Citibank-Changemakers Collaborative Competition – Banking on Social Change:
Seeking Financial Solutions for All.
OUR INNOVATION
“Business model to provide healthcare to the under-privileged people of the society - FOR FREE! ’’
J C Shukla
(B.E, MBA – IIMA)
Nahak Overseas Ltd, Baroda & Miss-A-Meal Trust, Ahmedabad
104 Synergy House,Gorwa – Subhanpura Road,
Baroda – 390023, Gujarat, INDIA
Tel: +91-265-2281419 . 2282638 Fax: +91-265-2282638
Email: /
Web:
CONTENTS
Page
Expression of our Gratitude3
Executive Summary4
1The Enterprise8
1.1Description of the Organization & Idea8
1.2Market Analysis9
1.2.1Market Opportunity9
1.2.2Competitor Analysis9
1.2.3Value Proposition, Competitive Advantage, Entry Barriers10
1.3Business Model12
1.3.1Production & Delivery Model12
1.3.2Revenue Model12
1.3.3Suppliers & Distributors13
1.4Marketing & Sales Strategy14
1.4.1Sales / Community Outreach14
1.4.2Marketing & Communication14
1.4.3Distribution14
2Organization & Team15
2.1Management
2.2Board of Advisors / Independent Directors15
2.3Legal Status of the Organization15
2.4Partners and Sponsors15
3The Financial Plan & Risks16
3.1Profit & Loss Statement20
3.2Cash flows20
3.3Balance Sheet – (Not Given)
3.4Financial Requirements20
3.5Risks21
4The Social Impact21
4.1Parameters of Democratization22
4.2Local employment and / or income23
4.3Improving the health & Quality of Living Standards23
5Action Plan24
Annexure 1Miss – A – Meal Trust writeup26
Annexure 2Miss – A – Meal Trust organization chart28
Annexure 3Nahak Overseas Limited writeup29
Annexure 4Credentials & other socio-business models
of Nahak Overseas Limited30
Annexure 5Plans for improving insurance coverage and
reducing costs31
Annexure 6ACash Flow32
Annexure 6BProfit and Loss statement33
Annexure 6CFunding requirement sheet34
Annexure 7ICICI Lombard group health insurance premium schedule35
Expression of our Gratitude
We are grateful to:
-All our Gurus, who have taught us the lessons of life and beyond
-Change Makers for coming up with this idea of Banking on Social Change - Seeking Financial Solutions for All-for democratization of health care globally.
But for their initiative, this unique idea might have just remained as an un-germinated seed in our minds still searching for a fertile land, where it could germinate and benefit millions of human beings
-Preeti, my wife; whose long drawn illness has opened my eyes to focus on pain and sufferings of others
-Prof C K Prahlad, who created a public perception on opportunities at bottom of pyramid; as also the concept of social entrepreneurship
-Mr. Bill Gates, for his Commencement address to the Harvard’s University class of 2007, on world class health services to the poorest of the poor
-Mr. Ratan Tata, who made everybody think about delivering world class products and services in spite of multiple constraints, by his eye-opening Tata Nano car
-CIIE – IIMA; for encouraging us by giving an award to our innovative business model “No more blood shortage” in Ideaz category in 2005
-Lifeline Foundation and Dr Subrato Das, who executed Highway Rescue Project which saved some thousand lives in Gujarat, wherein we had our humble contribution at concept level
-United Nations; for invitation to participate as an observer in World Summit on Information Society, where we could interact with representatives of 30 governments on global health issues
-International Society for Blood Transfusion (ISBT), who invited us to present our concept paper – “No more blood shortage” during their Annual Convention at Paris in 2001
-Last but not the least, my colleagues Mr. J N Mamtora, Air Marshal (Retd) P K Desai, Anand and Priyanka. I also thank all those who have directly or indirectly contributed to these ideas and their implementation
Executive Summary
Business Idea or Concept:
This project is unique. While on the one hand, it serves multiple social objectives, it is also profitable and self-financing. Hence, it will run along business lines
The main idea is to cover the BPL (Below Poverty Line) people under a health insurance. The cost of this insurance will be financed by the blood that these very people or their family members donate.
