Digital transformation of healthcare services in developing countries

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DEGREE PROJECT INDUSTRIAL MANAGEMENT,

SECOND CYCLE, 30 CREDITS STOCKHOLM SWEDEN 2020,

Digital transformation of

healthcare services in developing countries

An exploratory research of healthtech opportunities in Bottom of the Pyramid (BOP) markets

AMANDA RUNDQVIST AMANDA VON SCHINKEL

KTH ROYAL INSTITUTE OF TECHNOLOGY

SCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT

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Digital transformation of healthcare services in developing countries

An exploratory research of healthtech opportunities in Bottom of the Pyramid (BOP) markets

by

Amanda Rundqvist Amanda von Schinkel

Master of Science Thesis TRITA-ITM-EX 2020:211 KTH Industrial Engineering and Management

Industrial Management SE-100 44 STOCKHOLM

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Digital transformation av sjukvårdstjänster i utvecklingsländer

En utforskande studie av digitala vårdtjänsters möjligheter i Bottom of the Pyramid (BOP) marknader

av

Amanda Rundqvist Amanda von Schinkel

Examensarbete TRITA-ITM-EX 2020:211 KTH Industriell teknik och management

Industriell ekonomi och organisation SE-100 44 STOCKHOLM

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4 Abstract

The development of new technologies within healthcare open up for important and valuable opportunities for businesses as well as for individuals. Mobile health is one of the most important digital innovation, since patients get the opportunities to self-manage diseases and to receive healthcare services from specialists wherever and whenever. It has already been established in some developed countries, where the technology has, for instance, improved health research among populations and reduced healthcare costs. Currently, it is under investigation if there are also implementation possibilities in developing countries. They are defined as countries with poor infrastructure and decent economic activity, meaning a high number of people live with low income and they tend to have less access to health services than the ones in developed countries. The Bottom of the Pyramid (BOP) refers to the poorest of the economic human pyramid, where almost all of them live in developing countries.

In order to enter a BOP market, it is beneficial for businesses to use the 4A:s (awareness, access, affordability, and availability) as a framework.

The report aims to investigate if MedTech companies from developed countries can improve access, awareness, availability, and affordability to reliable healthcare in developing countries. It is referring to the BOP due to the focus on an innovation’s (i.e., MedTech app) growth opportunities in developing countries. The report is considered as an exploratory research, undertaking an inductive approach, since it exists limited written resources about the subject. The information has been gathered through primary- and secondary sources.

The report’s findings raise the low digital awareness as a threat that could harm the development of new digital innovations in developing countries. By taking use of local collaborations and partnerships, it will develop understandings of the populations’ needs and behaviors, which is a benefit to be able to reach the users’ attention. The telecommunication industries’ growth and the increase of mobile users proves the populations are eager to embrace new digital innovations, meaning the initiative might be right in time. Additionally, the findings concern the limited access to healthcare and currently, the local care is of low quality. The doctors and nurses have limited knowledge and the hospitals are not keeping up with technology, which leads to that the citizens are seeking healthcare outside their own country.

However, it could be perceived as a benefit when implementing a new MedTech service, since it does not exist any advanced systems that have to be changed or shut down.

Moreover, to ensure the populations will be able to use digital healthcare services, it is important to keep the service affordable. By being supported with correct treatments, and recommendations, it would not be necessary to visit a doctor several times and, therefore, it could also decrease the patient's’

healthcare costs. Finally, digital healthcare services enable for patients to interact with foreign doctors wherever and whenever, which would increase the availability of healthcare services in developing countries.

Master of Science Thesis TRITA-ITM-EX 2020:211

Digital transformation of healthcare services in developing countries

Amanda Rundqvist Amanda von Schinkel

Approved

2020-06-08

Examiner

Niklas Arvidsson

Supervisor

Milan Jocevski

Commissioner

N/A

Contact person

N/A

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5 Sammanfattning

Den ständiga utvecklingen av nya teknologier inom sjukvården öppnar upp för värdefulla möjligheter för företag samt individer. Mobil sjukvård är en av de viktigaste digitala innovationerna då det ger patienter möjlighet att själva hantera sjukdomar och har tillgång till specialistvård närhelst och varhelst. Detta har redan etablerats i ett antal utvecklade länder, där teknologin dels har förbättrat forskningen inom hälsa och dels minskat på sjukvårdskostnader. För tillfället undersöks även möjligheten för implementation av digitala sjukvårdstjänster i utvecklingsländer. De definieras som länder med outvecklad infrastruktur och svag ekonomisk tillväxt, vilket betyder att en stor del av befolkningen lever med låg inkomst och det finns inte samma tillgång till sjukvård som i utvecklade länder. The Bottom of the Pyramid (BOP) hänvisar till de fattigaste i den ekonomiska pyramiden där majoriteten av dem lever i utvecklingsländer. För att ta sig in i en BOP marknad, är det

