Innovative health service models

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WHILE HEALTHCARE CHALLENGES ABOUNDin every societyon earth, there is an overriding demand for improvedservices for the 2.6 billion people who are living on lessthan $2 a day. Not surprisingly, this group faces consider-

able barriers, including limited health insurance, low health literacyand residence in slums or remote areas that are frequently under-served. Such barriers must be carefully considered in the design ofany product or service created for this group.

Due in part to significant gaps in the availability of public healthservices, the presence of private providers in low- and middle-income countries (LMICs) has become significant. Recentestimates suggest that the poor seek care in the private sector for upto 95 per cent of cases of childhood illnesses across a wide range ofcountries.Of course, private care is notwithout its critics.Concerns

include the under-provision of public goods in free markets, lack ofaccess to care for the indigent, and the potential for providers toinduce demand for unnecessary services to generate profit.However, because public health services are not always available ormay be of poor quality, private healthcare has become a fact of life inLMICs, and it is therefore important to understand its potentialcontribution to robust health systems.

One particular area where the private sector can contribute isas a source of innovation – and in particular, ‘disruptive innovation’,whereby organizations develop simple, high-quality and inexpen-sive services that reach new sets of consumers that were excludedfrom conventional markets.A growing number of social enterpris-es are developing pattern-breaking models that have the potentialto be scaled up to improve the availability of high-quality healthcare

By Onil Bhattacharyya, Anita McGahan, Peter Singer,Abdallah Daar, Sara Khor and David Dunne

The businessmodels for several innovativeprivate healthcare organizationsprovide inspiration across industries.

InnovativeHealth Service Modelsfor the World’s Poor

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Organization(Country/Year Started)

Aravind Eye CareSystem(INDIA/1976)Eye Care Services.Manufacture ofintraocular lenses;cataract surgery;vision screening

Dentista Do Bem(BRAZIL/2002)Dental Care for youth.Free treatmentprovided by existingpractitioners

Greenstar SocialMarketing Pakistan(PAKISTAN/1991)Reproductive and childhealth education,intervention, monitor-ing and evaluation

Jaipur Foot(INDIA/1968)Lower limb prostheticmanufacture andfitting

OverallPerformance

Largest and mostproductive eye carefacility in the world;2.5 million havereceived outpatienteye care and > 300,000have undergone eyesurgeries from April2009 to March 2010

Reached > 12,000children in 27 states inBrazil in 2009; modelis being replicatedin 6 Latin AmericanCountries

2nd largest familyplanning providerafter the Governmentin Pakistan with afranchise network ofover 7,500 activeproviders

Distributed> 200,000 artificiallimbs in India and> 13,000 in 18 othercountries

Social ImpactImprovedNo change

? Unknown

Availability

Increased availabilityof services to ruralareas through outreachcamps, internet kiosksand vision centers

Existingpractitioners providefree services

Outreach workersreach over 2.5 millionpeople every year

Distribution throughclinics and outreachcamps, 24 hours a day

Affordability

Cost of cataractsurgery reducedto $25; 70% ofpatients receive caresubsidized or free

Services providedby existing providersfor free to poor youth

Serves higher pro-portion of poor clientsthan the governmentand provides moderncontraceptives ataffordable prices

Reduced cost ofa prosthetic leg andfitting to $35; pros-thetics are distributedto clients for free

Quality ofEvidence

Self-reportedevaluations;externally reviewedpublications

Self-reportedquestionnaire andreview; foundationwebsite

Self-reported reviewand questionnaire;third party evaluation

Self-reportedstatistics; third partyevaluation

Sources of Funding

Local entrepreneur

Local entrepreneursupported by partner-ships with dentists andfundraising

Initially funded byinternational NGO withsupport from variousgovernment andprivate foundationsand user fees

Local entrepreneursupported by localgovernment anddonations

InnovativePrivate SectorHealth ServiceOrganizations Figure One

for the poor. In this article we will explore the potential of theirmodels to create more inclusive and effective health services inresource-starved settings.

