Mid-fee healthcare
Mid-fee healthcare
Business Model Description
Develop mid-fee healthcare clinics that serve middle and low income South African citizens who cannot afford private health insurance.
Expected Impact
Improve access to affordable healthcare for underserved communities.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- South Africa: Gauteng
Sector Classification
Health Care
Development need
South Africa has made notable progress on multiple aspects of SDG 3 - Good Health and Well-being, but major challenges still remain to achieve the goal by 2030.(2)
Policy priority
The National Development Plan (NDP) aims to achieve healthcare so everyone has access to an equal standard of care regardless of income.(4) The government has committed to increasing health expenditure.(3) The NDP also outlines a national health insurance system that ensures all citizens have access essential healthcare, improves the quality of public healthcare and lowers the relative cost of private healthcare.(3) Other key areas include recruiting more professionals in the public and private sectors, improving healthcare systems and providing HIV/AIDS healthcare.
Gender inequalities and marginalization issues
COVID-19 lockdowns and restricted access to health services have directly affect women's health, particularly maternal health, unintended pregnancies, and women with chronic illnesses especially HIV/AIDS.(32)
Investment opportunities introduction
Despite progress towards achieving SDG 3, there is a significant need for private sector investment to achieve equitable access to healthcare in South Africa. This need has been illuminated by COVID-19.
Key bottlenecks introduction
Progress is still overshadowed by the inequities caused by the previous regime. Universal health coverage, value for money and funding requirements remain significant challenges.(3)
Health Care Providers
Development need
There is a very high degree of inequality in the South African healthcare sector, where 16% of the population access private healthcare and 84% are served by the public sector.(1) By 2030, the health system should provide quality care for all, but the public health system cannot meet demand.(2)
Gender inequalities and marginalization issues
COVID-19 has disrupted access to healthcare for contraception and maternal care, routine programs (HIV, tuberculosis) and sanitary dignity programs for teenage girls. Constraints in medicine supply and immunization services disproportionately affect women.(32)
Investment opportunities introduction
There is a large market for mid-fee health in other countries and the opportunity in South Africa is evident.(3) Implementing National Health Insurance should ensure rapid growth in this space.(3)
Key bottlenecks introduction
Prohibitive costs have made private healthcare too expensive for most South Africans.(12)
Health Care Delivery
Pipeline Opportunity
Mid-fee healthcare
Develop mid-fee healthcare clinics that serve middle and low income South African citizens who cannot afford private health insurance.
Business Case
Market Size and Environment
< 5%
The South African healthcare market is expected to increase at a compound annual growth rate (CAGR) of 4.7% over 5 years from 2017 to reach USD 37 billion by 2022. A similar growth rate is expected over the next decade to reach USD 47.1 billion by 2027.(13)
Indicative Return
15% - 20%
Based on studied benchmark projects, urban clinics are expected to be more profitable than rural ones.(27)
Investment Timeframe
Medium Term (5–10 years)
Models operating under blended financing models, which include reimbursing establishment capital expenses, have relatively short investment timeframes (under 5 years). Fully self-funded models naturally have longer payback periods, ranging from 5 to 15 years.(27)
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Market - Highly Regulated
Capital - Requires Subsidy
Impact Case
Sustainable Development Need
There is a significant shortage of quality affordable medical care in South Africa (17)
Large public hospitals are concentrated in metropolitan areas (16), with rural population relying on sparsely distributed clinics and communal health centres (16)
There are many resources available to the private health care, however it is important to find solutions for the 84% that rely on the public health system (7).
Gender & Marginalisation
66 percent of women classified as a ‘maternal near-miss’ encounter some form of delay before reaching the appropriate level of care(19)
Expected Development Outcome
Investing in midfee healthcare in South Africa has the potential to: Improve access to primary health care in underserved communities; and Create employment opportunities
Increase access to affordable private healthcare to more South Africans, especially uninsured black low-income population. Decrease inequality by addressing the challenges of health disparities in South Africa; Decrease the burden on the public health care sector
Gender & Marginalisation
Alleviate healthcare access problems disproportionately affecting women and create employment opportunities for women (nursing and community healthcare staff represent 77% of health workets)
Primary SDGs addressed
3.8.1 Coverage of essential health services
1 600 new clinics were built as part of the Reconstruction and Development Programme, the Bill on National Health Insurance (NHI) outlines the phased implementation of NHI in South Africa to achieve the goal of universal health coverage. (1)
The National Health Insurance Bill will give effect to the NDP that seeks to provide for universal quality health care services to all South Africans irrespective of social economic background.(3)
Secondary SDGs addressed
Directly impacted stakeholders
People
Indirectly impacted stakeholders
Public sector
Impact Risks
Unexpected impact risk exists for increasingly unequal access to healthcare between low density rural settings and urban settings.
