'Soga Oni

Yesterday, I mentioned the increase in medical equipment prices I saw at Medic West Africa. In response to that post, I got a request to share my thoughts about the factors driving the increase in medical equipment prices.

Here are 3 factors that I believe are affecting the price of medical equipment in Nigeria.

Depreciation of the Naira

Nigeria imports almost all of its medical equipment. Over the past couple of years, the Naira to USD open market exchange rate (it is almost impossible to get the official exchange rate) has gone from 360 to 700 Naira to 1 USD. As a result, the Naira cost of sourcing medical equipment from the US, EU, and China has increased quite significantly. This is perhaps the biggest reason why medical equipment is getting more expensive in Nigeria.

Increase in Supply Chain Costs

COVID-19 had a huge impact on global supply chains, and we are continuing to feel the effects of this massive disruption to the system. Shipping delays became very common during the pandemic, and even now the global supply chain has not fully recovered. Today it’s more difficult and more expensive both to manufacture and to ship medical equipment than it was in the past, and this added expense gets passed on to the customer. 

Higher Cost of Doing Business in Nigeria

The majority of medical equipment in Nigeria is sold through licensed local resellers and distributors rather than directly by the manufacturers. And, of course, these resellers need to add their own margins to the overall prices of the equipment they sell. In the past couple of years, the cost of doing business in Nigeria has increased (see factor 1), and local medical equipment sellers have needed to raise their prices as a result.  

A few days ago, I discussed the prevalence of hypertension in Lagos. However, hypertension isn't the only lifestyle disease on the rise. Across the continent, we are seeing an increase in a wide range of noncommunicable diseases, including diabetes, cancer, and heart and lung diseases. While there are many different causes of lifestyle diseases, physical inactivity, tobacco use, excessive alcohol consumption, and unhealthy diets are all big risk factors.

Here are a few ways our health systems should prepare.

Raise Awareness via Public Health Campaigns

Despite the increasing incidences of lifestyle diseases, public awareness about these diseases and how to prevent them remains low. Our health systems should initiate (or ramp up) public health campaigns to sensitize the general public and clinician communities on the prevention, diagnosis, and treatment of these diseases.

Restructure Primary Care

Our primary healthcare systems were historically designed to treat infectious diseases, like malaria and tuberculosis, and keep moms and babies healthy. While those remain important pillars of primary care, we now need to incorporate a lot more preventive health services into our primary care systems. Without robust prevention and screening tools, lifestyle diseases can go undiagnosed in the early stages, resulting in poorer health outcomes and more expensive overall treatment costs.

Create Better Access to Diagnostics and Treatment Options

Even with the best preventive care, not all lifestyle diseases can be avoided. In many cases, diagnosing lifestyle diseases requires access to capital-intensive diagnostics, such as x-ray, CT, ultrasound, and laboratory equipment. And some treatment options, like radiotherapy cancer treatment, require expensive equipment and care. Improving nationwide access to diagnostics can aid in early detection, while investment in specialized treatment centers can expand the options for those already diagnosed with noncommunicable diseases.

Nigeria healthcare has a massive brain drain problem.

Here are 4 simple (but not necessarily easy) ideas that could lessen its impacts on our health systems.

1. Train more health professionals

We need to accept the simple truth that a good percentage of our health professionals are going to leave. One way to mitigate the impact of clinician emigration is to increase the size of the funnel by training more clinicians across the board. Not all of our clinicians will leave, and even those who do typically need a few years of work experience locally before they can emigrate.

To grow the number of clinicians practicing in Nigeria, we should expand the size of existing medical training programs in universities, help launch new ones targeting disciplines with global demand, and make it easier for foreign-trained clinicians to train and practice in Nigeria. 

2. Task shifting

Despite the exodus, the burden of providing care to millions of Nigerians is still increasing. Yet, the pool of available clinicians to provide that care is dwindling. Therefore, we should look for creative ways to redistribute tasks (where appropriate) from the clinicians we have the fewest of (namely, medical doctors and specialists) to other health workers. For example, some primary care functions can be provided by nurses rather than doctors.  

There is of course a political pushback to this as many disciplines don't want any of their functions delegated to others. Whether we like it or not, task shifting will happen, either as a result of careful planning or just because there isn’t anyone else to do the work. I’d prefer the former option.

3. Develop a pipeline for experienced health professionals in the diaspora to come back

Around the world, there are thousands of experienced and highly-qualified Nigerian clinicians at the top of their fields. Many of these clinicians would love to contribute back to the motherland and many already do in their personal capacities. We should create more formalized programs for highly-qualified Nigerian clinicians in the diaspora to provide care and upskill others within our health systems. 

4. Treat health professionals better

The Nigerian health system really needs to treat its health workers better. In many states, health workers can go unpaid for months at a time and are still expected to show up and give their best at work day in and day out. While Nigerian health systems may not be able to pay the highest salaries, the least we should do is create an enabling work environment for our clinicians and pay their salaries on time while they are still here. 