Innovative ExemplarsBusiness models consist of four components: a product or service;managers that bring together the resources required to deliver theproduct or service; processeswhereby employees and resourcesworktogether to generate the product or service; and a profit formula toensure that the costs of the resources and processes are covered.

Healthcare service delivery models are simply business modelsadopted for the provision of health services. For our purposes, wedefine ahealthcare innovation as somethingnew that has thepoten-tial to drive change and redefinehealthcare’s economic and/or socialpotential.The ‘newness’ in an innovation can be achieved in variousways: by recombining old ideas in a new way; by creating a newprocess or product; by using a process from one industry in anotherthat has not used that process; or by reorganizing an organizationin a new way. In our search for innovative exemplars, we focusedon organizations that employ innovative service delivery modelsto improve the affordability, accessibility and quality of servicesfor the poor.

FigureOne lists the organizationswe selected as exemplars. Inanalyzing them, we found that they achieved significant innova-tions within the following three activities: marketing, financingand operations.We will discuss each in turn.

1. InnovativeMarketingActivitiesThe marketing strategies used by many of these organizationsinclude both the promotion of services to the poor and the designof these services to meet the needs of this group. Following aresome examples.

Social Marketing. Social marketing refers to the applicationofmarketing techniques to achieve behavioural changes. It is nota new concept, but Population Services International (PSI) inAfrica and the Population and Community DevelopmentAssociation (PDA) in Thailand have both applied this strate-gy in innovative ways. PDAuses humour to address taboo sub-jects such as contraception and HIV awareness and hasachieved unprecedented success in garnering positive publicattention. Their social marketing initiatives include ‘CondomNights’ and ‘Miss Anti-AIDS Beauty Pageants’ in the red lightdistricts of Bangkok. PDA has also established training and


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peer education programs that focus on behaviour change in thecountry’s schools, prisons, sex industry and the public in general.The results: their condom-distribution network covers one-third ofThailand, and their family planning effort contributedto the decrease in the population growth rate inThailand from3.3 per cent in the 1970s to0.6 per cent in 2005.The organizationdeveloped a national AIDS education program in partnershipwith government, contributing toThailand’s 90 per cent reduc-tion in new HIV infections in 2004.

PSI, meanwhile, operates three social marketing programsthat offer educational programs on reproductive health forurban youth inAfrica.The programs address the taboo subjectof safe sexual behaviour throughmeans that target youth, suchas magazines, television spots and call-in radio shows.A surveyfound that 90per cent of youth had read themonthlymagazineat least once and 70 per cent had viewed the television spots,with corresponding increased rates of contraceptive use andHIV testing, demonstrating the potential of these educationalsocial marketing programs.

Tailoring services to the poor. BhagwanMahaveerViklangSahayata Samiti (BMVSS) is the Indian organization that

developed the Jaipur Foot, an artificial lower-limb prostheticintended to meet the needs of amputees living in developingnations, where squatting, sitting cross-legged and walkingbarefoot is common but largely impossible with typical pros-thetic limbs. The Jaipur foot costs $35 to produce, and is madeby artisans using locally-available materials, as compared tothousands of dollars for imported prostheses. In addition toproviding a novel product, the BMVSS clinics have adaptedtheir services, allowing patients to check-in at any time of theday or night and providing free room and board if they have tospend the night. Since fittings can be completed in one session(as opposed to the usual several visits), time away fromwork andtransportation requirements are kept to a minimum, which isvery important to patients with limited means and mobility.