Impact Classification
What
Affordable private healthcare to improve access to primary healthcare in underserved communities
Risk
Medium risk
Impact Thesis
Improve access to affordable healthcare for underserved communities.
Enabling Environment
Policy Environment
The South African government has a constitutional mandate to provide quality healthcare services to its citizens.(12)
White Paper on National Health Insurance (NHI): This paper outlines the South African government’s strategy for achieving universal health coverage over the next 14 years.(11) It aims to improve quality, coverage and equity, as a response to the poor performance of South Africa’s healthcare system.
Financial Environment
Financial incentives: Common financing mechanisms for healthcare include: social insurance, private insurance, and medical schemes; user fees (out of pocket); community financing; donations/grants; and venture capital.(21)
Fiscal incentives: Development finance institutions such as the Development Bank of Southern Africa provide financial support for healthcare services. (20) The African Development Bank Group recently approved USD 10 million equity in Razorite Healthcare Fund for Africa.(24) The Discovery Foundation has invested over R189 million in grants and aims to invest R300 million towards specialised healthcare services over 20 years.(19)
Other incentives: A range of general and sector-funding solutions and incentives is available to investors and service companies. Several available databases are: GreenCape Finance Desk database (22) and Green Finance Database (23).
Regulatory Environment
National Health Insurance Plan: South Africa has been implementing major health reforms under the umbrella of the national health insurance plan.(11)
National Health Act, Act 61 of 2003: This Act replaced the Health Act of 1977.
Council for Medical Schemes: This statutory body was established by the Medical Schemes Act (131 of 1998) to provide regulatory supervision of private health financing through medical schemes.(18)
Marketplace Participants
Private Sector
Qualihealth, UnityHealth, Ambledown Financial Services (Pty) Ltd
Government
National Department of Health, Western Cape Department of Health
Multilaterals
Small Enterprise Finance Agency (SEFA), Development finance institutions, Development Bank of Southern Africa
Target Locations
South Africa: Gauteng
References
- (1) Statistics South Africa (2019). Sustainable Development Goals: Country Report 2019 - South Africa. http://www.statssa.gov.za/MDG/SDGs_Country_Report_2019_South_Africa.pdf
- (2) Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G. and Woelm, F. (2020). The Sustainable Development Goals and Covid-19. Sustainable Development Report. Cambridge University Press. https://dashboards.sdgindex.org/#/ZAF
- (3) South African Government (2019). South Africa Voluntary National Review: Empowering people and ensuring inclusiveness and equality. https://sustainabledevelopment.un.org/content/documents/23402RSA_Voluntary_National_Review_Report___The_Final_24_July_2019.pdf
- (4) National Planning Commission (2011). National Development Plan 2030; Our future - make it work. https://www.gov.za/sites/default/files/gcis_document/201409/ndp-2030-our-future-make-it-workr.pdf
- (5) Africa Health (2020). Industry Insights: South Africa Healthcare Market Overview. https://www.africahealthexhibition.com/content/dam/Informa/africahealthexhibition/en/2020/pdf/AFH19_Industry_Insights-SA_MARKET_REPORT.pdf
- (6) Mapham, W. (2020). Interview with UCT GSB Bertha Centre for Social Innovation and Entrepreneurship.
- (7) Interview with Peter Benjamin, HealthEnabled, 21 July 2020.
- (8) National Planning Commission (2011). National Development Plan - Vision for 2030. https://www.gov.za/sites/default/files/gcis_document/201409/devplan2.pdf
- (9) Interview with Debbie Rogers and Chiara Kunnie, Praekelt, 24 July 2020.