Besides providing health insurance to the people who need it most, the scheme will alsoenhance the blood supply which is, and is likely to remain, scarce in the foreseeable future. Needless to say, the blood donated willpossibly save a life or afford a critical surgery in the nick of time when it is a must.
The idea is to make available health insurance to the poorest of the poor: free of charge, and yet make him contribute for this insurance by way of donating his blood at least once a year; preferably twice.
It is a well known fact that within 90 days, the human blood is regenerated and hence a healthy person can donate up to 4 times in a year; without any adverse effect on his health. The supply of blood to hospitals, on the other hand, is and is likely to remain scarce not only in India, but throughout the world.
So, on the one hand, we are encouraging blood donation thereby improving blood supply; and on the other hand, we are providing the donors with a totally free medical insurance. The augmented blood supply can save lives, and / or make possible critical surgery / medical care.
Thus, our concept paper and project depicts the way we envisage to address the problem, and come up with a technically feasible and economically viable solution which is scalable, easy and effective.
Social Impact created by the idea
There is a genuine shortage of blood supply – in India, and, in the world. This idea can alleviate the shortage, the malpractices, the underhand deals etc. successfully.
Vast majority of people in India live below poverty line. They earn, say rupees 20 per day, and there may be just one or two breadwinners in a family. In this condition, when a serious disease strikes any member of such a family, the only option for them is to incur debt and save the life. In this scheme, by donating blood, they can insure all majors in the family for at least Rs. 15000 per year. Please note that this amount, though it looks small to us, is more than twice his annual income (Rs. 20/day * 365 days per year = Rs. 7300 per year).
The target customers
The target customers areall the adult persons below poverty line. However, the plan is equally and fully valid (within overall project parameters) even for APL (Above Poverty Line) persons who can also benefit from it.
Size of the total available market and served available market
Our model is highly replicable and scalable starting from the city of Ahmedabad but can be extended to the whole world. However, we will be taking one step at a time as follows:
Phase IAhmedabad
Phase IIAhmedabad and Baroda
Phase IIIWhole of GujaratState
Phase IVWestern India
Phase VWestern + Northern India
Phase VIWhole of India
Phase VII Whole WORLD
As we design and test various parameters successfully in India, we may extend the same to other developing countries of Asia, Africa,South America and so on.
We are pleased to inform you that phase 1 has already started and we are in touch with all the blood banks in Gujarat / Ahmedabad to involve them in this project. In fact, we are already running a project in Gujarat for removing the blood shortage in collaboration with Gujarat State Council for Blood Transfusion and Indian Red Cross
As of now, we are giving the most conservative estimates of the market size, revenues, profits etc. for the city of Ahmedabad only. Accordingly, hereinafter we will discuss only the Phase I of the rollout in Ahmedabad.
The model is scalable in terms of number of people involved, in terms of countries / cities / towns involved, as also the other parameters like blood banks involved, the insurers involved and so on.
The Ahmedabad population is 35 lakhs ( i.e 3,500,000 assumed for our project). Even at a conservative estimate of 20 % (as against 40 % reported by a study) people living below poverty line (BPL), the total BPL population is of 7 lakhs. Assuming that around 50 % of them will be over 18 years of age, the total available market will be 350,000.
Out of these, some (let us say 40 %) may not be acceptable risk for the insurance company. Hence, the available market will be of 210,000 persons. Out of these, not all may be aware or interested in getting a health insurance in lieu of blood donation/s. Hence, served available market may be most conservativelyassumed to be, say, 100,000 persons or 200,000 blood bags per year.
