Social Enterprise: Naya Jeevan
Social Entrepreneur(s): Asher Hasan
Leverage corporate supply chains to build bottom of the pyramid markets.
The Innovation Explained
Countless health insurance products targeting low-income people are offered through microfinance institutions, NGOs, major insurers and others, with varying degrees of success. Major design challenges include educating people who have never been exposed to insurance before, convincing them to spend extremely limited disposal income today to cover a health problem they may have tomorrow, and creating a monthly payment mechanism cost-effective enough to keep premiums down.
In collaboration with the global insurance company Allianz, the Naya Jeevan team designed a health plan targeted towards low-income workers in Pakistan who typically earn less than US$ 6 per day, such as drivers, nannies, cleaners, security guards and cooks. “We want to completely change the way that healthcare is financed in South Asia,” said Asher Hasan. “If private corporations, schools and upper-income households employ huge numbers of low-income informal workers, it seems to me that we can institutionalize a system whereby people who have resources can co-finance the health coverage of people who don’t. And we can do it in a way that meets both of their interests – what I call a strategic cross-subsidy.”
For less than US$ 2.50 per adult and US$ 1.50 per child per month, the Naya Jeevan health plan provides catastrophic health coverage up to US$ 1,800 a year (benchmarked to cover heart bypass surgery), 24/7 mobile phone access to designated family physicians, preventive health services, annual medical check-ups, and cashless access to a nationwide network of 190 high-quality private hospitals.
Naya Jeevan currently works with five insurers, offering them a strong value proposition. “Based on current utilization patterns, they’re making decent profits,” said Hasan. “But the biggest value we offer insurance companies is educating low-income communities about the concept of insurance. We conduct intensive orientation sessions and provide preventive health education and general physician support in which our doctors navigate patients through a complex healthcare system. All of these services greatly minimize the business development costs that insurance companies would normally incur in building these markets.”
And because door-to-door collection of monthly premium payments is cost prohibitive, Naya Jeevan partners with HR departments of major corporations such as Unilever and P&G to enrol their low-income workers and collect any co-payments from them. Employers typically co-finance the premium as a part of their corporate social responsibility programme or as a market-based approach to building loyalty among suppliers, distributors and retailers. “Scaling our product through corporation distribution systems is very cost-effective,” said Hasan. “We have one collection point: the corporation or the school. And for them, it’s easy to deduct the employee or subcontractor’s contribution directly from their wages.”
To date, Naya Jeevan has partnered with seven multinational corporations in Pakistan, enrolling 43,000 low-income people into various health plans. It is expanding into India and Latin America, and is developing a strategy to engage the South Asia diaspora in Europe, Middle East and the US.
Why This Matters
There are over 800 million people in South Asia who do not have access to affordable, quality healthcare – both because public health systems are under-resourced and overwhelmed and because quality health insurance products are virtually non-existent. Ninety-seven per cent of Pakistan’s citizens pay out of pocket for healthcare costs, which in the case of a major health crisis such as a stroke, heart attack or pregnancy complication, can bankrupt a low-income family.
“What happens is that families pull their children out of school to supplement family income or they take high-interest loans from loan sharks, or both,” said Hasan. “This has a huge effect on the next generation, on a family’s ability to come out of poverty and on the social fabric of entire societies.”
Engage corporations strategically to create shared value. “It’s so much more efficient and cost-effective to piggyback off of existing platforms, distribution channels and corporate supply chains,” said Hasan. “Collaborating with corporations to explore the creation of shared value is a powerful way to come up with products and services that can meet the needs of the bottom of the pyramid.”
Know when to take the plunge. “The early years are very challenging financially when your organization is still in its infancy and pre-revenue,” said Hasan. “I put myself and my family under a lot of financial stress and in retrospect I wouldn’t do it the same way again. Don’t quit your day job until you’ve raised sufficient working capital!”