As a health innovator, it is not enough to create a great health product or service that solves a need for your customers, community, and health system. It is also important for you to capture some value via reimbursements to create a sustainable business and keep the flywheel of innovation spinning. Unfortunately, this is not always easy.

Below are the major payment channels you can explore as a health business. Three channels are covered below, and I’ll see you back here tomorrow for the next four!

Out-of-Pocket Customers

It is a simple fee for services rendered paid by the customer.

Pros: It is the least complicated channel. You own the relationships with your customers and can provide ongoing care and new services to them over time.

Cons: The cost of customer acquisition is typically high. Also, many Nigerians have little discretionary funds available, so you need to solve a critical problem for your customers, and the amount you can charge will be capped by what your target customers can afford to pay.

Health Insurance (via HMOs or Government backed Schemes)

These are bulk payments made by health insurance providers on behalf of their beneficiaries for services rendered over a period of time.

Pros: You will have access to a large pool of insured patients, so there is no need to acquire each individual customer.

Cons: HMO services are discounted, and you will need to go through the insurance providers’ claims processes. Payments are usually made 30-60 days after services are rendered, and there is always the possibility that HMOs may dispute the fees charged and/or delay payments.

Corporates

These are payments made by businesses on behalf of their employees.

Pros: Corporates and businesses typically pay faster than HMOs and at higher reimbursement rates. And, like the health insurance channel, you also do not need to acquire each individual patient.

Cons: Signing corporate deals is highly competitive and mostly based on price; with many competitors vying for corporate business at similar price points, you will need to differentiate your services in order to win and keep these types of deals. This channel also tends to have long lead cycles.

That’s all for today. Tomorrow, we’ll go through the other 4 payment channels.