Treating our health workers better may not prevent clinicians from leaving altogether, but it can extend the amount of time that clinicians spend working in Nigeria by making it easier for them to provide for themselves and their families.

When we informed different “health experts” that we were pivoting from a medical equipment supplier to a diagnostic service provider, the feedback we got wasn’t very positive: “Building diagnostic centers is too capital intensive,” “you don’t have enough experience,” “you won’t be able to get VC investment for brick-and-mortar retail healthcare”.

Looking back, I have to admit that there was some truth in that feedback, but I am so grateful that we didn’t let these comments deter us. Today, we have successfully scaled from operating just one diagnostic location in 2018 to 15 locations in 2022, and we are on track to become one of the largest diagnostics providers in the country.

Today, I will share some tips that have helped me scale my healthcare infrastructure startup in Nigeria. 

1. Understand the local health system in which you are building

Since the majority of healthcare is coordinated at the state level, Nigeria actually has 36 independent health systems of varying robustness and with diverse needs. Before entering into a new state, spend time researching the peculiarities of its health system so you can tailor the services you provide to the area’s specific needs.  

2. Find the best location you can afford

Just like in regular retail, where you locate your health facility matters a whole lot. In most cities, there are certain neighborhoods where most of the health facilities in the town are clustered. That is usually the best place to locate a new physical location. 

3. Work with and learn from locals

It is important to learn from folks who have years of experience working within the local health system to understand what the gaps are and how your solution is positioned to solve them. For us, this involves hiring local clinicians as much as possible. For all administrative positions, we prioritize hiring from the local community. 

4. Find a local champion with the clinician community

Local clinician networks are often close knit and very distrustful of outsiders. It is important to find a local champion in the clinician community  who can become an advocate for your work early on. Your local champion will be someone who believes in the work you are doing and can gain support within their immediate network. This accelerates trust building with the local clinician community.

Starting a new company is almost always really tough. Fortunately, there are three exciting trends that make right now a great time to innovate in Nigerian healthcare.

Increasing private investment in healthcare

Nigeria, like many other African countries, is currently going through a tough time economically. The ability of the government to fund its various healthcare priorities is reducing due to economic headwinds. But with these gaps come great opportunities for private sector innovation and investment in healthcare. In recent years, there has been an increase in private sector investment to fill critical healthcare gaps, which is great news for founders working in the space!

Many new opportunities due to changing healthcare needs of the population

Historically, healthcare in Nigeria has focused on treating infectious diseases and reducing maternal and child mortality. With the rise of lifestyle diseases, like cancers, heart disease, and diabetes, healthcare needs are quickly evolving beyond what the existing healthcare systems were built for. At the same time, the population of the continent is exploding, and existing healthcare providers simply cannot keep pace. As a result, there is a massive opportunity to build modern, high-impact healthcare products and services for a growing population of Africans with changing health needs. 

Willing government partners

Back in the day, healthcare was considered to be solidly and completely within the government’s realm. However, given the current state of government coffers, both the federal and state governments are increasingly open to partnering with NGOs and private health organizations. This is great news for new companies in the sector as working with government partners can help you get around some of the challenges of fragmentation in the sector and reach more patients faster.

When I meet relatively new founders in the healthtech space, one common question I get is, "What do I need in order to fundraise for my healthcare startup"? Over the past five years, MDaaS has raised over $4M in grants, equity, and debt investments; here are the top four things that have helped us raise money. 

A promising product or service

Have a product or service that solves an important enough problem that someone is willing to pay for it. And in healthcare, the beneficiary isn’t necessarily the payer. At the early stages, you might not have a lot of customers yet, but you should be able to show the potential of your product either via extensive market research, early traction from users, or a pilot that shows that someone is willing to pay.

Clear and concise fundraising materials

To convince potential investors of a promising product or service, you need to create a set of documents that includes things like your pitch deck, business plan, financial models, and historical financials. You might also need to provide documentation showing regulatory approvals, market information, technology stack, and others, depending on your business type and stage.

Your fundraising documents should demonstrate your understanding of the market, clearly articulate your business model, and communicate your unique value propositions through a compelling narrative.

Team credibility

Ideas are a dime a dozen; execution is king. Investors want to know that they are backing a team that can execute the vision. At the earliest stage, team is often the biggest factor for investors. Build a team that is passionate about the problem, has complementary and relevant skill sets, and has the grit to persevere when things get tough.

A supportive network

Even though it might seem unfair, having the right connections to the right people really helps in fundraising. If you are still early-stage without a lot of connections in the space, joining an accelerator or an incubator can be a great way to gain access to investor networks. You can also join founder groups and professional platforms and attend conferences and other events to broaden your network. As an entrepreneur, you have to be intentional about building a professional network around you that can support you during the different stages of your startup journey.