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HealthStore Foundation is changing its stripes


CFW Clinics in Kenya are getting a makeover at the franchisor level.

After 15 years in Africa, the HealthStore Foundation is changing its stripes, going from a non-profit platform for its franchised health clinics to a for-profit franchisor.

While “for-profit” is a little-used word in social-sector franchising, this 63-unit chain is looking to restructure its offering in order to grow. CFW clinics provide reliable healthcare for the poorest neighborhoods in Africa, specifically in and around Nairobi, Kenya.

The world “reliable” is key here, because the cheaper drugs, often those dispensed by government agencies, are often placebos. But a franchise based on an NGO (non-governmental organization that’s not for profit) model for developing nations has to rely on grants and constant fundraising, says Scott Hillstrom, lawyer turned healthcare advocate  and founder of HealthStore.

When he first started using the franchise model, the nurse-franchisees didn’t pay royalties, instead treating both paying and nonpaying customers. Since nonpayers accounted for about 15 percent of their patient visits, it was perceived as the equivalent of a royalty payment. And while 5 million Ken-yans have been served in either the clinics or through outreach educational programs, growth was static, Hillstrom says. Growth may not be a critical concern when it comes to hamburger franchises, but it’s a big deal when it comes to healthcare and developing countries—one could easily say it’s a matter of life and death and still not sound like you’re being over-the-top dramatic.

The reason growth didn’t happen organically, Hillstrom believes, is because it wasn’t run like a traditional franchise. The incentives that drive growth weren’t there — and profit is just one of the equations. Just like McDonald’s has a system for everything from preparing and cooking a French fry to supply-chain management, HealthStore’s CFW Clinics had systems, but was missing standards. “The social-sector sphere we play in doesn’t always have standards for scalability,” Hillstrom says.

After researching the problem with his board, he hit upon shifting the “payer.” “If you focus on royalties, you focus on growth,” he said during an interview at his coffee shop “meeting site” near his home in Minneapolis. The new model is HealthStore East Africa and expectations are that it will grow to 358 clinics over the next 10 years, using a hub-and-spoke system.

“Our mission isn’t to run a charity,” he points out, but rather to deliver “effective, quality care in places where substandard care all too often results in needless suffering and sometimes death—particularly of children.”

In the old model, the problem of how to serve the poor who can’t afford to pay for care was being treated with top-down funding. The new model will subsidize patient visits, which are about $3 on average.

“If your goal is to deliver healthcare to a large population, you can only do it if it passes the three-point test,” he says. The three points are: standardization, scalability and economies of scale.

The new model, HealthStore East Africa, will be funded by private investment capital. Rather than top-down, these bottom-up subsidies that cover non-paying patients will ensure that the franchisees get paid. Since every customer will now be a paying customer, Hillstrom points out, franchisees will now be able to pay the franchisor the 15 percent royalty used to grow the franchise.

Standards can be enforced through the subsidized payer program, he adds.

By using the spoke-and-hub model, spoke clinics located closer to where the patients live can provide routine care, including perinatal and dispensing drugs for malaria, while the hub clinics are reserved for higher-level care that doesn’t need to be provided at every clinic.

The details are still being rolled out, but the new direction is one that Hillstrom believes will make “capitalizism” into a life-saving word. And someday the same people who buy a pair of Toms shoes for its social component or the company who subsidizes a Fitbit program to keep its employees healthier, may buy visits to Kenyan healthcare clinics in their quest to be good global citizens.

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