The 3 challenges Mexican health entrepreneurs should work to solve

Low-income patients in Mexico suffer from a greater percentage of preventable chronic diseases than most other countries. Village Capital seeks entrepreneurs who, through education or treatment, can mitigate chronic illness.

By Daniel Cossío and Amanda Jacobson

In Mexico, one in three children is either obese or overweight, one in six adults suffer from diabetes, and at least half of the total population does not have access to affordable healthcare services at all, according to the OECD.

Problems like these have led to improvements in the nation’s health coverage, like the creation of public programs and institutions such as Mexican Social Security Institute (IMSS) in 1940, Institute for Social Security and Services for State Workers (ISSSTE) in 1960, and most recently Seguro Popular in 2004. Collectively, these entities provide public health insurance and medical attention to at least 60 million Mexicans. Only about 8% of Mexicans have private health insurance, which results in a total of about 70 million Mexicans with coverage.

In a country of over 122 million people, how is the other half of the population ever going to afford the medical attention they need?

How will Mexicans pay for regular check-ups with a minimum wage below $140 USD a month (and that’s just for formal laborers)? Are clinics and hospitals equipped with adequate technology and devices to serve their patients? How much is it going to cost the public sector to attend to patients with diabetes, cardiovascular problems, and other non-communicable diseases? How can we prevent those conditions and diseases?

These are real problems for all Mexicans, but entrepreneurs can do something about them.

Village Capital finds, trains, and invests in entrepreneurs solving real-world problems, just like these ones in health. We build communities around entrepreneurs and their ventures to improve opportunities for growth and success. Over the last 7 years, we have trained over 500 entrepreneurs across the world through over 40 programs.

And now, after two successful financial inclusion programs in Mexico and several programs specialized for health IT and device ventures in the US, we are excited to collaborate with the Autodesk Foundation to find and support Mexican entrepreneurs tackling the greatest health challenges in the country, with an emphasis on design for impact.

“We lack insurance options for people with chronic degenerative diseases; and moreover, we need to work on prevention mechanisms.” — Marivi González, Adobe Capital

On August 23, we convened 19 health experts, entrepreneurs, institutions, investors and other key players in Mexico City to join us for the first ever Village Capital Health: Mexico Roundtable.

During the Roundtable, experts like Nalleli García (MetLife Foundation), Rodolfo Medrano (ProMujer), and Rebeca Sáenz (Alianza Médica para la Salud (AMSA)) shared their insights on what entrepreneurs and other existing health institutions should do to strengthen the healthcare sector in Mexico.

Each participant came up with what they considered the number one issue to be solved in Mexico. Alonso Gómez of the International Finance Corporation (IFC) of the World Bank Group explained, “The lack of coordination within public institutions leads to an inefficient allocation and distribution of resources. We need to align incentives and create initiatives that include both public and private institutions.” In addition, Maria del Carmen Villafaña of Farmacias Similares’s Fundación BEST added that the sector has serious problems in geographic distribution; many remote communities around the country still lack the basic infrastructure needed for healthcare providers to serve the people.

The conversation continued with an entrepreneurial perspective from Village Capital alumni Santiago Ocejo, Founder of Salud Cercana: “We need clearer regulations. We need coherent laws around primary medical attention, and, of course, clear steps for how to work with the public sector. We need entrepreneurs need to enter the game.” At Village Capital, we couldn’t agree more.

José María Ostos of McKinsey elaborated, “First of all, public and private institutions should provide education on how to prevent health complications; education is a key factor.” He also emphasized that public institutions could better allocate existing resources and take advantage of complementary private services. Regulations should enable private institutions to bring in innovative approaches, both with new products and better methods of data collection.

After discussing the lack of access to affordable healthcare services and products and what the major barriers are, Village Capital and the roundtable participants highlighted three primary concerns and analyzed respective solutions that we hope our first generation of Mexican health entrepreneurs can provide.

1. CULTURE, EDUCATION, AND PREVENTION

Mexico is one of the countries with the highest rate of obesity and is the largest soft-drink consumer in the world. More than 4 million Mexicans suffer from diabetes. It’s one of the top causes of death in the country and of course, the condition and its complications are not cheap to treat. This problem alone costs public institutions an estimated $3.4 billion USD (some $60 billion pesos) per year.

It’s clear that we need to improve the way we educate Mexicans about staying healthy. As is, healthy living is simply absent from primary education. Beyond the the controversial Plato del Bien Comer, we need additional access to nutritional information and affordable systems that help us choose the best alternative for our diet. Without being taught about nutrition in school, what would you choose on your lunch break?

