The Structure Of Nigeria’s Home Healthcare Industry

The promoters of home healthcare businesses may lose new customers and market share if they don’t understand the structure of Nigeria’s home healthcare industry.

In this article, I explained what public health is and how home healthcare is a part of it.

Also, I highlighted the factors used to measure the industry and linked them to its entry barriers.

I concluded the piece by pointing out how to exploit the opportunities in the industry.

You will often hear policymakers and healthcare workers talk about levels in the health sector. Nigeria has three healthcare sub-sectors::

1. Primary healthcare.
2. Secondary healthcare.
3. Tertiary healthcare.

As you know, home healthcare is an aspect of primary healthcare.

I will provide a background to primary healthcare to help you understand what home healthcare is. 

What is Primary Health?

The World Health Organization (WHO) made a declaration in 1978 on global health known as the Almaty Declaration. The WHO called for urgent and effective national and international action to develop and implement primary healthcare worldwide.  

Below is the basic overview of the Almaty Declaration:

All people, everywhere, deserve the right care, right in their community. This is the fundamental premise of primary health care.

Primary health care (PHC) addresses most of a person’s health needs throughout their lifetime. This includes physical, mental and social well-being and is people-centred rather than disease-centred. PHC is a whole-of-society approach that includes health promotion, disease prevention, treatment, rehabilitation and palliative care.

A primary health care approach includes three components:

• Meeting people’s health needs throughout their lives;
• Addressing the broader determinants of health through multisectoral policy and action; and
• Empowering individuals, families and communities to take charge of their health.

By providing care in the community as well as care through the community, PHC addresses not only individual and family health needs but also the broader issue of public health and the needs of defined populations.

The Eight Components of Primary Healthcare

The declaration also defined eight essential components of primary health care, which helped outline the means of providing health care globally. They are:

1. Public education.
2. Proper nutrition.
3. Clean water and sanitation.
4. Maternal and child healthcare.
5. Immunization.
6. Local disease control.
7. Accessible treatment.
8. Drug provision.

Public education

Public education is the first, and one of the most essential, components of primary health care. By educating the public on the prevention and control of health problems, and encouraging participation, the World Health Organization works to keep diseases from spreading on a personal level.

Proper nutrition

Nutrition is another essential component of health care. The WHO works to prevent malnutrition and starvation and prevent many diseases and afflictions.

Clean water and sanitation

A supply of clean, safe drinking water and basic sanitation measures regarding trash, sewage and water cleanliness can significantly improve the health of a population, reducing and even eliminating many preventable diseases.

Maternal and child healthcare

Ensuring comprehensive and adequate healthcare to children and mothers, both expecting and otherwise, is another essential element of primary health care. By caring for those who are at the greatest risk of health problems, WHO helps future generations thrive and contribute globally. Sometimes, care for these individuals involves adequate counselling on family planning and safe sex.

Immunization

By administering global immunizations, WHO works to wipe out major infectious diseases, improving overall health globally.

Local disease control

Prevention and control of local diseases are critical to promoting primary health care in a population. Many diseases vary based on location. Taking these diseases into account and starting measures to prevent them are key factors in efforts to reduce infection rates.

Accessible treatment

Another important component of primary health care is access to appropriate medical care to treat diseases and injuries. By treating disease and injury right away, caregivers can help avoid complications and the expense of later, more extensive, medical treatment.

Drug provision

By providing essential drugs to those who need them, such as antibiotics for those with infections, caregivers can help prevent the disease from escalating. This makes the community safer, as there is less chance for diseases to be passed along.

What is Home Healthcare?

Medicare.Gov defines home healthcare as a wide range of health care services you receive in your home for an illness or injury. 

Home health care is usually less expensive, more convenient, and just as effective as care you get in a hospital or skilled nursing facility (SNF). 

