Cost-effectiveness of NGO-Sourced Health Franchising

Abstract

Healthcare services in the developing countries are suffering from lack of equipment, expertise and infrastructure. Sexual reproductive health is one of these health areas in which the public health sector is not meeting the growing demand and it is defined as unmet need for family planning. To address this need, international agencies have been operating in the developing world with the aim of making sexual reproductive health services accessible to everyone while assuring good quality. Health franchising is a healthcare service delivery model that is operated by international NGOs and private sector in these regions. As a type of social franchising, health franchising uses commercial franchising mechanisms in order to generate social welfare. The business model of health franchising is based on creating a network of franchisees, utilizing the existing private clinics while providing them with subsidized commodities, training, monitoring, promotion of the network and incentives. In return, the franchisees are promising to stay loyal to the franchisor’s standards and periodically report their performance. Although health-franchising programs have been active and constantly expanding their operations, there are limited studies on the business model and its cost effectiveness. This study aims to explore health franchising, the business model, performance and cost effectiveness in comparison to other healthcare service delivery models in the developing world. For this purpose, a cost effectiveness analysis is conducted on the operations of a health franchising program to calculate the input/output ratio in terms of cost per health impact generated. The value adding mechanisms and impact of health franchising are further discussed through interviews. Findings are interpreted into a set of practical recommendations and an experiment blueprint for a standardized evaluation of health franchising programs. Findings from the case of PSI Myanmar suggest that the cost effectiveness ratio of health franchising is within the limits of similar health service delivery models in the developing world. Apart from its cost-effectiveness, there are other factors such as quality, perception of comfort from the patients and the robust supply chain that make this business model successful in the context it operates.