Competitive Advantage
To tell the truth, there is no competition as of now. Our competitive advantages will be:
1being pioneer in this kind of business model,
2our tie up with the two crucial collaborators; namely blood banks and insurers
3As the model envisages building up from scratch - ground up, if we are able to garner sufficient numbers and brand name; that itself will be our competitive advantage. This is because both the above collaborators can not ignore us or ditch us if the numbers are with us.
Entry Barriers
Every success in real life does invite some copy cats. However, we do have the following entry barriers:
1Brand name of our organization – we may change the name to one that is more easily remembered and more fitting and appropriate to our activities for this purpose.
2Cost advantage – As the numbers jump, the insurance cost comes down continuously and progressively. Our model does not look for high profits; but more for social service and sustainability. Hence, our costs will be kept under control.
Also, due to our big numbers; we will have a lot of bargaining power with theblood banks or with the MNC pharmaceutical companies wanting to extract proteins from the blood.
Similarly, due to the numbers we will have lot of bargaining power with the Insurers as well. All these will lead to substantial cost leadership for our venture.
3Distribution – here again, the numbers will ensure that our distribution is more effective as we will be dealing with almost all the blood banks of Ahmedabad. Also, we will be dealing with one or a few Insurers so that distribution also will be effective, and difficult for competition (if any) to beat.
4Government – while the private interest of those in power may not be served in this model, the public interest of the people, particularly the vulnerable sections of the society, will be served very well. Hence, the government will favor the project which will take up what is, in reality, a duty of the government. Not that we need any government favor as this is a self sustaining business model. However the moot point is that the government will, in all likelihood, support this kind of mass health project, which serves very well two of the objectives that even the government has found difficult to achieve.
5Technology – the latest ICT Technology will be used wherever necessary to cut costs, to improve information flow and to make all things user friendly. As our promoters are already in the ICT field, they will be difficult to beat in this area. We have extensively used ICT in the first phases of Highway Rescue and Miss-A-Meal projects.
In spite of all these entry barriers being available to us, we would be more than happy if some copy cats do emerge because they will help us in the following ways:
1They will enable us to really democratize the healthcare; by way of bringing the highest standards of healthcare within the reach of all socio economic classes in India.
2The numbers are humungous. Just imagine; at 6.4 billion world population, there are around 190 million potential blood donors. Even at 20 % BPL persons, there are 1.32 billion people who neither have any health insurance, nor any ray of hope for it on the horizon. So, the task is very huge, like an ocean. Even if someone else consumes few tons of water, the level of ocean is not going to go down.
3Most importantly, any competition will enthuse and empower us to be always innovative, always in a state of preparedness, always improving and reinventing ourselves and thereby providing a better service to the target groups.
We already have plans to improve our model by reducing costs and improving insurance coverage, as detailed in Annexure 5.
Estimated Revenues and Income (three years)
Please see the attached Annexure 6. Accordingly, the revenues / income for the first three years will be as follows: (in rupees)
Year 111.3 crores i.e. 113,000,000
Year 224.3 crores
Year 329.7 crores
Funding Requirements
Please see the attached Annexure 6.
As detailed therein, the biggest funding gap will occur in the 8th month amounting to rupees 1,391,250. This will be funded from the following sources:
Loan & Donation from Indian friends1,000,000
Promoters 218,750
NRI friends 172,500
T O T A L1,391,250
While NRI friends will be fully refunded by the end of the 1st year, promoters will fully recover their funding in the 2nd year.
1The Enterprise
Our Enterprise modelis as follows:
Miss-A-Meal Trust will execute the project through an independent profit centre; while Nahak will have the responsibility from concept to commissioning / launching the project.
The current organization chart and activities of Miss-A-Meal Trust is given in Annexure 2 and 1 respectively.Details of the activities of Nahak Overseas Limited is given in Annexure 3
1.1 Description of the Idea
NAHAK provides the service of creating tailor-made business ideasfor the growth and prosperity of businesses. For the social services sector, it even envisages and creates ideas that can lead to achieving many social goals that even governments find difficult to achieve. Nahak selects social bottlenecks and converts them into business opportunities. These business models are designed as self sustaining and feasible. See Annexure4
For this project, the Target Market is anyone who is healthy enough to be capable of donating his / her blood, but who cannot afford to buy a health insurance policy of Rs. 15000 per year. So this class of people will be the direct beneficiaries of this project.
