PSI in Transition

By Karl Hofmann, CEO, PSI 

For the past 45 years, PSI has worked to improve the health of people throughout the world, mainly by making high-quality, affordable products and services available to people where and when they need them.

Because of our deep, global roots, we have a good sense of how the health products and service markets work and where a market may fail. And we believe we know our consumers. But are we serving them as well as we could?

To answer that, we’ve taken a step back to evaluate our business model, and to think creatively about how we can have even greater and longer-lasting impact.

As you’ve read throughout Impact magazine, the question that kept coming up for us involves markets as a whole. How can PSI be a better steward of health markets rather than just an actor within them? Shouldn’t our future involve understanding and structuring health markets in a way that our host governments and our funders need and that better serves health consumers? The answer is yes, so PSI is embarking on a shift in how we operate.

Over the next decade PSI will become an organization that increasingly diagnoses and addresses market failures, while still continuing to provide much-needed health products and services. Our focus must be on how entire markets and systems meet peoples’ needs, not only on how we are acting in those markets.

Donors and governments are asking pointed questions: After decades of investment, is there no more sustainable approach? One that requires less subsidy, but that doesn’t walk away from the progress we’ve made? This trend is particularly evident in parts of Asia, and Central America and the Caribbean, and in some parts of Africa too where bilateral donors are moving countries out of assistance programs. The United Kingdom’s Department for International Development, Sweden’s SIDA, USAID, The Bill and Melinda Gates Foundation, UNITAID and others are shifting assistance toward market shaping strategies, even as they pare down investments.

Some donors are looking at an exit strategy. PSI is formulating an evolution strategy.

One of the more promising approaches is to turn our nonprofit programs into social enterprises, which I’ll define here as mission-driven, subsidy-free business activities that generate a surplus. This won’t work everywhere, but in countries where purchasing power is rising and where we are seeing a reduction in donor subsidies, transforming the NGO model to a social enterprise is a responsible way to continue to deliver health impact and meet the health needs of our consumers.

PSI running a social enterprise already in Southern Africa with a regional commercial condom sales entity called Company 158. We have been operating as a social enterprise in Paraguay for years. And we recently launched a social enterprise in India to take over all commercial aspects of our work there. With more intentional focus on market failures and total market dynamics, and with the sharper discipline that comes from social enterprise, and operating without a donor safety net, new perspectives for meeting health needs appear.

The drive toward universal health coverage, and opportunities to leapfrog the constraints of struggling primary health care systems through new diagnostic technologies and self-administered therapies and treatments also offer transformational possibilities for us. HIV self-testing is one example.

Right now we have more questions than answers about these shifts. But we trust that when we keep the people we serve at the center of our work, and we focus on removing barriers to access for them, we’re on the right track. A consumer-centered, empowerment-driven, sustainably focused future looks big, exciting and different for PSI.

 Karl Hofmann is President & CEO of PSI.

Follow @KarlHofmannPSI on Twitter.

 

 

 

Photo Credit: Miguel Samper 

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.

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