rekommenderat för företag att använda sig av ramverket “the 4As” (awareness, access, affordability, and availability).

Syftet med rapporten är att undersöka om MedTech företag i utvecklade länder kan förbättra “the 4As”

inflytande på tillförlitlig sjukvård i utvecklingsländer. Den hänvisar till BOP på grund av att fokus är på innovationens (dvs. MedTech applikation) tillväxtmöjligheter i utvecklingsländer. Rapporten betraktas som en utforskande studie och åtar en induktiv strategi med tanke på att det finns begränsat med information om ämnet. Underlaget för rapporten har samlats in via primära - och sekundära källor.

Rapportens resultat visar på att den låga digitala medvetenheten skulle kunna begränsa utvecklingen av nya digitala innovationer i utvecklingsländer. Genom att etablera lokala partnerskap och samarbeten, kan en förståelse för befolkningens behov samt beteenden utvecklas, vilket är en enorm fördel för att få deras uppmärksamhet. Dessutom växer telekommunikationsindustrin och mobilanvändandet bland befolkningen ökar, vilket visar på att en digital nyfikenhet finns. Detta innebär i sin tur att det skulle kunna var helt rätt i tid för en etablering av digitala sjukvårdstjänster. Utöver det visar undersökningar på att tillgången till sjukvård för tillfället är begränsad och den lokala vården är av låg kvalité. Läkare och annan sjukvårdspersonal saknar ofta fullständig utbildning, vilket leder till att befolkningen söker sjukvård i andra länder. Avsaknaden av teknologi kan däremot uppfattas som en fördel vid en eventuell implementation av en ny MedTech-tjänst då det inte finns några avancerade system som måste ändras eller stängas ner.

För att säkerställa att befolkningen kommer kunna använda sig av digitala sjukvårdstjänster är det viktigt att tjänsten uppfyller befolkningens ekonomiska möjligheter och är prisvärd. Genom att få tillgång till rätt behandling och rekommendationer direkt, behövs inte lika många besök hos läkaren och sjukvårdskostnader kan minska. Slutligen möjliggör digitala sjukvårdstjänster för globala interaktioner med läkare och specialister, vilket skulle kunna öka tillgången och tillgängligheten till sjukvård i utvecklingsländer.

Examensarbete TRITA-ITM-EX 2020:211

Digital transformation av digitala sjukvårdstjänster i utvecklingsländer

Amanda Rundqvist Amanda von Schinkel

Godkänt

2020-06-08

Examinator

Niklas Arvidsson

Handledare

Milan Jocevski

Uppdragsgivare

N/A

Kontaktperson

N/A

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List of Figures

Figure 1: Diffusion of innovation (Rogers 2003) 23

Figure 2: Innovation Process Model (Tidd & Bessant, 2013) 24

Figure 3: Research process 27

Figure 4: Mapping of stakeholders 32

Figure 5: Process for registration (PharmAccess Foundation, 2015) 47 Figure 6: Number of internet users in Nigeria from 2017 to 2023 (Statista, 2020) 48

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List of Tables

Table 1: Disposition of the report 15

Table 2: Representation of interviewees 33

Table 3: Examples of secondary sources 35

Table 4: Internet usage and population growth in Angola (Internet World Stats, 2019) 44

Table 5: RQ1 summary (Awareness & Access) 64

Table 6: RQ1 summary (Affordability & Availability) 65

Table 7: RQ2 summary – Focus areas 68

Table 8: RQ2 summary - Appropriate models 69

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Abbreviations

BOP Bottom of the Pyramid

RQ Research question

Ch Chapter

The 4As Awareness, Access, Affordability and Availability

MedTech Medical Technology

Healthtech Healthcare Technology

mHealth Mobile Health

eHealth Information and communication technologies in healthcare SDG Sustainable Development Goals

IHIS Integrated Health Information System GSB General State Budget

NHIS National Health Insurance Scheme

LGA Local Government Areas

NCH National Council of Health

HPCC Health Partners Coordinating Committee CITA Companies Income Tax Act

NCC Nigerian Communications Commission BBC British Broadcasting Corporation

SNG Shell Nigeria Gas

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Foreword

This is a Master Thesis within Industrial Engineering and Management, performed at the Royal Institute of Technology (KTH) in Stockholm. In this section we would like to thank the people who have influenced, helped, and inspired us during the report’s development.

