Social Entrepreneurs Providing Primary Health Care

Teresa Chahine: Welcome to Impact & Innovation. I’m Teresa Chahine, and I’m inviting you inside my classroom at Yale School of Management as we grapple with questions on social entrepreneurship and impact.

Welcome back, everyone. I am so excited to be here with my former student, Dr. Lutfi Lokman, who’s visiting us today to talk about his organization Hospitals Beyond Boundaries.

My students at Yale are writing a case study about HBB, or Hospitals Beyond Boundaries, and Lutfi is here to meet with us and write about the case, and we’re so delighted to have you.

Lutfi Lokman: Thank you.

Teresa Chahine: So, tell us a little bit about what is Hospitals Beyond Boundaries, how did it all start, and how you got here to where you are today?

Lutfi Lokman: Yeah. So thanks again for inviting me. It’s really nice to be here at Yale. HBB is a nonprofit organization that is registered in Malaysia in 2012. Our mission is to improve the healthcare of poor and vulnerable communities around the world, starting with Southeast Asia, by empowering them to run social health enterprises. So “social health enterprises” basically means that healthcare services that runs as a social enterprise because we believe that this is the only sustainable way in which you can balance between profit and impact to the community that we’re trying to serve.

Teresa Chahine: So let me stop you there, even though I asked you more and didn’t give you a chance to answer. But when you say that you believe that every community has a right to run sustainable health enterprises, this is where the public health community will go up in arms, right? Because we believe as a public health community that health is a human right and that the government is accountable for providing health. So why should you start these health enterprises rather than the government providing health services?

Lutfi Lokman: Yeah. First of all, we have to acknowledge that almost all governments are trying their best to provide healthcare for their own community. But we also have to face the fact that there’s always scarcity in this world and there’s not always enough for everybody. And the government doesn’t necessarily have enough resources to treat every single person in the country.

So I believe this is a very good opportunity for the private sector. By “private sector” I mean both the nonprofit and also the profit organizations to come in and fill in the gap. Like in terms of access we may have clinics built by the government in some places, but in some other places the government hasn’t reached that area yet. So I believe it is in these gaps that other nongovernmental organization should come in and help.

Teresa Chahine: Okay. So tell us about the gap that you’re filling and how you ended up there. Why did you feel the need to provide the services to this community?

Lutfi Lokman: So the gap that we’re filling is not geographical. So this community that we’re helping, they’re called the Cham people of Cambodia, they’re an ethnic minority, only 2% of the population, and they have suffered for a long time. Just 40 years ago, they were under the rule called Khmer Rouge regime, in which they did a mass genocide, which half of the population of this community were killed. So right now they’re really left behind in terms of economic, healthcare, and also in education.

So this ethnic community is living in a general population that’s already poor. So it brings more pressure on them. So because they are an ethnic minority living in a poor population, there are certain barriers that they face; for example, in terms of language, they are speaking something, a language different from the general population, and also in terms of culture and the religion that they’re practicing. So all these three are a barrier towards healthcare, although there’s a clinic right next to them.

Teresa Chahine: Oh, I see.

Lutfi Lokman: And Cambodia is actually one of the country that has the highest density of NGOs. So a lot of foreign countries come in to provide foreign aid. But the thing is that most of the providers in which, I mean doctors and nurses are from a foreign country, and I realized that they lack cultural competence when treating a small ethnic minority population because these are different from the patients that they usually treat day by day. So this created an unintended barrier in which the minority population feels like they are not confident to come and see a foreign doctor either in terms of language or culture. So this is what you call a nongeographic barrier.

Teresa Chahine: So what makes your organization different? Are you part of this population?

Lutfi Lokman: I’m not. I’m from Malaysia. So how we empower the local population is by...We make it a big effort to hire from the local community.

Teresa Chahine: Well, first before you get there, how did you end...If you’re from Malaysia and the Cham population is in Cambodia, how did you end up doing this work in Cambodia?

Lutfi Lokman: Well, it’s a long story, but to get it short, I was always inspired by the story of Paul Farmer and Jim Yong Kim, who founded Partners in Health in the U.S. but worked mostly in poor countries like in Haiti and Rwanda. So they started off as a medical student. So I read a book about them when I myself was a medical student and was very motivated to do something similar.

And then, in my third year of medical school, I had a head injury in which I was hospitalized for almost two weeks. So it was kind of a depressing time for me. And at that time I really felt like life can be short and if I want to start something, I mean I should just start it, instead of waiting until I have enough funds or enough influence to start a nonprofit organization. So that’s basically where it all started.