The goal of home healthcare is to treat an illness or injury. Home healthcare helps you:

• Get better
• Regain your independence
• Become as self-sufficient as possible
• Maintain your current condition or level of function
• Slow decline

What is The Structure of Nigeria’s Home Healthcare Industry?

 

 

One of the basic tenets of economic theory is that society is better when industries are very competitive and when there are large numbers of firms operating in an industry. When the products and services that these firms sell are like each other, and when it is not very costly for firms to enter or exit these industries.

In this context, I will use the following factors to measure the structure of Nigeria’s home healthcare industry:

1. The number of competing firms.
2. Homogeneity of products and services.
3. Cost of entry and exit.

#1. The number of competing companies

According to the Corporate Affairs Commission (CAC), Nigeria had 3.1 million registered companies by March 2019. However, the commission did not provide specific numbers by industry and sector. However, I can tell you that several home healthcare companies are operating in the industry. 

Companies like Healy Nursing Services and Clafiya are a few of the new entrants into the industry. 

#2. Homogeneity of products and services

From an outside perspective, home healthcare services appear to be homogeneous. However, there are different aspects and fundamental differences in the service.

The range of home health care services a patient can receive at home is limitless. Depending on the individual patient’s situation, care can range from nursing care to specialised medical services, such as laboratory workups. 

#3. Cost of entry and exit

Opportunities and the profits made by incumbent companies motivate new ones to enter an industry. These new firms increase the industry competition and reduce the performance of incumbent firms.

The cost of entry depends on the existence and height of the barriers to entry. And for the sake of brevity, I will list the barriers to entry into Nigeria’s home healthcare industry:

1. Economies of scale.
2. Service differentiation.
3. Cost advantages independent of scale.
4. Government regulation of entry.

Economies of scale

Economies of scale exist when companies’ costs fall as a function of their volume of service production. As these companies’ volume of services increases, their costs fall. 

Service differentiation

With service differentiation, companies possess brand identification and customer loyalty that potential entrants do not have.

Cost advantages independent of scale

Besides the barriers that I have cited, companies may have a few cost advantages, independent of economies of scale, compared to new entrants. These cost advantages may include (1) propriety technology, (2) managerial know-how, and (3) learning-curve cost advantages.

(1) Propriety technology: If an incumbent company in Nigeria’s home healthcare industry has propriety (i.e., secret or patented), it gives them important cost advantages over potential entrants.

To enter the industry, potential entrants must develop their own substitute technologies or run the risk or run the risks of copying incumbents’ patented technologies. Both of these activities can be costly.

(2) Managerial know-how: It is the often-taken-for-granted knowledge and information that are needed to compete in the home healthcare industry on a day-to-day basis. Know-how includes information that it has taken years, sometimes decades, for a company to accumulate that enables it to interact with patients and other registered medical practitioners (RMPs), to be innovative and creative, to provide quality services, and so forth.

Typically, new entrants will not have access to this know-how, and it will often be costly for them to build quickly.

(3) Learning-curve cost advantages: As with other sectors and industries, the cost of providing home healthcare services falls with an increasing volume of patients. Over time, incumbent companies gain experience in providing home care services and their costs fall below those of potential entrants. Potential entrants, in this context, must endure substantially higher costs while they gain experience. Thus, potential entrants may not enter the industry despite the superior profits being earned by incumbent companies.

Government regulation of entry

Governments, for their reasons, may decide to increase the cost of entry into an industry. This occurs most frequently when a company operates as a government-regulated monopoly. In this setting, the government has concluded that it is in a better position to ensure that it made specific services available to the population at reasonable prices.

Conclusion

There are many generic industry structures. However, Nigeria’s home healthcare industry is fragmented.

Fragmented industries are industries in which many small or medium-sized companies operate and no small set of companies has a dominant share or creates dominant technologies.

The major opportunity facing companies in a fragmented industry is the implementation of strategies that merge the industry into a smaller number of companies.

Finally, companies that are successful in implementing this consolidation strategy can become industry leaders and get the benefits of these efforts if they exist.