Franchising. Franchising has been used to facilitate rapidexpansion and the sustainable distribution of products andservices of a specified quality in reproductive health.GreenstarSocialMarketingPakistan is one of the first health franchisers,and has grown to provide over 26 per cent of all contraceptivesin Pakistan by targeting non-users through a ‘total marketapproach’, which is the organization’s way of expressing that it

Organization(Country/Year Started)

K-MET(KENYA/1995)Maternal and child care.Trains existing pro-viders on reproductivehealth, family planning,safe abortion care

NarayanaHrudayalaya HeartHospital (NH)(INDIA/2001)Coronary arterydisease. Heartsurgeries andcardiac care

Population andCommunityDevelopmentAssociation (PDA)(THAILAND/1974)Family planningand HIV/AIDSeducation.Contraceptive/vasectomy/pregnancytermination services

OverallPerformance

Network of 204health providers andcommunity-basedworkers

The 800-bed hospitalperforms high qualitysurgeries with eighttimes more volumethan average Indianhospitals

Contributed to thedecrease of Thailand’spopulation growth ratefrom 3.3% in 1970s to0.6% in 2005; helpedestablish nationalHIV/AIDS preventionprogram in Thailandwhich reduced potentialnew infections by 90%;model adopted by thegovernments of manycountries


? Unknown

Availability

Provides carefor rural communitieswhere governmentservices areunavailable

High volumehospital; 54 tele-medicine centers,outreach camps andbuses reach out tothe rural poor

Nation-wide publiceducation campaigns;outreach and mobileclinics reach 10 millionThais in 18,000 villagesand poor urban com-munities; provide bloodtests, family planningand pregnancy termi-nation services for thepoor where serviceswere previouslyunavailable

Affordability

Serves clientsslightly poorer thancommunity average;services benefit allincome quintiles

High-volumestrategy allowed NH toreduce cost of cardiacsurgery to Rs 65,000from Rs 150,000(average Indian privatehospital); 18% ofpatients receive caresubsidized and 1% free

Most services arefree; owns innovativecommercial venturesto fund communityhealth and develop-ment projects

Quality of Care

Gives loans toclinics and providestraining to improvefacilities and ensuresafety and highquality of care

Ensures high qualityand efficient servicesby training surgeonsand nurses, use of top-quality equipment;higher overall successrate in coronary arterybypass surgery thanthe U.S average

? Quality of careunclear; aims to improvesafety of services (e.g.reinforced safe abortionpractices etc) and pro-vides health educationto the public

Sources of Funding

Local NGO withsupport fromdonations andinternational grants

Local entrepreneurwith the help ofcapital funding fromfamily members andAsia Heart Foundationplus user fees

Local entrepreneurwith support throughdonations and revenuefrom their owncommercial venturesranging from restau-rants to industrialhealth services

>>

InnovativePrivate SectorHealth ServiceOrganizations (Cont’d)



uses different price points for each segment of the population.GSMP operates a franchise network of over 7,500 privateindependent healthcare providers, most of which are locatedin low-income urban and peri-urban areas in Pakistan. Theorganization signs franchising agreements with providers fordistribution of products and social services, and keeps regularcontact with the aim of ensuring quality. It also provides med-ical training, supply of goods, public education, technical sup-port, quality control and program evaluation to its franchisees.

2. Innovative Financial StrategiesMost of the organizations we studied were funded by local entre-preneurs who wanted to make an impact on society; just two ini-tially received funds from international NGOs and have sincegrown to be more independent. Many also received support frompartnerships, government funding, grants and donations and somerecovered part of their costs from user fees.While some innovatedto generate funds for sustainability,many redesigned cost structuresin ways that allowed products and services to bemore affordable tothe poor. Dramatic reductions in cost were achieved throughrigorous expense management, capital funding and revenue-generating programs. Following are some examples.

Lower operating costs through simplified medical services.In several cases, operating costs were lowered by simplifyingthe medical services provided under innovative protocols thatallowed the services to be provided by community workersrather than physicians. For example, VisionSpring’s financialstrategy includes a ‘business in a bag’, which involves trainingrural community members to become Vision Entrepreneurs(VEs) who can provide vision screening, identify far-sightednessand provide glasses for vision correction.VEs are provided a kitwith items intended to help launch a business, including multi-ple styles, colours, and powers of reading glasses, screeningequipment and marketing materials. VisionSpring helpsreplenish supplies of reading glasses and provides additionalsupport as required. This strategy is intended to enable moti-vated workers to gain access to an entrepreneurial opportunitywithout the barriers of high set-up and operating costs.