- (10) Burger, R. and Christian, C. (2018). Access to Health Care in Post-Apartheid South Africa: Availability, Affordability, Acceptability. https://www.cambridge.org/core/journals/health-economics-policy-and-law/article/access-to-health-care-in-postapartheid-south-africa-availability-affordability-acceptability/559D7EAE9E98DCD5839AEF6CC85C5DAD
- (11) Health-E News (2015). White paper: National Health Insurance for South Africa. 2015. http://www.health-e.org.za/2015%EF%BF%BD/%EF%BF%BD12/14/white-paper-national-health-insurance-for-south-africa/
- (12) RH Bophelo (2017). A glimpse into the South African healthcare industry. https://www.rhbophelo.co.za/understand-the-south-african-healthcare-industry/
- (13) Africa Health (2021). Healthcare Market Insights for South Africa. https://www.africahealthexhibition.com/content/dam/Informa/africahealthexhibition/en/2020/pdf/AFH20_Industry_Insights_Healthcare_Market_South-Africa.pdf
- (14) Hassam, A., Heywood, M. and Berger, J. (2007). 'Chapter 6: The private health care sector', Health and democracy. http://section27.org.za/wp-content/uploads/2010/04/Chapter6.pdf
- (15) Simpson, S. (2018). Quali Health: Changing the face of private healthcare in South Africa. https://medium.com/the-tempestuous-times/quali-health-changing-the-face-of-private-healthcare-in-south-africa-b39454cfc7b2
- (16) McIntyre, D. and Ataguba, J. (2017). Access to quality health care in South Africa: Is the health sector contributing to addressing the inequality challenge? Health Economics Unit, University of Cape Town. https://www.parliament.gov.za/storage/app/media/Pages/2017/october/High_Level_Panel/Commissioned_reports_for_triple_challenges_of_poverty_unemployment_and_inequality/Diagnostic_Report_on_Access_to_Quality_Healthcare.pdf
- (17) Businesstech (2016).The astonishing number of South Africans who do not have medical aid. https://businesstech.co.za/news/lifestyle/129166/the-shocking-number-of-south-africans-who-do-not-have-medical-aid/
- (18) Allafrica (2020). South Africa: Pay Black Women Healthcare Workers, The Backbone of Our Health Sector. https://allafrica.com/stories/202007020672.html#:~:text=In%20South%20Africa%2C%20women%20make,by%2072%2C000%20community%20care%20workers.
- (19) International Federation of Gynaecology and Obstetrics (2019). Think Equal: women's health, South Africa. https://www.figo.org/news/think-equal-womens-health-south-africa
- (20) Development Bank of Southern Africa (2021). Health. https://www.dbsa.org/sectors/health
- (21) Kew, J. (2017). 37-yr-old doctor entrepreneur brings private care to townships. https://www.news24.com/fin24/entrepreneurs/news/37-yr-old-doctor-entrepreneur-brings-private-care-to-townships-20170316
- (22) Council for Medical Schemes (2020). Council for Medical Schemes. https://www.medicalschemes.com/
- (23) Discovery Foundation (2020). Grants and Funding. https://www.discovery.co.za/marketing/discovery-foundation-site/grants.html
- (24) African Development Bank (2020). African Development Bank Group approves $10 million equity in Razorite Healthcare Fund for Africa. https://www.afdb.org/en/news-and-events/press-releases/african-development-bank-group-approves-10-million-equity-razorite-healthcare-fund-africa-35206
- (25) Bizcommunity (2019). The startups changing healthcare through innovation. https://www.bizcommunity.com/Article/196/836/195132.html
- (26) GreenCape (2020). GreenCape finance database. https://www.greencape.co.za/assets/Uploads/GreenCape-Finance-Database-v6.xlsx
- (27) GreenCape (2020). GreenCape green finance database. https://www.greencape.co.za/content/focusarea/green-finance-databases
- (28) GreenCape (2020). Government Funding and Incentive Booklet. https://www.greencape.co.za/assets/Uploads/Government-Funding-and-Incentive-Booklet.pdf
- (29) FinFind (2020). FinFind Easy. http://www.finfindeasy.co.za/
- (30) AlliedCrowds (2020). AlliedCrowds. https://alliedcrowds.com/
- (31) Interview with Lynda Toussaint, Unjani Clinics, 18 December 2020.
- (32) United Nations Development Programme (2020). South Africa Report 2020: Covid-19 Rapid Emergency Needs Assessment for the Most Vulnerable Groups. https://www.za.undp.org/content/south_africa/en/home/library/rapid-emergency-needs-assessment.html