And then why Cambodia is that one day a local Cham community person came to Malaysia to fundraise for a school. So he came directly to my family’s house. And so he began telling about the suffering of his own community and how they need help in terms of education. So he’s trying to build a school. But because my family are mostly from the medical background—my father is a doctor, my mom is a pharmacist, and all of my siblings are in the medical field—so we asked him about how’s the healthcare status of the Cham people in Cambodia? So it turns out that it’s really bad. And so we decided that we can help in terms of building the school, but we can leave a bigger impact if we do something that’s within our specialty, which is medicine.

Teresa Chahine: Okay. So that’s how you ended up working with the Cham population.

Lutfi Lokman: Yes.

Teresa Chahine: And what are you doing differently to make this their clinic and to really empower the community rather than just being yet another foreigner, even though closer to home and from a similar ethnic background, but what makes you different from the other NGOs that are building other clinics?

Lutfi Lokman: Yeah, I believe we are different in that we really make it a point to hire from the local community, from the Cham people themselves. So as I’ve mentioned, the Cham community has suffered a very bad history that was just 40 years ago. So you can imagine that only little of the population become doctors today. So we actually managed to hire the only Cham doctor at the time.

Teresa Chahine: Oh, wow.

Lutfi Lokman: He was working as a neurosurgeon at the public hospital, but we targeted him because we really wanted someone from the local community and we actually won his heart. So he resigned from being a neurosurgeon. So he went to work with primary care with us, some kind of downgrade of his job, although his salary is a bit lower than what he would earn as a surgeon, but he feels the satisfaction of being able to help his own community. So it’s more than salary; it’s about leaving an impact to your own community.

Teresa Chahine: And since then, have more people been trained in medical fields to join the staff?

Lutfi Lokman: Yes. So after our current doctor, there are younger doctors, younger medical students from the Cham community, but they’re not working for us yet. Some of them are just graduating, but we are hiring more nurses, midwives, and even lab technicians from that community itself. So I see that the way that we’re empowering them is by providing them with a stable job so that they can take care of themselves and their family. Because we have to face it. People can volunteer to leave a social impact, but then you still need to feed your family. So we provided with a stable income, and I’ve also heard that some of them use their income to help the siblings to study medicine or study nursing. So we are proud of this achievement and that’s how we leave an impact to the community.

Teresa Chahine: And do you foresee a future where they will take over and run this clinic and potentially start others?

Lutfi Lokman: Yes, exactly. That’s the vision.

Teresa Chahine: Okay.

Lutfi Lokman: We don’t want to come in and feel like, oh, we are the savior. We come in, we know best, so this is what you should do. It should be the other way around. To leave a long-lasting impact, I believe that the community must feel like they own the project. So that’s why our model is not based solely on charity, like giving everyone free treatment, but we are training the local doctors and nurses and managers entrepreneurship skills. Right now we’re doing cross-subsidy in the population. There are those who managed to be better off and those—

Teresa Chahine: Financially?

Lutfi Lokman: Financially, yes. So for them, they pay the normal price as how much you’d pay in the market. Then the revenue from them will be used to fully subsidize those who are poor.

Teresa Chahine: And how is that working so far? You mentioned you’re a nonprofit, so what is your percent cost recovery? Is the cross-subsidization enough to break even?

Lutfi Lokman: Yeah, I have to admit that the cross-subsidy model is not enough to break even. So our cost of recovery is only one third. So we still have to depend on donations, but we have seen an increasing trend in the cost recoveries. So I really feel that there’s a promising future in which the clinic can be sustained fully by cross-subsidy and not depending on donations. It’s not saying that donations is wrong, but to leave a long-lasting impact, I believe empowering the community is the way to go.

Teresa Chahine: So usually when we see this kind of differential pricing model where one subset of the patient population is paying more than others who can’t pay and cross-subsidizing them, it’s usually in tertiary care. We all know the stories of the Aravind Eye Care Systems, the Narayana heart hospitals, and others because you have a standardized product or service that’s offered in exactly the same way to everyone, but some people pay more than others depending on how much they can pay. In primary care, we really rarely ever see this type of social enterprise model because everyone is coming in for something different. Someone has a stomachache; someone has a flu. So how does that work?

Lutfi Lokman: Yeah. I mean it’s a bit tough because as opposed to tertiary care where people come in and you can expect what is the cost and how much revenue you can make from those who are able to pay, with primary care people come with anything under the sun, and it’s very hard to extrapolate how much revenue you’re going to make for the next month or next year. So it has always been a challenge for us, and it still is. And I believe with our research, we also find out that other organizations are also struggling with that for those who are working in primary care.