High volume and low unit costs.TheNarayanaHrudayalayaHeart Hospital (NH) in India – the largest provider of pedi-atric heart surgeries in the world – has reduced the unit cost ofcardiac surgeries through volume by performing eight times

Organization(Country/YearStarted)

PSI’s TopReseau/100%Jeune/CentreDushishoze(MADAGASCAR, CAMEROON,RWANDA/1999)Sexual/ReproductiveHealth. Peer counseling;education; contracep-tive services;multimedia promotion

Vision Spring(INDIA/2001)Vision correction.Screening, provision ofglasses, adjustments

Ziqitza 1298(INDIA/2005)Ambulance Service.Transportation andemergency care; publiceducation

OverallPerformance

Increased contracep-tive use among youngmen from 29% to53%, among youngwomen from 20 to39%; increased num-ber of people gettingHIV test in Rwandaand reproductiveservices in Madagascar

"Business in a Bag"strategy allows1200 VisionEntrepreneurs todistribute > 100,000pairs of glasses in13 countries

70 ambulances inMumbai and Keralahave served more than60,000 patients


? Unknown

Availability

Broad reach throughmultimedia campaignsand outreach

Entrepreneursdistributed glasses inpoor communities andrural areas; door-to-door service with easyscreening and testingmethods

The first singleemergency number forambulance service inMumbai; 24-hourambulances with GPStracking

Affordability

Provide services ata subsidized rate(Madagascar) andcheaper than otherhealth clinics(Cameroon)

Glasses are $4 apair instead of $40-60at optical shops

Cross-subsidizationmade services moreaffordable to the poor

Quality of Care

Continuous evalua-tion to ensure highquality and effectiveyouth programs

Quality of glassesare in general lowerthan those fromexpensive opticalretailers, but higherthan competitorswithin their price-range

90% of ambulancesin urban India did nothave adequate equip-ment and trained para-medics; Ziqitza’sambulances providetrained paramedics, lifesupport equipment andcontinuous evaluationto ensure safety andquality of services

Sources of Funding

International NGOsupported by grantsand user fees

Foreign entrepreneurssupported by venturephilanthropy, philan-thropic investors anduser fees

Local entrepreneurssupported by venturephilanthropy and userfees

InnovativePrivate SectorHealth ServiceOrganizations (Cont’d)



more surgeries per day than the Indian average. The Hospitalrents machines for blood tests and pays only for reagents,which satisfies suppliers given the high volumes. NH alsoreduces cost by relying on digital X-rays rather than expensivefilms and by reducing inventory and processing times usingcomprehensive hospital management software. The quality ofcare has not been compromised by the high volume: in fact,NH uses high volume to improve the quality of care by allow-ing individual doctors to specialize in just one or two specifictypes of surgeries. The success rates are high: a 1.4 per centmortality rate within 30 days of coronary artery bypass surgeryvs. 1.9 per cent in the U.S. NH’s average cost of open heart sur-gery is about US$2,000, as compared to $5,500 in an averageIndian private hospital. One third of the patients don’t actual-ly pay out of pocket: the founder of NH partnered with thestate of Karnataka to start an insurance plan that costs $3 ayear per person and reimburses the hospital $1200 for eachsurgery. The hospital makes up the difference by chargingmore for the 30 per cent of patients who opt for private/semi-private rooms.

Cross-subsidization. Some of these organizations haveachieved financial sustainability through a cross-subsidizationstrategy, whereby they exploit the greater willingness and abil-ity to pay amongst wealthier patients to cross-subsidize expen-sive services for lower-income patients. Others have developedefficient ways of assessing financial need and implementing across-subsidy. Aravind Eye Care System, the largest eye careprovider in the world, attracts wealthier patients who paymar-ket rates and provides the same services to the poorer 70 percent of patients at a highly subsidized rate. Differential pricingis established by the patients’ choice of amenities and the typeof lens to be inserted in the eye, not by the quality of treatmentreceived.All patients – regardless of ability to pay – receive thesame care, but paying patients can choose soft lenses and sleepin private rooms, while non-paying patients are given basichard lenses and sleep in open dormitories on mats. Thisapproach, called ‘quality targeting’, is an efficient way of assess-

TheNarayanaHrudayalayaHeartHospital has reduced the unit costof cardiac surgeries by performingeight timesmore surgeries per day thanthe Indian average.

ing financial need because those who can afford private roomsand soft lenses are much more likely to choose them.

