Nick Pearson quit his job at global venture fund Acumen to start Jacaranda Health – a social enterprise that is opening clinics in peri-urban centres in Kenya to provide quality, affordable maternal care for women. Pearson told How we made it in Africa’s Dinfin Mulupi about Jacaranda’s model, the opportunities in Africa’s health sector and why he finds entrepreneurship fulfilling. [hidepost=9][/hidepost]
Tell us about Jacaranda Health.
Jacaranda Health provides quality maternal healthcare. Our value proposition is providing high quality, easily accessible and respectful care that is also affordable for all women. We opened our first mobile clinic in July 2011, which was an easy way to start because it was a low capital expenditure and an opportunity to start serving clients and build a reputation. We also wanted to bring healthcare closer to the people. We opened our first maternity hospital in August last year in Ruiru, a peri-urban community outside Nairobi. We are looking to open more hospitals in such locations which are densely populated and are growing very fast.
Describe your business model.
We operate on a thin margin. Child delivery at Jacaranda Clinic costs KSh7,900 (US$95) which is a lot cheaper than other private hospitals which charge an average of $500 to $600. We are building systems to make our care more protocol driven. We want patients to experience the same quality every time they walk in. We want to become the biggest chain of maternity hospitals in East Africa. Our plan is to open 25 hospitals in about five years. We want to understand the geographies better, show momentum and attract investors. We are looking at opening two more hospitals in Nairobi and its environs this year.
We are seeing increased investment in the health sector in Kenya. What is driving this?
There is recognition that the sector has been under-invested in for many years. We have had a lot of small clinics started by medical practitioners; it is very fragmented right now. The health sector benefits from scale and systems. Investors are interested in the sector but they are looking for clinics and hospitals that want to scale and have proper systems. It is hard work running a hospital successfully and there is a high barrier of entry in terms of capital and expertise. You need both clinical expertise and business sense.
What are some of the challenges you face?
There is not enough data in the market we are working in. There is lack of adequate information on what drives customer behaviour, income levels, health behaviour and demographics. We end up doing most of that research ourselves. This data is important if we are to succeed. We are working with our patients to design services that fit their needs. For instance, how do they want the waiting room to look like or the interaction with nurses to be like? We want to understand what makes the best maternal care from the customer’s perspective. Maternity care is such a critical and emotional part of someone’s life; everyone deserves the experience to be joyous and safe.
There is demand for high quality maternal care in most African countries. Do you have plans to expand beyond Kenya?
I think there is a huge opportunity in some markets that are similar to Kenya where you have a mix of public and private providers like Uganda, Nigeria and Ghana. In these markets people basically pay out of their pockets for healthcare and most go to private providers. That presents a huge opportunity. There is so much opportunity for growth in Africa.
What advice do you have for entrepreneurs looking to invest in the health sector?
There is a big opportunity here but you need to bring in both medical and business expertise, otherwise you will not succeed. You also need to keep your model as simple as possible. You need to understand your target market particularly if you are looking at the lower income segment.
You worked in venture capital, at Acumen Fund, for years. Is running your own business more fulfilling?
I think so. It is fun because I get to see the results of what we do. Our outputs are very tangible; we see the happy customers and the hospitals that we build. In private equity you invest in other people and you see the money. I am, however, more driven by seeing those tangible outcomes.