“Healthcare is difficult. But at the same time, if one identifies a sustainable economic model in healthcare, it can be super impactful and also super profitable.”
So says entrepreneur Emilian Popa, co-founder and CEO of Ilara Health, a company which provides diagnostic equipment and services to small clinics and pharmacies on the outskirts of urban areas in Kenya.
“Seventy percent of medical decisions require some form of diagnosis, like a blood test. Yet, there are more than 500 million people in Africa today who struggle to access, or cannot afford, a simple blood test. At Ilara Health, we make diagnostics in Africa more affordable, accessible and accurate to bridge the diagnostic gap and improve the quality of care,” Popa explains.
Greater availability of diagnostic equipment not only has health benefits, but also enables clinics and pharmacies to boost their revenue by offering additional services to patients. However, the cost of traditional diagnostic machines can run into tens of thousands of dollars, which is too expensive for Ilara’s customers. As informal businesses, these clinics and pharmacies do not enjoy the benefit of traditional financial services typically used by SMEs to support their growth.
To overcome this, Ilara has partnered with international manufacturers of next-generation small portable diagnostic devices, many of which integrate with mobile phones. The devices Ilara currently has in the market can diagnose infections as well as non-communicable diseases such as diabetes and hypertension.
“The exponential development in smartphone medicine and digital health has brought us small, affordable and accurate devices to replace the bulky, expensive legacy machines that have historically been out of reach for the facilities we target,” Popa notes.
While Ilara’s devices cost a fraction of legacy diagnostic equipment, their price tags are still too high for informal clinics to purchase outright. To make its equipment more affordable, Ilara introduced an innovative financing option: its clients pay a small upfront deposit and the balance is settled over 24 months. Ilara’s devices are connected to a technology platform that allows the company to turn them off remotely if a client doesn’t pay.
“At the core of our business is a subscription model that enables our facilities to access the latest developments in diagnostic technology at a low initial cost.”
About 70% of the clinics pay by mobile money, while the rest do it through cheques or bank transfers. Popa adds the goal is to eventually have all clients pay via mobile money.
Despite its innovative business model, Ilara does face several hurdles. One of these is the challenge of operating in areas where healthcare services are informal and disorganised. “Understanding the dynamics of healthcare delivery in a low-income setting is challenging. We all live in a bit of a bubble in Nairobi. Most of my friends have never heard of the places where we operate, even though they are just 10 to 15 kilometres outside the city,” Popa reveals.
Ilara also has to provide extensive training to its clients on how to operate the devices. “They are all medical professionals and are great people but many of them lack a lot of knowledge. We need to train them, which is tough.”
In addition, many of these clinics often face cash flow constraints which affect their ability to pay. “Collecting the leasing fees is not always obvious,” Popa says. “We have a system in place and incentivise them to pay on time but like any SME lending, this is also a challenge.”
Popa believes dealing with these various challenges is part and parcel of targeting a segment of the healthcare market into which few have ventured.
He adds many of the successful tech-enabled companies in Africa that target informal, fragmented industries don’t just do one thing. They have multiple businesses in one business: there is a product to distribute, with financing to make the product more affordable as well as a technology platform on top of it all to streamline the process.