Is (Social) Enterprise the Future?
By Abigail Winskell, PSI
What is a social enterprise? Profit for purpose or the double bottom line of impact and money? Applying commercial practices to deliver positive social impact? A for-profit entity with a strong focus on delivering social impact? Or simply an opportunity for non-profit organizations to diversify their funding for increased health impact?
All of the above. Social enterprise models can take many forms depending on the social or environmental challenge they are trying to solve along with the actors involved. At PSI, we define the purpose of social enterprise as achieving sustainable health impact delivered through a commercial business model.
How can social enterprise help to create stronger health markets?
Social enterprise offers us the opportunity to deliver sustained health impact by growing health markets. We develop the market for a health product or service to exist beyond the life of donor funding. We increase access to more affordable products or services by filling a segment of the market where other commercial sector actors aren’t present. And we open up the market for a new health product or service.
Scaling Up the Family Planning Market
With a target of reaching 48 million additional users of modern methods of contraceptives by 2020, India represents 40 percent of the total global FP2020 goal — of reaching 120 million additional users of modern contraceptive methods in 69 of the world’s poorest countries.
PSI’s market development approach analysis demonstrated that the market is failing women across all wealth quintiles in urban and rural areas, and particularly young women. Moreover, method mix is disproportionately skewed towards sterilization, with limited access to other methods.
Recent changes in these market restrictions have opened the door for a new approach. PSI has established a family planning social enterprise that will drive growth of the family planning market, while building an efficient business model for sustained business operations.
The India Limited Liability Company (LLC) will offer a basket of family planning products designed to grow the market by increasing access, improving distribution and expanding choice by diversifying the method mix. The LLC will operate as a commercial entity focused on driving operational efficiency to ensure that products remain accessible and affordable for our consumers.
Sustainable Models for Service Delivery
Social enterprise also has a role to play in health service delivery. Many people in developing countries face significant challenges in accessing quality, affordable health care. Public health systems are often overburdened, health providers lack incentives to offer quality services and there is low participation in the private sector market for preventative care.
Traditional social franchising programs have been very successful in expanding access to a specific health service through an existing healthcare provider. However, health care markets are becoming more sophisticated and donors are increasingly focused on exploring greater financial sustainability of social franchising.
PSI is working on two different enterprise models for delivery of healthcare services. These two approaches are currently in pilot phase, to test and learn before considering how best to scale up.
Abigail Winskell is the Deputy Director of Global Marketing at PSI.
Read the piece below to learn about one of PSI’s successful social enterprises in Latin America.
AN ANSWER TO SHIFTING RESOURCES
By Julia Roberts, Regional Director of Latin America & the Caribbean at PSI
In the 1960S, the average family in Latin America had six children and many women died in childbirth. Today, most women in the region have between two and three healthy children. Similarly, infant mortality has fallen faster than anywhere else in the world and child mortality has declined by 57 percent.
Regionally, development assistance — primarily U.S. foreign aid — has declined in each decade since the 1980s. Additionally, out of pocket expenditure for health has reached over 30 percent of national health expenditure. Purchasing power has also increased, from just below $6,000 in 1990 to nearly $16,000 in 2014. This substantial growth in real income translates to market opportunities for health products and services. More and more, consumers are choosing and paying for the health care they want.
The public health community’s responsibility is to provide high quality, integrated services with a focus on equity. To meet this goal we must better understand the primary care market. We also need to understand our consumers more intimately, including them in the development of solutions that work best for them. In doing so we enable health providers to create approaches that address market failures across the ever-expanding list of new and emerging causes of morbidity and mortality.
FROM SUBSIDY TO SUSTAINABILITY
Ten years ago, our network member in Paraguay pioneered one of these opportunities to create a sustainable social enterprise model for contraception after graduating from donor support. Today it offers a broad portfolio of sustainable products across the family planning and nutritional spectrum. Similarly, PSI’s partner in Central America, the Pan American Social Marketing Organization (PASMO), has built on years of donor investment to develop a profitable condom brand, Vive, that now boasts a 52 percent market share in the region. PSI and PASMO have continued this journey by diversifying their sustainable portfolio to include other affordable, quality health products across the region.
Now, with investments from PSI’s philanthropic program Maverick Collective, foundations and corporate technical assistance, PASMO is again pushing forward by building a sustainable, clinical franchise, Red Segura.
Red Segura is currently working to prove its business model. We are making exciting strides in addressing equity and quality while providing integrated, primary care services inclusive of sexual and reproductive health, non-communicable diseases and gender-based violence. The goal is to demonstrate health impact and sustainability. As Colleen Gregerson, Vice President of Corporate Partnership and Philanthropy at PSI and Director of Maverick Collective, acknowledges: “This is a lab for developing new approaches to improve the health of women and girls. What we learn here, we plan to scale up in partnership with other donors and replicate in other countries.”
This article is part of an ongoing conversation about #MakingMarketsWork in Impact Magazine No. 22 “Are We Thinking Big Enough” issue. Join in the conversation with @PSIImpact.November 14, 2016