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EF: What are the shifts in the current healthcare landscape, and how have the roles of care providers and digital interfaces evolved in this context?
IB: The significant shifts in healthcare centres on the evolving roles of care providers, the changing delivery methods, and the evolving profile of care consumers. I believe exploring each of these areas and understanding their importance is crucial. Firstly, the transformation in care providers' roles is important. Unjani Clinics, a novel idea 12 years ago, has now established nurse-based care as a primary access point to the healthcare system. Today, people choose their primary healthcare providers from various professionals, including nurses, pharmacists, and doctors. This shift is irreversible despite some doctors' efforts to protect their traditional roles.
What is emerging now is even more significant. Community health workers and health professionals, often referred to as Health Promotion Officers (HPOs), are expanding their roles from clinic-based settings into communities. Essentially, primary care educators and engagement points, these individuals are increasingly becoming accessible within their communities.
The new generation of community pharmacists entering the industry is focused on patient care rather than just dispensing medication. They demand the right to see patients and play an active role in healthcare delivery. Nurse practitioners are more self-assured and no longer fear that doctors will criticize their work. This evolution in provider roles and patient engagement is reshaping the healthcare landscape. They now see themselves as a fundamental part of primary engagement. This changing profile of the providers of care is the first big thing.
The second major shift is in how we deliver care, and telemedicine plays a crucial role in this transformation. This model acts as a digital gatekeeper, serving as consumers' first point of contact, offering triage and initial assessments. Another significant change in healthcare delivery is the rise of point-of-care diagnostics. Laboratories operated behind the scenes for decades, but now they are being brought directly to consumers. These diagnostics are becoming more sophisticated, accessible, and cost-effective, fundamentally altering patient engagement.
The third significant development is the growth of step-down care and home-based care. Discovery has been a major proponent of this approach, and it is expected to become a substantial sector. These models of care facilitate recovery and ongoing treatment outside of traditional hospital settings, providing more flexible and patient-centred care solutions.
If you look at the businesses in Kenya that have grown because people want to go to the hospital for their hip replacement but cannot afford to stay for long.
The final major shift is in the consumer of care. For a long time in South Africa, the question of who the customer is has been debated. Traditionally, the customer was the insurance company. For pharmaceutical companies, being on the insurance formulary was essential for reimbursement. However, this is starting to change. Self-funding of care is becoming a more significant concept, altering the traditional dynamics of the healthcare market. Patients are increasingly taking on the role of direct consumers, driving new healthcare delivery and engagement models.
Historically, there were only two choices for healthcare in South Africa: state-provided care or private care, the latter requiring insurance. While private GPs did see cash patients, they were not the middle-class demographic we see today. Now, a growing cohort in South African society—potentially twice as large as the insured population—is willing and able to self-fund their care.
This new group of consumers demands different products, services, engagement models, interaction styles, and various price points. This addressable market presents a significant opportunity that has not been fully recognized or tapped into. While efforts continue to defend traditional insurance models or promote NHI, there is an incredible opportunity to cater to this substantial middle market with significant cash reserves. We are starting to see some of the insurance companies and provider organizations move into this opportunity, but still on a very small scale. If you are running a startup, that is the place to be and the market to focus on.
EF: Can you elaborate on Health 4 Development's commitment to the healthcare sector, explain your role in the market, and explain how you are accelerating these trends?
IB: I highlight two key points when discussing our strategy and market positioning. Firstly, over 50% of total healthcare spending in Africa is self-funded. This self-funding begins with individuals paying cash for services, evolves into self-saving models, advances to risk-sharing models, and ultimately becomes insurance products. Across the continent, in countries like Kenya, Uganda, Tanzania, Ghana, and Nigeria, the healthcare sector is predominantly driven by self-funded care and private market trends. The growth rate of private healthcare investment is such that governments will inevitably need to engage private sector providers to meet their populations' needs.
Healthcare industry investment focuses on addressing unmet demand rather than unmet needs. Unmet demand refers to the situation where individuals are willing and able to pay for healthcare but lack available services. This differs from unmet need, which is determined by epidemiological analysis identifying health conditions in a community, such as the number of people with diabetes. Unmet demand signifies that consumers have decided to purchase services, but no providers meet this demand.
