinical officers are able to handle approximately 60% of cases, while doctors’ time is reserved for complicated cases as well as case review and training of clinicians and nurses. Efficient and productive service delivery results from a right-skilled workforce and proper management of employees. Technological innovation is a key determinant of the scalability of Penda’s model and they are currently developing an integrated cloud-hosted system to facilitate remote monitoring of inventory, sales, and cash records, and to ensure data safety.

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Penda Health

“Our model is staffed with the smallest number of people possible, which means getting people do to work they wouldn’t do in other settings. Our cleaner does infection prevention. Our providers pre-package drugs and do simple lab tests in the exam room that in other places would be outsourced to a lab. We want to build a culture where people are excited about rooting for Penda, rather than saying, ‘That’s not my job.’ This has been a big innovation for our staffing model.”

Stephanie Koczela, Co-Founder

Business ModelPenda Health has developed a sustainable business model in order to achieve scalable impact. Financial planning and succinct terms of growth provide a roadmap with benchmarks to measure progress. Using a fee-for-service model, Penda charges 150 KSH ($1.75 USD) per consultation, approximately one-sixth the price of other private clinics. Penda prices their services at a slight premium of 10% above the average price charged by low-quality clinics, which allows them to maintain the quality care demanded by their patients and remain competitive with low-quality clinics. All payments are received in cash at the time of the visit. Using well-trained nurse practitioners and clinical officers instead of doctors, the price of consultation significantly decreases. This savings is passed onto Penda’s patients, creating a mechanism for increasing patient volume and remaining financially sustainable. Similar to their marketing and outreach strategies, Penda’s business model was shaped by the in-depth market research conducted prior to the opening of their first clinic. Penda believes that a solid business model as well as patient demand should underlie any additions to their services in order to ensure financial sustainability. Local marketing and outreach drive up patient volumes, leading to clinic growth. An efficient staffing model and move to cloud-hosted inventory management and procurement of medical supplies as well as medical records will allow clinics to take advantage of economies of scale and further drive down costs.

According to their model, a typical Penda clinic requires about $30,000 USD working capital and 7 months to reach positive cash flow. Penda clinics are projected to break even in about 22 months. At full capacity (80 patients per day), large clinics are expected to deliver a 25% profit margin and generate $50,000 USD in gross annual income.

Impact MetricsQuality

• Third party valuation scores (e.g. Safe Care http://www.safe-care.org)• Risk Register scores at each clinic• Percent of cases covered by a Penda protocol• Percent of charts following protocol perfectly• Number of employees enrolled in and completing training courses

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Penda Health

“We’ve done a lot of crazy things in the waiting room that are frowned upon from a medical perspective but it’s just a waiting room. When women come in for preventive healthcare, they get a manicure or pedicure in the waiting room. We are taking a completely fresh approach to making this the best for patients and for employees, to help them really have fun at work.”

Nicholas Sowden, Co-Founder

Access and utilization• Number of patients served per month• Number of screenings provided• Number of health issues caught at screening that require treatment• Number of patients referred to other health facilities for treatment• Number of patients who follow through with referrals for treatment of HIV/

AIDS, diabetes, hypertension, early indications of cervical cancer and early indications of breast cancer

• Number of women using family planning services and typeUser satisfaction:

• Patient satisfaction, whether patient would refer a friend or family member• Percent of patient flow from return visits and patient referral

Cost and sustainability• Number of employees• Number of people supported by employees• Average staff employment level • Total wages paid• Amount of money spent in local community (e.g., via hardware shops,

repairs, construction, etc.)

Goals for Scaling and Replication1. Open 100 clinics by 2020 across East Africa, seeing over 2 million

patients per year.2. Become the best employer, with approximately 1,000 staff members, and

training institute in East Africa for clinical officers, nurses and managers

3. Expand use of innovative alternative payment models, partnerships with government and development organizations, and continuous focus on affordable pricing with a sustainable business model in order to ensure services are affordable for everyone

4. Develop protocols for common diseases in each locality to ensure reliable quality of care for every patient

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Penda Health

“We use doctors from around the world, including in Kenya, to review charts and make sure our quality is high. This is very innovative in Kenya. I am inspired by Kaiser Permanente and their model of internal review. Minute Clinic also does this. We felt this was out best shot at ensuring quality with a mid-level provider model.”

Stephanie Koczela, Co-Founder

External Support Required for Scaling and Replication1. Sharing challenges and best practices with similar innovators

2. Training and/or technical assistance in world-class medical training models, health technology systems building, quality patient-provider interactions, and best-in-class inventory management and procurement

3. Mentoring and support from business leaders

Selected Media Attention and AwardsBusiness  Daily  Africa  (Dec  17,  2012).  Women’s  clinic  attracts  investors  after  global  award.  http://www.businessdailyafrica.com/Women-­‐clinic-­‐attracts-­‐investors-­‐after-­‐global-­‐award/-­‐/539552/1646028/-­‐/sh5hjxz/-­‐/index.html

Named  the  2012  BiD  Network  Global  Entrepreneur  of  the  Year  (Nov  2012).http://www.bidnetwork.org/en/news/bid-­‐network-­‐entrepreneur-­‐year-­‐crowned-­‐growing-­‐smes

Business  Daily  Africa  (Aug  12,  2012).  Health  clinic  gets  US  investors’  funding.  http://www.businessdailyafrica.com/Health-­‐clinic-­‐gets-­‐US-­‐-­‐investors-­‐-­‐funding-­‐/-­‐/539552/1477466/-­‐/svxgs1z/-­‐/index.html

BBC  (July  30,  2012).  Technology  opens  the  doors  of  Africa’s  health  sector.  http://www.bbc.co.uk/news/business-­‐18969646    

Next  Billion  (July  24,  2012).  The  Art  of  ‘Nice’,  Putting  ‘Care’  in  African  Healthcare.  http://www.nextbillion.net/blogpost.aspx?blogid=2882  

Venture  Capital  for  Africa  (May  18,  2012).  Penda  Health  sets  out  to  disrupt  Kenyan  healthcare  system.  http://vc4africa.biz/blog/2012/05/18/penda-­‐health-­‐sets-­‐out-­‐to-­‐disrupt-­‐kenyan-­‐healthcare-­‐system/  

Last updated March 22, 2013Penda Health provided the source data for this document and is responsible for the accuracy of the content.

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Penda Health

“It is really important that you get the right people on your team from the beginning. In the early days of a start-up that is trying to revolutionize something, you should hire slowly and have only people who are bought into your mission.”

Stephanie Koczela, Co-Founder