Teresa Chahine: So one thing I didn’t mention is that last summer Lutfi did his summer immersion with me, and we conducted this exact research study asking the question, can social enterprise be a viable model for primary care as opposed to specialized care? And we interviewed, we went through the portfolios of several large global organizations supporting social entrepreneurs to see who’s working in health, who’s working in primary care, and then who’s actually delivering primary care, and narrowed it down to 10 organizations out of hundreds, if not thousands, across these fellowships and interviewed 9 out of 10 of these organizations. So there aren’t many.

Lutfi Lokman: There aren’t many.

Teresa Chahine: And we observed certain patterns. One of the patterns that I remember was that as opposed to the tertiary care, you don’t have differential pricing. It’s more of a flat fee. But rather than different people subsidizing others, it was that different services would subsidize others.

Lutfi Lokman: Exactly.

Teresa Chahine: So for example, the lab tests would have more of a revenue to subsidize maybe the common cold or something like that. And I think some clinics also had their own electronic medical record system, and that was a way for them to monitor and standardize things and often even sell it to other clinics, right?

Lutfi Lokman: Yeah.

Teresa Chahine: So what are you thinking along those lines? I think that to get it up from one-third cost recovery to 100% cost recovery, a certain number of things have to happen, right?

Lutfi Lokman: Yeah.

Teresa Chahine: Tell me, what do you think those things are?

Lutfi Lokman: Well, another point that we discovered during the research is that most of these organizations have multiple clinics. So they are either franchise—

Teresa Chahine: You definitely have to drive up the volume, right?

Lutfi Lokman: Yes.

Teresa Chahine: And that is in line with your mission. It’s not like it’s a trade-off.

Lutfi Lokman: Yeah, because we want to leave as much impact as possible in terms of access and also in terms of the type of services that we can give. So that’s in line with our service, and that’s something in line that we’re thinking about. And second is going to the example that we’ve seen in which having similar revenues stream. Like what I’m thinking right now is currently I’m even developing our clinic’s own medical record, and it’s a very low-cost medical record that we can assign—

Teresa Chahine: You mean electronic medical record system?

Lutfi Lokman: Yes.

Teresa Chahine: Okay.

Lutfi Lokman: It’s a software which is kind of unique because it works even in areas of low connectivity. Especially in Cambodia, the internet sometimes breaks down. So this medical record can work on 3G or slow 3G networks. I believe this can also be monetized and help sustain HBB further as a revenue stream. And yeah, I think those are the two main ways I’m thinking about seeing the future of HBB.

Teresa Chahine: So ramping up the volume, subsidizing across services, not just across patients and building your own in-house electronic medical system record system to measure the outcomes and also to potentially sell to other clinics.

Lutfi Lokman: Exactly.

Teresa Chahine: So I’m going to end by looping back to something you said at the very beginning about your mission, which was not specific to the Cham population, but you wanted everyone everywhere in the world to have access to social health enterprises.

Lutfi Lokman: Yeah.

Teresa Chahine: So why did you choose such a global mission, and how is that going to go down?

Lutfi Lokman: Well, I think that in terms of healthcare, it’s a very difficult dilemma for private organizations. And with private, I mean both for profit and nonprofit, because you are giving a service, but in a way that you are also charging people because of the suffering. And I believe until now, there’s not much choice between a government service and a fully for-profit organization. So I believe that—

Teresa Chahine: There’s not much in the middle.

Lutfi Lokman: Yeah, there’s not much in the middle, and the government service, sometimes things are lacking. And the for-profit service, not many people can afford it.

Teresa Chahine: Exactly.

Lutfi Lokman: So how do you take an organization, make it sustainable financially, but also leave a lasting impact not only to the patients but the whole population? So I believe social entrepreneurship is really the way to go because it balances between profit and social impact. And that’s why the overarching mission of HBB is to promote this ideology that no one, no single person should benefit from the suffering of others. Any profit from that should be used to help to cycle back into the community to make them better.

Teresa Chahine: So I guess you’re creating a whole new model where once this clinic is able to be run in the future by the Cham population, then you’ll partner with other populations to do a similar model in other locations.

Lutfi Lokman: Yes.

Teresa Chahine: Well, I’ll be really excited to see where this goes. Thank you so much, Lutfi, for being with us here today, and I hope that everybody checks out the case study about Hospitals Beyond Bound ... Beyond—

Lutfi Lokman: Boundaries.

Teresa Chahine: ...Boundaries on the Yale SOM website. Thank you.

Lutfi Lokman: Thank you very much.

Teresa Chahine: I’m Teresa Chahine, and you’ve been listening to Impact & Innovation. Subscribe to stay tuned and follow us @TeresaChahine and @SOMVentures. Special thanks to the broadcast center at Yale School of Management.