For example, in Unjani, we have seen a rapid increase in patient numbers. It once took 18 months to reach 400 patients monthly in a clinic, but now it takes just six weeks. Lynda and her team are opening a clinic weekly and plan to launch 50 new clinics this year. Each clinic is expected to succeed within three months of opening, demonstrating the significant unmet demand within this emerging consumer sector.
EF: What are the key pillars that you think make the sector attractive in the market?
IB: A study conducted around 15 to 18 years ago significantly influenced my perspective. This study referred to a World Bank definition of household income, indicating that households enter the discretionary spending phase when their total annual income exceeds $5,000. This threshold has likely increased to around $6,000 today. The study examined spending patterns as household incomes surpassed this level. Initially, with an income up to $5,000 per year, households prioritize basic needs: shelter, food, utilities, and sanitation—fulfilling Maslow’s basic needs.
When household incomes cross the line, spending will shift towards clothing, footwear, education, household appliances, and healthcare. In emerging markets, where many households are crossing this income threshold at a significant rate (previously estimated at 1,000 households per day), a substantial amount of money is directed towards healthcare. This shift represents a major market opportunity driven by the emerging middle class's changing spending patterns and economic growth.
The growth of economies and the expanding middle class are key drivers of consumer demand for healthcare rather than government or donor spending. The excitement in the market stems from this demographic shift and the associated economic growth.
Another pivotal factor was the introduction of the President's Emergency Plan for AIDS Relief (PEPFAR) by George W. Bush in 2003 and The Global Fund in 2002. From 2003 to 2023, average life expectancy in Africa increased by 11 years, from 53 to 64. This increase meant that people lived longer during their most economically productive years, earning and spending more than ever before.
Additionally, as people lived longer and better, they began to develop lifestyle-related conditions such as hypertension, diabetes, and cancer. The emergence of these conditions further fueled the growth of the healthcare industry. Thus, the combined impact of an emerging middle class and the success of public health programs against diseases like HIV, TB, and malaria has fundamentally transformed the economic and health landscape of the continent. This transformation has created a robust market for healthcare services driven by increased demand and financial capacity.
EF: What do companies entering the healthcare business need to succeed?
IB: I think there is an insightful idiom here: do not get distracted by the allure of reimbursement, donors, or government funding. Instead, focus on the self-funding market. Two compelling examples from Kenya illustrate this point. First, there is a man in Nairobi we are considering investing with who buys large, beautiful houses with gardens and converts them into step-down facilities. We will structure it so a property company buys and holds the properties while a management company rents and operates them.
This setup benefits both sides: the property company enjoys capital appreciation and rental yield, while the operations company sees impressive returns on invested capital. The only real limitations to growth are access to capital and properties. Essentially, he buys houses, employs nurses, and cares for patients. These facilities are particularly busy on weekends as people seek temporary care for their elderly relatives.
Another example is an ophthalmic surgeon in Kisumu who built a cataract clinic. The demand for cataract surgeries in Kenya is immense, and while the National Health Insurance System covers some costs, it is not enough to be profitable. To address this, he conducts a simple yet effective means test based on the patient's shoes. Wealthy individuals who arrive by car have clean and good-quality shoes. Middle-class patients might have scuffed, dusty shoes from walking or taking a taxi. Poor individuals cannot afford nice shoes at all. This straightforward method allows his clinic to tier their pricing effectively, providing accessible care while maintaining profitability.
The takeaway is that success does not always require complex IT systems or sophisticated strategies. Often, common sense, excellent service, and genuine care are the keys to thriving in the healthcare market. If you can do those things, then there is real money to be made, and as an entrepreneur starting, that is where I would be putting my money.
EF: Do you have any final message you want to share?
IB: Do sick people get poor, or do poor people get sick? The answer is both. There are far greater studies than I can quote to demonstrate the indelible link between healthcare status and GDP growth.
Gathering data that shows the growth of the middle class, the increase in self-funded healthcare, and the lag in government investment makes it clear: investing capital in Africa’s healthcare systems to provide affordable, quality care for patients willing and able to self-fund is a surefire way to generate returns.
Healthcare influences every facet of South African communities and life. And yet, the most impactful intervention for a child’s life is giving one of their parents a job. Employment leads to better healthcare outcomes, as parents with jobs are better equipped to provide for their children's nutrition, vaccinations, and overall well-being. This comprehensive approach underscores the importance of healthcare in driving broader societal benefits.