Another example is 1298 Ziqitza Health Care Limited,which provides private ambulance services using a tiered-feesystem. Patients call the ambulance service and are chargedaccording to the hospital they have arranged to be transportedto: those going to private hospitals are charged above cost, whilethose going to free government hospitals pay a nominal fee andtrauma patients do not pay. A patient’s ability to pay is inferredfrom the choice of hospital. The result: approximately 20 percent of patients over the last three years were subsidized, allow-ing Ziqitza 1298 to be financially sustainable.

In addition to formal tiered-payment systems, an informalsystem of cross-subsidy can be created by encouragingproviders to provide subsidized services to the poor.DentistaDo Bem is a large network of private, for-profit dentists inBrazil who have agreed to see a few patients every day for free.This formof charity has a limited impact on the earnings of for-profit providers, as paying customers indirectly ‘subsidize’ thecost of caring for poor patients within a given practice.Children are screened in schools and recruited to join the pro-gram until age 18. The result: though each dentist only sees afew free patients per day, the large number of participating den-tistsmade it possible to seemore than 12,000 children in 2009.Providers derive some recognition for providing this service.The network reaches people across all 27 Brazilian states and insix LatinAmerican countries.

Generating Revenue.Thailand’s PDAdeveloped 16 for-profitcompanies that are affiliated with the organization. Each putsfunds towards the NGO to facilitate expansion and supple-ment operating costs. PDA’s innovative commercial venturesinclude theCabbages and Condoms Restaurants, located indifferent parts of the country, where condom-themed food anddrink help bring money into the organization.This unique set-up allows the companies to generate revenue independentlywhile using novel social franchising mechanisms to spreadinformation about safe-sex practices.

3. Innovative OperatingActivitiesSome of these organizationsmodify operating strategies to increasethe availability of services in remote areas by making judicious useof human resources in settings where widespread shortages ofskilled labour are the norm. Here are some highlights:

Optimizing human resources. One of the great tragedies inresource-limited settings is the shortage of trained medicalworkers in settings where disease is common and the populationis abundant. Some organizations expand the use of communityhealth workers into new areas, helping laypeople acquire skillsthat were previously exclusive to trained professionals. Theservices supported by models of this type include the distribu-tion of oral contraceptives (PDA) and the performance of eyeexams (VisionSpring). By shifting tasks to trained community

Abhishek

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Abhishek

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members, these organizations have reduced operating costs,increased the availability of staff, and empowered local commu-nities. Aravind Eye Care System trains high school graduatesfrom rural areas into paramedical staff like patient flow man-agers, providers of simple diagnostic procedures, and evenoptical technicians.

Process and product re-engineering. In addition to distrib-uting ready-made eyeglasses for the far-sighted,VisionSpring isworking together with the d.o.b foundation to offer newadjustable lens (U-specs) to the near-sighted, and especially tochildren.The innovative design of U-specs is comprised of twoadjustable lenses that can be shifted to adjust the refractivestrength of glasses.Thismakesmass production easier, reduces


costs and offers an alternative to the traditional customizedconstruction of eye-glasses. In another example, Aravind EyeCare System improved efficiency by reengineering its operat-ing rooms to allow surgeons to work on two tables in alterna-tion, shifting from one case to another.While one surgery is inprogress, a team of four nurses and paramedical staff preparesthe next patient. The result: Aravind is able to perform acataract surgery in 10 minutes – one third of the industry stan-dard. Despite the shared space for patients, their infectionrates are four per 10,000 cases, which is better than the pub-lished rate in the UKof six per 10,000.

