Uttar Pradesh is the most populous state in India accounting for 16.5 percent of the population of India. More than 70 percent of the births in UP are not assisted by any doctor/nurse/LHV/ANM/other health personnel. According to 2007-09 figures, UP is, therefore, burdened with high infant mortality, with an estimated IMR of 63 per 1000 [ii] live births and maternal mortality ratio (MMR) of 359 per 100,000 [iii] live births. In 2007-09, the national IMR is estimated to be 50 per 1000 live births and MMR of 212 [iv] per 100,000 live births. The unmet need for family planning is 21.9 percent in UP whereas the unmet need for family planning in all of India is 12.8 percent. More than 73 percent of mothers in UP did not receive the three antenatal care (ANC) visits for the last birth [v] .
Given the scenario of dismal health and demographic indicators, an urgent need was felt to provide access to affordable and quality health care to women in UP.
Social franchising for health
Franchising has been defined as 'A form of business organization in which a firm which already has a successful product or service (the franchisor) enters into a continuing contractual relationship with other businesses (franchisees) operating under the franchisor's trade name and usually with the franchisor's guidance, in exchange for a fee' [vi] .
Social franchising is an attempt to use franchising methods to achieve social rather than financial goals, influencing the service delivery systems of the private sector in a manner similar to which social marketing has adapted traditional outlets for commodity sales [vii] .
There were various reasons why privatisation was considered important for the development of reproductive health services. These services had to provide 'more with less' because governments were required to develop an expanding array of high quality services. Demand for reproductive health services was also rising because of the increasing number of people in the reproductive age group, the rising need for preventive services, increasing education and awareness of reproductive health needs and the growing HIV epidemic.
Today, various forms of privatisation are being pursued in the provision of reproductive health services. Governments across the world in lower and middle income countries have engaged in contracting of services - contracting both in and out- often with the non-profit sector in their countries as the provider [viii] .
Franchising is a hybrid business structure somewhere between a market and a firm in the study of organizational economics. Franchisors and franchisees typically engage in a contractual exchange, with a regular transfer of goods or services between the two, similar to what would occur in a market with long term contracts. As a part of this contract, the franchisors strictly regulate many of the activities of the franchisee - standardizing retail outlet design and colour, the range of goods and services offered, and acting to assure quality and prices [ix] (Lafontaine 1992).
Merrygold Health Network
Merrygold Health Network (MGHN) emerged as one of the answers to address UP's maternal mortality. The different units of Merrygold Health Network are shown in figure 1. It has been able to successfully spread and establish itself all across UP since its inception in 2007. USAID and State Innovations in Family Planning Project Services Agency (SIFPSA) have developed this innovative social franchising programme through consultations with various national and international experts. Hindustan Latex Family Planning Promotion Trust (HLFPPT) implements this public private partnership for delivering maternal health services and is supported by USAID and SIFPSA. HLFPPT has developed, managed and sustained the MGHN.
Figure Different units of Merrygold Health NetworkThe MGHN aims to provide high quality maternal and child health services at affordable prices. This network currently comprises of the following franchisee private providers - seventy 20-bed Merrygold Hospitals, 700 - Merrysilver clinics and 10,000 Merrytarang workers - as described in Figure 2 below. This network of providers aims to provide varied package of services at affordable prices. Currently, MGHN covers 36 of the 71 districts of UP and 469 of the 834 blocks, which means that MGHN is present in more than 50 percent of districts and blocks.
Figure : Merrygold health network model. Source: Adapted from organization documents and information received from the organization
How does this model work?
The franchisers (Merrygold hospitals) own the L0 tier hospitals and operate these themselves. These hospitals provide maternal, newborn and family planning services including Comprehensive Emergency Obstetric Care. These services include:
Antenatal Care
Delivery Care
Post-delivery care
Child care
Family Planning
These are also referred to as model referral hospitals. There are only two L0 hospitals, one in Agra and the other in Kanpur. These are 20 bedded hospitals managed and run by HLFPPT and the Merrygold brand itself. The Merrygold hospital's own hospital model was difficult to replicate across the state so the franchisee model was initiated.