At the same time, healthcare professionals are taught in a highly academic language. Doctors know the benefits of a balanced lunch of poached salmon and low-starch veggies, but they aren’t taught options that are healthy and affordable enough to meet the needs of many of their patients. Overwhelmingly, they aren’t taught how to use simple, accessible language that those visiting their offices can easily understand. Doctors have little time to educate their patients, and are typically taught the reactive practice of treating symptoms with medicine. The incentives just don’t align.

Possible Solutions

1. Implementation of collaborative education models. To start, the Secretary of Public Education (SEP) should integrate health and wellbeing into primary education curriculum, requiring all public schools to teach healthy habits. The public sector could also proactively seek ways to partner with private sector, through public-private partnerships (PPPs) tied to health outcomes. These alliances would emphasize the importance of a health system that understands the needs of the patients, with human-centered design ensuring that technology and devices are easy to use for healthcare professionals and their patients. Fair and transparent tenders would incentivize entrepreneurs to develop and distribute technology and devices with measurable outcomes for the people.
2. Development and implementation of prevention systems. For example, 80 years ago nearly 100,000 people died each year because of tuberculosis and its complications. With important contributions by campaigns designed to create a culture of prevention and detection by the National Institute of Respiratory Illnesses, even with seven times the population, the country’s casualties have decreased by half. What if Televisa wrote just one popular telenovela with a protagonist with asthma or lung cancer, and really delved into their needs and preventative measures? What if Pokemon GO became a tool to encourage physical activity? How can existing businesses and entrepreneurs integrate health into daily life in a fun and engaging way?
3. Capitalizing on the unique vantage point of entrepreneurs. With deep understanding of the healthcare sector and education on new business strategies like human-centered design, entrepreneurs can personalize solutions for healthcare institutions and directly for the patients, across geographies and conditions.

2. INFRASTRUCTURE FOR PUBLIC HEALTHCARE

Decentralization, inefficient administration, and poor working conditions plague public health institutions. Administrators aren’t well trained in best business practices and the existing systems are inefficient. Even when qualified executives take office, they risk losing the role after each six-year political cycle, terminating promising projects in their tracks. Unfortunately, even when the needed resources exist, they often aren’t taken advantage of, and rarely reach remote communities.

Furthermore, healthcare professionals often have to divide their time between the public sector and their private practices, resulting in inefficient schedules, with primary care centers understaffed at times when demand is high. Although things seem to have improved in recent years, private and public institutions still suffer inefficient (arguably, nonexistent) internal and external coordination.

Recently, in states like Coahuila and Oaxaca, a union movement known as #YoSoyMédico17 has led protests and strikes, lobbying the Secretary of Health to update the National Health Law to provide universal health coverage and to improve working conditions for healthcare professionals. In particular, professionals working in public hospitals are requesting modern equipment that would allow them to do their job more efficiently and effectively. How are healthcare professionals supposed to focus on the patient when they lack the basic materials and conditions to perform their activities?

Possible Solutions

1. Development of new business models to reach and offer specialized healthcare attention in remote, low-income, and otherwise underserved communities.
2. Collaboration of private and public health institutions to best utilize resources. For example, the two sides of the sector can share best practices in medical training, facilities, and data to best use resources. Mexican institutions need to explore models for collaboration, then regulate processes that incentivize for collaboration.
3. Creation of initiatives focused on current problems and desired outcomes, like public private partnerships (PPPs) and impact bonds.

3. FINANCING AND INSURANCE

Entrepreneurs and experts agree that there is a mismatch between financial products and services available in the market and the healthcare needs of the people. Many financial institutions and health organizations have developed products that are either inaccessible to low-income patients or not adjusted to their unique needs. In particular, those with public health insurance have no certainty what their policies cover. Low-income and otherwise uninsured families with public health insurance are thus often forced to deal with health emergencies out-of-pocket.

Possible Solutions

1. Collaboration among entrepreneurs and decision-makers across the public and private sectors for the creation of financial products for low-income, thin-file, and uninsured clients. Regulators don’t know how to classify innovative financial products and financial institutions are weary to integrate them. This holds back entrepreneurs, who are slow to make initial sales without support from the right partners, and in turn limits their market reach. Mexico needs institutions that are willing to test and iterate on new financial products that meet the population’s needs.
2. Data collection on habits for loan repayment, savings, and insurance use. The industry, and especially entrepreneurs, lack comprehensive data on Mexicans’ financial activities and how those behaviors interact with various health needs, from primary care to maintenance of chronic conditions. How many people suffer from a given illness? Is there a way to forecast and track its progress, complications or improvements, to understand what sort of financial resources will be needed at a given phase? What is the best way to finance overdue, expected, and future unexpected expenses?
3. Establishment of a central regulatory entity that facilitates innovation and cooperation among health institutions, experts, entrepreneurs, and leaders to enable new financial products. We must re-think who needs to be in this conversation, who will take part in the change of the industry as we know it, and besides governmental entities (such as COFEPRIS, Mexican Social Security Institute or Secretary of Health), we should consider which authorities will encourage progress and cooperation between the parties.

