The global healthcare sector has boomed in the last two years as pandemic-induced lockdowns triggered a rise in the use of technology and innovation in healthcare provision worldwide.
But as the healthtech sector continues to grow and investments in health technology startups have skyrocketed, populations in emerging economies still struggle to access basic healthcare due to the heavy cost involved.
“Essentially, financing is the biggest problem when it comes to accessing healthcare. Almost 30% of families — some places as high as 50% — are one health care expense away from bankruptcy,” Femi Kuti, co-founder and CEO of Nigeria-based HealthTech firm Reliance Health, told PYMNTS in an interview.
In Nigeria, the company’s core market, only about 4% of people have any access to healthcare financing, leaving the 96% — about 190 million people — with expensive out-of-pocket costs each time they seek medical care, while others wait till their conditions have worsened before seeking medical help.
“It’s a crazy irony when the poorest people are paying for healthcare in the most expensive structure, and that’s what we’re trying to disrupt in the market today,” Kuti said.
Reliance Health, founded in 2016, aims to be an “integrated healthcare provider” that uses technology to make quality healthcare in emerging markets “delightful, affordable and accessible,” instead of focusing on only one subset of the healthcare value chain, such as telemedicine or electronic medical records (EMRs).
Businesses have caught on with the trend so far, and according to Kuti, over 90% of their overall revenue model is tilted towards their business-to-business (B2B) offering, through which companies purchase affordable healthcare services on behalf of their employees.
Some of the healthcare services are provided directly by Reliance, which owns and operates a telemedicine platform, a drug delivery platform, mobile services and a group of clinics across the country. Other services are provided by third parties that Reliance has partnered with like hospitals, clinics, diagnostic centers and pharmacies.
Last month, the Lagos-based digital healthcare provider announced the completion of a $40 million series B funding round, further highlighting the boom in healthtech investments, with the fresh capital injection earmarked for expanding into new markets and building products that complement their existing offering.
Read more: HealthTech Firm Reliance Health Closes on $40M in Series B Funding
Consolidation in HealthTech
One of the biggest value adds as a financier of healthcare is to be able to bring down the costs, Kuti said, predicting that this would lead to more consolidation in the HealthTech space across emerging markets.
“It’s going to be very similar to what has happened in more developed markets, where you see that financing players are beginning to get more involved in the auto provision of healthcare,” he explained.
By taking that position, it gives financiers the same incentives as customers, which is to provide good healthcare at a fair price. Even though these players work hard to ensure that their prices are high enough to make a profit, they are aware that placing it too high will put customers off and lead to an unhappy experience.
“There probably isn’t a better place to have such a great alignment between the customer and the provider,” he noted.
However, because of that, financial firms tend to also want to control a lot more than cost, Kuti explained. He referenced U.S.-based firm United Healthcare which, in addition to being a healthcare provider, doubles as the largest employer of physicians in the U.S., employing almost 20% of physicians in the country.
According to Kuti, a similar shift is happening in developing markets, where the finance companies are beginning to consolidate healthcare provision within the healthcare systems.
In the meantime, the company is looking to expand to other emerging markets like Egypt, Vietnam and Indonesia, where the healthcare challenges are the same as in Nigeria and where the legacy healthcare infrastructure systems need a major digital disruption.
“Typically, you’ll find a foreign company operating within the confines of Nigeria but then to flip that narrative around and become a Nigerian company operating in other markets, that’s very exciting for us and it’s something that we believe we can make a reality within the next 12 months,” Kuti said.
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