HLFPPT as the franchiser is responsible for selecting, appointing and managing the potential franchisees. Its role is to seek health care entrepreneurs keen on starting hospitals and provide them with support for accessing capital and needed accreditations. The quality of service delivery is ensured by quality assurance protocols and periodic quality audits are done for ensuring consistency in delivering high quality services to the underprivileged sections. HLFPPT charges Rs. 3 lakhs as franchising fee from the L1 level franchisees and gives support in terms of marketing, training, developing network, outreach activities, medical audits, and quality assurance. Merrygold set up the franchisees' entire information technology (IT) system. It provides software to all the Merrygold hospitals and is capturing all the data from the field at one point.
This network provides high quality maternal and child health services at affordable prices. HLFPPT conducts process audits for ensuring that quality of care standards are maintained by the franchisees. As the franchising network expands, HLFPPT has been focusing on developing linkages such as with community health insurance schemes, low cost generic drug marketing networks, and equipment leasing for enhancing the value additions to the health care seekers and franchisees.
The franchiser is the owner and originator of the brand and policies. In the Merrygold Health Network, HLFPPT is the franchiser and HLFPPT's functions can be categorised as:
Creating access to products and services for improving reproductive and child health through social marketing and franchising;
Developing programmes for HIV prevention among populations with highest risk of contracting HIV;
Providing technical assistance in public health programmes;
Programming new technologies for public health.
Figure Benefits of social franchising. Source: Adapted from organization documents and information received from the organization
Besides this, Merrygold is also responsible for providing the L1 and L2 tier franchisees with the following benefits:
Capacity building and training of medical and para medical staff
Development of vendors and procurement at competitive prices
Regulating quality assurance systems (medical audits)
Marketing of the network
Helping the network avail of various government schemes by putting the franchisees in touch with the relevant district health authorities
Branding support to franchisees by giving them a brand name including installation of standard signage, glow sign boards, clinical posters, branding of hospital premises and providing hospital stationery.
Other benefits to the franchisees:
The franchisee receives the HMIS software and training in it
Pathology assistance by Metropolis laboratories
Pharmacy assistance by Guardians Pharmacy
Training and orientation of Merrysilver and Merrytarang partners
According to Mr Birendra Kumar, Team leader of MGHN in Lucknow "the franchisee usually opts for this arrangement because the MGHN mobilizes more footfalls in the hospitals with help of the Merrytarang workers. More institutional deliveries and family planning services in the hospital means more turn over and more revenue generated." Facilitating corporate tie-ups (if possible)
Management development programmes
Services provided by the network
Figure 3 - Services provide by the network. Source: Adapted from organization documents and information received from the organization
The social franchising network created by HLFPPT provides all the services listed in Figure 3. This results in an improvement in the array of services and enhances their quality, as shown in Figure 2 above. The bouquet of services provided to the franchisee helps in setting up protocols and systems for the hospital which earlier might not have had the benefit of these.
Quality assurance at Merrygold Health Network
Quality assurance at MGHN
The MGHN system has a team of gynaecologists. HLFPPT has developed 13 protocols mainly for clinical practices at hospital level. The HLFPPT team does quality audits and visits the hospitals routinely. One-on-one meetings with doctors and paramedical staff are held to discuss how the quality may be improved. An analysis of quality assurance scores for all L1 hospitals was done as per Figure 4 below and as per quarter 8, nearly 100% of the check list was completed on the quality assurance scale.
The business model
Figure 4 - Comparative analysis of quality assurance scores of all L1 health facilities [1]
The business model of MGHN rests on the principle of 'increased volume and specialization of the health care facility to drive costs down and result in better patient outcome'. The services franchised out are priced at 50-60 percent less than market price. The franchisee is usually a 15-20 bedded facility spread over a 6,000 sq. ft. area.
The franchisee at each level is required to have a particular level of infrastructure, and for L1 and L2, a licensing fee is required. No revenue share is required for L2 and L3. This is described in Table 1 below.
Level
Licencing fee
Revenue share
Infrastructure needed
L1 Tier Merrygold
Rs 3.0 Lakhs
3%
20 bed+ OT + Personnel for EmOC
L2 Tier Merrysilver
Rs 1000 per annum
NIL
5 beds + MBBS/ Lady AYUSH +Asst
L3 Tier Merrytarang
NIL
NIL
Community connections
Table 7C.1 - Franchisee terms. Source: Adapted from organization documents and information received from the organization
Cost structure of Merrygold Health Network
In 2007 the cost of services had been fixed at modest rates when Merrygold was initiated. Over the years, the cost of services has gradually increased. For instance, as per Table 2 below, the cost of normal delivery for general ward patients has gone up by approximately 66 percent over five years. Similarly, the cost for a caesarean section for general ward patients has gone up by 60 percent in the same time period. Many costs however remain unchanged such as the ANC, post-natal care (PNC), and costs for regular check-ups. The cost of normal and caesarean deliveries and hysterectomies for patients in private rooms also remain unchanged over the last five years.