Village Capital and Autodesk Foundation are committed to finding entrepreneurs with the best solutions to these real healthcare challenges in Mexico.

After identifying and analyzing these three major problems during the Roundtable, Village Capital and Autodesk Foundation are ready invite entrepreneurs to find solutions to Mexico’s health challenges. The following problem statement will guide our efforts to find, train, and invest in ventures with solutions to improve the lives of Mexicans who lack access to quality, affordable medical attention today :

In Mexico, demand for healthcare services exceeds supply across the board, with disproportionate need in rural communities. Chronic conditions have become a challenge nation-wide: 75% of all deaths in Mexico are caused by non-communicable diseases. Even with the launch of government insurance programs like Seguro Popular (“Popular Insurance”), nearly half of the 122 million Mexicans still have to pay completely out-of-pocket. Mexico currently lacks the infrastructure to address these problems: The health sector faces inefficient resource allocation, opaque and nonexistent regulations, insufficient data, and a lack of communication between private and public institutions. That means there are millions of Mexicans without access to the services they need to prevent, detect, and treat illnesses. Ultimately, it’s the patients that literally feel the pain of these challenges.

The healthcare challenges in Mexico can have devastating effects on the people, not merely health-wise, but can also have an adverse effect on the economy and economic growth of the country. A healthy workforce means less sick days and increased productivity. That is why we are committed to launching the first ever Village Capital Health: Mexico program and seek health entrepreneurs with market-based solutions that:

• Leverage affordable technology, devices, and services to detect, diagnose, and treat individuals’ unique health conditions, especially for those in remote and low-income communities;
• Educate and inform Mexicans on how to prevent, detect, and address health conditions early, and help health professionals to better communicate with their patients;
• Collect data and facilitate communication and collaboration between actors in the health system to enable greater efficiency and better health outcomes for patients; and
• Address financial access to health through savings, credit, and insurance products that decrease excessive out-of-pocket expenditures.

The Village Capital Health: Mexico program will deliver Village Capital’s award-winning process, centered around personalized content and peer-learning. At the end of the program, participating entrepreneurs will rank each other to choose the top two companies solving major problems in access to healthcare in Mexico. These two peer-selected companies will be offered $75,000 USD investment each, from VilCap Investments and co-investor Pomona Impact.

We are grateful to have this select group of experts, entrepreneurs, investors and institutions join the Village Capital community to help us envision how we can improve the way Mexicans access affordable healthcare.

What’s next?

Now the real challenge begins. It’s time to seek out early-stage ventures to apply and participate in the first Village Capital Health: Mexico cohort, as well as key actors and decision-makers in the sector to foster solutions for these major challenges as mentors. During the three-month program, we will support the top 10 applicants with an award-winning program curriculum and targeted introductions to potential customers, partners, and investors to help them improve their business models and provide opportunities for investment capital.

Do you know any early-stage venture that is currently solving these challenges in Mexico? Who else should be involved in the discussion? Please reach out to Daniel Cossío at daniel.cossio@vilcap.com and let us know who are the leading entrepreneurs and experts changing the health sector.

Think we’re missing a key problem or solution? We would love to hear from you! Please leave your comments below. Let’s keep the conversation going beyond the Roundtable.

A special thank you to the first Village Capital Health: Mexico Roundtable participants:

• Alejandro Hollan, Hospital Escandón
• Alonso Gómez, International Finance Corporation (IFC)
• Cynthia Torres, Endeavor
• Daphne S. Leger, salauno
• Enrique Bay, KIWI
• Federico Olea, Angel Ventures
• José María Ostos, McKinsey & Company
• Katia Dumont, Aspen Network of Development Entrepreneurs (ANDE)
• Lisa Ramón, ProMujer
• Luis Royero Meneses, Hacking Health
• Maria del Carmen Villafaña, Fundación BEST de Farmacias Similares
• Marivi González, Adobe Capital
• Nalleli García, Fundación MetLife
• Rebeca Sáenz, Alianza Médica para la Salud (AMSA)
• Rodolfo Dieck, Promotora Social México (PSM)
• Rodolfo Medrano, ProMujer
• Santiago Ocejo, Salud Cercana
• Sofía Garrido, ALL Venture Partners (ALLVP)
• Tania Rodríguez Riestra, CO_ Plataforma