Social Impact Investing

Impact Investments:
An emerging asset class
Global Research
29 November 2010
Urban locations are more likely to be profitable
As in some of our other case studies, the success of these hospitals will depend on
their ability to maintain high bed occupancy and turnover rates, as well as high
outpatient visits to optimally utilize doctors’ time. Figure 24 and Figure 25 highlight
the high resource utilization rates that LifeSpring delivers relative to comparable
private clinics. In order to achieve these utilization rates, the hospitals must be
located within reach of enough potential patients – the majority of their patients
come from within a 5km radius 70 . LifeSpring’s hospitals are located in peri-urban
areas, and R-Jolad is located in Lagos, the capital of Nigeria, so in choosing the
target market we will consider the urban population.
Figure 24: Average # of deliveries per month
Figure 25: Cost of doctor per patient (USD)
120 Lifespring Priv ate clinic
100
100 - 110
1.4
1.2
Lifespring
1.2 - 1.8
Priv ate clinic
80
1
60
40
20
15 - 20
0.8
0.6
0.4
0.2
0.3 - 0.5
0
0
Source: Monitor Group. Private clinic refers to small 20–30 bed
nursing house, usually run by a family.
Source: Monitor Group. Private clinic refers to small 20–30 bed
nursing house, usually run by a family.
Target market: Unattended births expected in the next 10 years
Similar to water, the health sector is one where governments typically provide some
degree of service. In considering the potential customers of a private hospital, we
target those that are not currently accessing those government services. Some
mothers will avoid government hospitals because of cost (subsidies do not
necessarily cover the full cost of treatment 71 ), while others may not utilize them
because of quality of service or lack of access to or knowledge about them. While
LifeSpring costs more than the government service, customers who do not utilize the
government services might choose LifeSpring for some of the other reasons. The
hospital aims to deliver-high quality service by retaining talented doctors with nonmonetary
incentives, such as fewer administrative duties 72 . LifeSpring also dedicates
time and money to marketing its services through outreach, education and
advertising. Where costs are concerned, the hospital does compete with other private
clinics by cross-subsidizing lower-cost delivery rooms with higher-cost private
delivery rooms.
70 Low cost service delivery in health & education, Monitor Inclusive Markets, 2008.
71 LifeSpring Hospitals, Gita Johar, Columbia CaseWorks, April 26, 2010.
72 Other private clinics often pay doctors based on consultations, forcing them to spend time
soliciting new patients into the clinic.
55