Increasing outreach.Aravind Eye Care System andNarayanaHrudayalaya Heart Hospital provide health camps to reach

Like most design educators, I am excited about the increased inter-est in creativity in business thinking these days. Yet I worry aboutwhat the outcome will be. My fear is that creative types are comingto the table simply to make more fancy do-dads for the top one percent of the economic pyramid. Will they instead make a more mean-ingful contribution? Below are just a few promising business modelsthat promote a laudable combination of creativity and social respon-sibility and hopefully, will prove inspirational.

Micro Entrepreneurship: Oorja StoveMicro Entrepreneurship models create jobs for the poor, and one ofthe most elegant applications of this principle is Oorja Stove. Theproduct is innovative because it helps people who traditionally cookon wood fires – which is bad for health and the environment – transi-tion to cooking on fires made from agricultural waste pellets. Whatis most innovative about the stove is the way it is distributed andsold: it is designed so that sales can be handled by people who livewithin the communities in which the products are sold, creating adoor-to-door sales force.Tip: If you’re thinking about creating a new product or service, thinkabout how your venture could be designed so that it creates jobs forpeople who really need them.

Buy One, Give One: TOMS ShoesBuy One, Give One is a business model in which for every productsold, another is given to someone who needs it. TOMS Shoes is ashoe company that gives away a pair of shoes for every pair soldand the shoes have a distinct look that is becoming instantly recog-nizable. This model is creative because the charitable giving is nothidden away in an annual report; instead, it becomes symbolicallyembedded in the product itself. The shoes empower the purchasersto take pride in their contribution and to spread awareness aboutthe company’s mission.Tip: If you are thinking about including charitable giving in your busi-ness, think about doing so in a way that delivers not only money,but an awareness of the cause itself.

Hyperlocal Collectives: Good Food CollectiveLocal farmers in New York State were having a tough time compet-ing with factory farmers in the marketplace, so they banded togeth-er to share resources, knowledge, marketing power and distributionchannels. The Good Food Collective is now in its third year of coor-dinating sales between local farms and consumers. Another suc-cessful example of a food collective is Full Plate Collective, justoutside of Ithaca, NY.Tip: If you are developing a product or service that is trying to com-pete with similar offerings from mega-corporations, consider form-ing a ‘hyper-local’ collective to share resources with like-mindedbusinesses in your region.

Knowledge Sharing: Toyota Ideas for GoodThis model is an alternative to the prevalent model that compelsstakeholders to protect their intellectual property (IP) at all costs.Toyota and other Japanese car companies have received recogni-tion for the way they share knowledge with each other. Competingcompanies get together and share technological breakthroughs,then go back to their respective labs and implement the technolo-gies in different ways. These competitors decided that sharingknowledge was in the best interest of the entire group. I am excitedto see that Toyota is extending this concept to consumers with its‘Ideas for Good’ campaign, a knowledge-sharing campaign that askspeople to apply a technology to areas outside of the car industry.Tip: If your business offers an innovation that has the potential tomake positive change in the world, think about sharing that innova-tion with as many people as possible and asking for their input.

TheCreativeCapacity of SocialBusinessModels ByXantheMatychak

Xanthe Matychak is a visiting lecturer at the Rochester Instituteof Design. She is a regular contributor/blogger at core77.com.



Onil Bhattacharyya is a professor of Family and Community Medicine andHealth Policy, Management and Evaluation at the University of Toronto, as wellas a clinician scientist at the Li Ka Shing Knowledge Institute of St. Michael’sHospital. Anita McGahan is theAssociate Dean of Research and the RotmanChair in Management at the Rotman School of Management. Peter Singer isCEO of Grand Challenges Canada and director of the McLaughlin-RotmanCentre for Global Health, University Health Network and University of Toronto.He is also the Sun Life Financial Chair in Bioethics at U of T. Abdallah Daar is aprofessor of Public Health Sciences and Surgery at the University of Toronto anddirector of Ethics and Commercialization at the McLaughlin-Rotman Centre.He is also Chief Science and Ethics Officer of Grand Challenges Canada. SaraKhor is a research associate at Cancer Care Ontario and the Li Ka ShingKnowledge Institute. David Dunne is an adjunct professor of Marketing at theRotman School of Management.

