November 17, 2020

HealthLane: Get quality and affordable healthcare in Africa

Iris Quan

The global digital health market size reached US$106 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 27.7% from 2019 to 2025. Money has been poured into the healthcare sector as deals and dollars set new records.

Digital Health Defined

Different terms such as digital health, e-health, mHealth, and telehealth have been used in the field which can sometimes cause confusion. Let’s clarify a bit first.

The term “digital health” originally referred to the use of interactive media, tools, platforms, applications, and solutions on the Internet to address health concerns of providers as well as consumers. While mHealth emphasizes the use of mobile phones in healthcare, telehealth means using technology to remotely deliver clinical health services to patients. According to the FDA, “the broad scope of digital health includes categories such as mobile health (mHealth), health information technology (IT), wearable devices, telehealth and telemedicine, and personalized medicine.” CBinsights, a popular business database and analytics platform, includes over 8,000 digital health companies globally in its digital health database.

We understand digital health as the use of information and communication technologies (ICT) in healthcare to improve medical diagnosis, disease treatment, and health care delivery for individuals. The long existing and newly emerging ICT tools include software, platforms, cloud computing, sensors, voice technology, 5G, AI, blockchain, etc., and can combine a few elements together to take the forms of wearable devices, telemedicine, mobile health, genetic testing, etc., developing into cyber-physical systems similar to those in industrial electronics.

Why digital health

Digital health can help supplement the growing demand for physicians. According to AAMA, there will be a shortage of 120,000 physicians in the US by 2030. Therefore health systems — hospitals, clinics, and post-acute care facilities — are turning to digital health to combat labor shortages.

Another benefit of digital health is that it can provide solutions in saving costs. Healthcare costs have been skyrocketing, with U.S. health care spending having reached $3.81 trillion in 2019 — 17.8% of GDP. An analysis of 14 randomized controlled clinical trials with a total of 4,264 patients showed that remote monitoring systems decreased hospital readmission rates by 21% and all-cause mortality by 20%.

The emergence of value-based healthcare promotes the reimbursement model that ties payments for care delivery to the quality of care provided and rewards providers for efficiency and effectiveness. Governments have taken major steps to reduce friction for businesses offering digital health. For instance, in March 2019, US government officials relaxed privacy restrictions under the Health Insurance Portability and Accountability Act (HIPAA) to allow Apple, Google, and Microsoft to facilitate virtual doctors’ visits through their existing chat and video apps, including FaceTime and Skype.

Finally and most urgently, the disastrous pandemic has become an unexpected catalyst pushing both providers and patients to seek digital solutions to maintain social distancing. CMS has broadened access to Medicare telehealth services so that beneficiaries can receive a wider range of services from their doctors remotely. FDA also approved virtual clinical trials to allow for ongoing drug development while facilities are closed down.

Why Healthlane

These discussions apply well to medical demands in Africa. Problems caused by the pandemic and the long-lasting severe shortage of doctors and quality medical services are driving digital health solutions and innovations in Sub- Saharan Africa especially, facilitated by the increasing prevalence of mobile phone usage.

Problem and product

Image for post

In the Y Combinator Winter 2020 batch, a startup named Healthlane came into our sight. Founded in 2019, Healthlane offers both online and offline healthcare services in Africa. It has operations in 5 cities and 28 locations in Cameroon and Nigeria. Healthlane started with focuses on pregnancy, pediatric and chronic diseases, where the need is prevalent and consistent, and demand is relatively inelastic during the pandemic. In the overburdened public hospitals, pregnant women or other patients often have to wait 5 to 6 hours for a medical visit. The startup can help patients book fast track appointments in public medical facilities, significantly reducing patients’ visiting times and increasing hospital efficiency. Considering the current doctor to patient ratio in Africa is 1:5000 with every physical-site doctor visit, the company will further offer digital consultancy by assigning specific doctors for patients to provide high quality healthcare and disease prevention.

Business model

Image for post

Modeling after Ping An Good Doctor (1833:HK, with a market capitalization of more than US 15 $billion) in China and One Medical in the US, Healthlane will ultimately serve as a personal health record aggregator that covers full spectrums of records — including medication, lab testing results, health insurance claims and patient electronic health records. The demand for online healthcare platforms in Africa is paramount. It’s comparable to Ping An Good Doctor for the Chinese market in this sense. Healthlane has already formed partnerships with local hospitals and adopted a revenue sharing model with local hospitals that can highly incentivize them by bringing extra revenue streams. The current business model also intensively uses existing hospital resources, including midwives, staff, and facilities. Sharing 50% of the consultation revenue with hospitals, HealthLane is able to quickly on-board hospitals with its effective go-to-market strategy in about a week’s time. They reached a net revenue of $51K in February 2020. They claim to have $0 CAC, while One Medical CAC is around $600. However, the estimation of $0 CAC ought to be taken with a grain of salt since costs might be under-calculated by Healthlane, but it does evidence much lower customer acquisition efforts needed and more promising profit margins.

Team and risks

Healthlane was founded by two African-native entrepreneurs. The CEO, Alain Nteff, had experience in building and selling EHR systems to the African government. As our first Africa-based startup in our fund’s portfolio, there are a few risks to consider. First of all, the African market is completely new to us. Although the potential is huge, there are a lot of unknown factors. Regulations can also be a challenge. Going to different countries in Africa may require more domain knowledge regarding regulations and know-hows, especially for their interactions with local hospitals. COVID-19 has reached Africa and we don’t know yet how well it can be controlled. Online doctor services may offer solutions as more people would prefer using online options and/or get VIP healthcare services instead of waiting in the long hospital lines. For us, collaborating with a team 10,000 miles away could still be an obstacle even with digital communication. On the upside, its offline fast track medical service continues to flourish, highlighting the uniqueness of the African market.

By the end of Q2 2020, Healthlane had over 60,000 medical consultations done across 30 locations in Nigeria and Cameroon, generating $307,000 in revenue. It achieved +620% Y/Y growth in the midst of the pandemic despite more than half of the team members contracting COVID-19 (thankfully, they have all recovered).

Ultimately, we have chosen to put down our money to support the dedicated young African entrepreneurs who have deep passion and grandiose dreams to bring improved and affordable healthcare to Africa. We wish Healthlane all the best.

Read the original article