The reason for the increase in some costs could be attributed to two reasons: a) increased cost of services incurred by the franchisees; and b) these services are more utilised than the others so increasing their costs will increase profits for the franchisees.
All services offered are significantly lower than the market price for them in other private facilities. For example, the cost of a normal delivery in a private facility can go as high as Rs. 11,050/- while it is 2.7 times lower at Merrygold health network and priced at Rs 3,999/-.
Revisions in pricing since inception
S. No
Service
Merrygold price (in INR) Aug 2007- Aug 2009
Merrygold price (in INR) Aug 2009-Dec 2011
Merrygold price (in INR) Dec 2011 - to date
Market price range (non-metro range) in INR
1.
Normal delivery
(2 days)
General ward
1499
1999
2499
3450-11050
Semi- private
2499
2499
2999
Private
3999
3999
3999
2.
Caesarean delivery
(5 days)
General ward
4999
6999
7999
9500 - 22000
Semi- private
7999
7999
8999
Private
11999
11999
11999
3.
Hysterectomy
General ward
5999
5999
7999
3500-22000
Semi- private
8199
8199
8999
Private
12999
12999
12999
4.
Day care
1000
Varied
5.
ANC
50
50
50
100-300
6.
PNC
50
50
50
100-300
7.
Regular check ups
50
50
50
Varied
8.
IUD insertion
99
99
100
250-400
9.
Sterilization
999
999
1500
1000- 3000
Table 7C.2 - Services offered by MGHN and their price in comparison to market price. Source: Organization documents and information received from the organization
Evidence of impact
Utilization of services
Services
2007-08
2008-09
2009-10
2010-11
2011-12 (till May)
Total
ANC check-ups
25066
44874
192955
467971
35984
766850
Institutional deliveries
5785
9669
36028
75928
9319
136729
Sterilization
355
734
1921
7499
158
10667
IUD
1284
1973
11191
23109
1050
38607
Table 7C.3 - Evidence of impact from 2007 onward till May 2012. Source: Organization documents and information received from the organization. [x]
From Table 3, it is evident that institutional deliveries have gone up significantly, nearly 23.6 times from 2007 to 2012. Similarly, sterilization went up 30 times in the same time frame in the MGHN. Utilization of ANC check-ups went up 30 times as well from 2007 to 2012. Thus, impact, in terms of uptake of services has had a steep incline
Discussion
The MGHN initiative is a laudable one. In a short span of time, small nursing homes and clinics providing maternal care and family planning services have been branded, their quality upgraded and patient load increased as a result across Uttar Pradesh. Social franchising initiatives as can be seen in MGHN seem to provide better quality of patient care and have the clinical protocols streamlined for better output and improved quality of services.
Social franchising models also do well economically because they result in covering large areas of the population which might or might not be underserved by the existing government system. The reason why MGHN is hailed as a success is because it provides maternal health services at an affordable price with quality assured.
At regular intervals HLFPPT has been revising the costs of services, in order to cover the expenses of the franchisees as well as looking to the profit margin. There is concern in some quarters that the footfall at the MGHN facilities might reduce because of schemes such as Janani Suraksha Yojana (JSY) being provided at Government facilities. If the MGHN network is accredited by the government as institutions where schemes such as JSY may be implemented as well, the issue of reducing footfalls will not arise. This linkage with the government system might be useful for the future.
The initial idea while setting up the three tier system was also for referral between L2 and L1. However, since the L2 facilities have MBBS doctors, complicated cases are taken up by L2 and not usually referred. For greater economic efficiency, the L1 and L2 facilities could be consolidated and all these facilities could be given L1 status.
Way forward
MGHN has been scaled up throughout UP covering 36 districts. Expanding the network in difficult areas within UP will help strengthen the fact that social franchising as a model can be replicated in different social settings. The challenge also lies in replicating MGHN across the different states of India. There is a move towards this, and hopefully states such as Rajasthan might take this up in the future.