Indirectly, there will be several beneficiaries:
1the medical fraternity who is unable to collect blood enough for all its demand, with the result either it has to compromise on the quality of blood or has to request the relatives of the patient to donate blood
2the government, whose duty it is to insure the weaker sections against disease, will be able to achieve this thru these private efforts
3the insurers, who will be able to get a large mass of people for their group health insurance schemes, thus lowering their risks and expanding their market
4the private social entrepreneur, who will be able to make reasonable profit at a very low investment, while at the same time having the satisfaction of having served the society
5the employees of this venture, who will not only get a job, but will also be able to derive immense satisfaction of having served thousands of people
1.2Market Analysis
1.2.1Market Opportunity Problems being addressed
Actually, there are two problems to begin with. First is that blood donations are insufficient. The second is that the poor people have no health insurance and, therefore, no access to medical treatment in view of the fact that they earn, say, Rs. 20 per day. Even this meager amount may be divided in a family of two or three or four.
They say that an optimist finds at least one opportunity in every problem. We have followed into the footsteps of the optimists and located this opportunity of providing a health insurance free of charge (for self and / or one or more of his family members) as well as augmenting the donation, and, therefore the supply of blood.
Size of the Target Market
For the city of Ahmedabad with a population of 35 lakhs, the market size is conservatively estimated at 1 lakh donors. Assuming each person, on an average, donates twice a year, the size is of 2 lakh bags per year. At a most conservative gain of just Rs. 150 per bag, the turnover will be Rs. 3 crores a year.
Once this project is implemented and initial glitches or teething troubles are overcome, the same may be extended to the whole nation, and thence to the whole world’s population which is around 6.4 billion. Applying the same ratio as Ahmedabad to this 6.4 billion, out target market will be 366 million blood bags. Applying same gain of Rs. 150 per bag, the turnover will be Rs. 54.86 billion or around $ 1.37 billion.
In short, the scalability and growth prospects are humongous.
1.2.2Competitor Analysis
There are no competitors to our venture if we take the traditional or literal meaning of the word competitor. In fact, no one seems to have thought in this direction so far.
However, the main players are:
1The blood banks
2The processors of the blood, in case we decide to process it
3The ultimate buyers of the blood or the blood proteins
4The insurers who will provide the health insurance – here we may negotiate with many insurers and go for one or a group of insurers who give us the best offer
5Government support, if it comes, may also be of some help
6Support from concerned NGOs will also help
1.2.3Value Proposition
We will provide the needyand poor persons - a health insurance, free of charge, in lieu of the blood that they will donate.
We will provide the blood supply to the health care systems which are right now facing a severe crunch. This extra supply may save a life or allow a critical surgery to be performed in time.
This is a barter model where in lieu of the blood donated, the person can get health insurance for self and / or family.
There is no special technology required in this. You will find the working model or the prototype by referring to point 3 hereunder – Financial Plans and Risks. You will also see that the model is highly flexible, replicable and scalable right from one city to the whole of the world, wherever blood banks and persons in need of free health insurance co-exist.
Once the beneficiary needs these benefits, he will come to us and to us alone, because of the TINA factor – There Is No Alternative.
It is possible, however, that the insurance companies and / or blood banks can create a similar model in other cities not yet covered by us. This is fine as long as they don’t push their own self interest at the cost of the interest of the poorest of the poor. In that case, they are our collaborators rather than competitors. They will help democratize healthcare and we welcome them. But, if they push hard their self interest, we can compete with them because of the simple reason that there are plenty of insurance companies available and because the beneficiaries will soon be able to see how an alternate model serves their interests better.
As seen above, our services create tremendous financial and social benefits for the whole of the society; particularly for those at the bottom of the pyramid.