patients in rural areas. Narayana provides camps that focus oncardiac diagnosis, with transportation to the hospital forpatients who require it. In addition to health camps, Aravindhas also set up internet kiosks in remote villages run by com-munity members, which take pictures of patients’ eyes using awebcam and send the images to a doctor along with a com-pleted online questionnaire about the patients’ symptoms.The doctor is able to access the images instantaneously, andtalk with the patient online in real time to assess whether thehe or she requires consultation at the hospital. These kiosksreduce both the time and expense incurred by an unnecessaryhospital visit.

The Emerging InsightsBased on our analysis of the strategies employed by these innova-tive organizations, we have identified four distinct characteristicsof their models.

1. Completemarketing, finance and operations solutionsThese organizations managed to innovate across marketing,finance and operations, and each had at least one unique innova-tion in each area. There appears to be no single effective approachto improving health delivery – which may serve as a cautionarynote to organizations looking for ‘silver bullets’ to improve care forthe poor. However, each exemplar in our study has developed anovel and comprehensive approach, simultaneously addressing thefact that poor people are often unaware of services, have limitedfunds and live in hard-to-reach areas.

2. A Narrow Clinical FocusVirtually all of these organizations have a narrow disease focusbuilt around a fewmedical processes.While this may be an artifactof our search strategy, none of the organizations discussed hereprovide broad-based comprehensive health services.This could berelated to the fact that it is easier to manage and experiment with-in well-defined healthcare delivery systems with a narrow focus.The predictability of the health problems and treatment strategiesmake it easier to simplify processes, delegate tasks to lower-trainedpersonnel and measure quality, all of which can reduce costs whileincreasing reach and quality.Though vertical approaches have lim-itations, theymay lead to innovations whose benefits could be cap-tured by replication or by linking them to broad-based health serv-ices, as in the case of PDA’s collaboration with the Thai govern-ment on HIV control: the partial integration of PDA’s programinto health system functions has contributed to a nation-widereduction of the HIV infection rate. In fact, studies show that sel-dom are interventions wholly unintegrated (i.e., purely vertical) orfully integrated into health system functions, and the heterogene-ity in the extent of integration is influenced by intervention com-plexity, health system characteristics and contextual factors. Sincethe organizations selected for our study vary by disease area, geo-graphic, economic and political environment, there is no doubtthat the intent and extent of integration of these targeted healthinterventions into the health system will also vary.

3. Cost-Reducing InnovationsMany of the organizations we studied have designed services andproducts for poor consumers who were previously excluded fromaccess. Jaipur Foot’s artificial foot and VisionSpring’s ready-madereading glasses are disruptive in the sense that they fill gaps in con-ventional markets. The vertical approaches described above alsoallow for refinements in quality while reducing cost through simpli-fication and delegation of certain processes to community workers.For the most part, they break the tradeoff between cost and qualityby pursuing both low costs and high quality at the same time.Mostorganizations adapt services to the needs of their clients, and somereduce the ‘frills’ while providing high quality clinical care.

4. Business Process InnovationThe core innovations of most of these organizations are in businessprocesses rather thanmedical processes, demonstrating that it is pos-sible to have large scale impact using innovative marketing, financeand operating strategies. Indeed, some of the strategies describedherein have been successfully reproduced by larger entities, forexample, by theThai government in the case of PDA, and by otherhospitals using the consulting services ofAravind Eye Care System.

In closingAs we have shown, many of the private health organizations thathave emerged to serve low- and middle-income countries – oftencalled social enterprises – have developed innovative techniquesto improve care for the poor. We believe that the private sectorcan continue to be a potent source of innovation in healthcare serv-ices worldwide, and that it can serve as an inspiration for newapproaches in any industry.

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Innovative health service models