Firstly, we would like to acknowledge Thomas Ehrengren and Christian Tärnholm at Medicheck for providing us with this Master Thesis opportunity. We are grateful for you having us and for guiding and encouraging us throughout the journey. Secondly, we would like to thank our supervisor at KTH, Milan Jocevski, for delivering insights and support that have been valuable in order to continually improving the report. Thank you for challenging our thoughts, and ideas, it opened up for taking new perspectives into account. Thirdly, we would like to thank our Prof. Cali Nuur and classmates for participating in seminars where we could deliver and receive feedback during the way. Many thanks for listening to our presentations and for the engagement afterward. The advice and recommendations we have received during the seminars have helped us to generate a greater report. Finally, we would like to acknowledge all the participants in the performed interviews. The different expertise and knowledge have created and formed the report’s results and analysis. It has been interesting and inspiring to talk to people with such high competencies and it would not have been possible to generate this report without all of you.

Thank you!

June 2020 Stockholm, Amanda and Amanda

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1. Introduction

The chapter presents the background of the investigation, problem definition, purpose, research questions, and delimitations. The chapter ends with a disposition of the report, which provide the reader with an overview of the content of each chapter.

1.1 Background

The mobile phone is a popular technology innovation and is used by approximately 3.6 billion people in the world (Gogging, 2006). Today, the mobile phone is not only used for phone calls or messaging, since it has become a culture and an important factor in the population’s daily lives (Gogging, 2006). The technology has enabled the citizens to perform other activities, such as; shopping online, watching programs, and using social media at any time. Hence, it has opened up for new opportunities, which has contributed to the constant development of new, digital solutions (Gogging, 2006). Digital healthcare is a new technology used by a vast amount of people in the world (Kumar et.al., 2013), where Mobile health (mHealth) is one of the innovations. It gives people the possibility to self-manage diseases and to contact a doctor wherever and whenever. Further, it has improved health research and reduced healthcare costs (Kumar et.al., 2013). Therefore, digital health services have been requested in developed countries and the healthcare sector has optimized the use of them. It makes it possible to reach out to more patients and to provide them with faster care and treatments. (Rivas and Wack, 2018)

The number of people using digital health services is constantly rising due to the technology’s benefits to patients (Safavi and Kalis, 2018). It is also noticed that patients of all ages are interested in using them, since information regarding diseases and medicines can be provided without visiting a doctor. It saves time and energy for the patient (Safavi and Kalis, 2018).

Moreover, the digital healthcare services are not only a benefit for the patients, but also for hospitals and health centers. They become more effective, since doctors are able to provide patients with medical recommendations online, meaning they can treat more people during a day and also focus more on the patients that actually need a physical meeting (WHO, 2019). It would in turn generate reduced care queues, costs and more time can be spent on practices and research (WHO, 2019).

The technology is already established and well working in some countries and it is currently under investigation if there are possibilities for implementation in developing countries, since several of them are in high need of improvements in the healthcare sector (WHO, 2019).

Moreover, a developing country is defined as a country with decent economic activity and a high number of people living with low income (Cambridge dictionary, n.d.). The Bottom of the Pyramid (BOP) refers to the poorest of the economic human pyramid, where almost all of them live in developing countries (Kirchgeorg and Winn, 2014). A helpful framework for companies to use to tackle a BOP market is the 4As. The 4As framework consists of;

awareness, access, affordability, and availability (Prahalad, 2011). The people in developing countries tend to have less access to health services than the ones in developed countries (Peters

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13 et.al., 2008). The awareness and availability to healthcare barely exist and it is far to travel to a hospital and the right care or treatment may not be available (Peters et.al., 2008; O’Donell, 2007). In addition, a major problem is the access to effective and high-quality healthcare, since local doctors are lacking knowledge and they deliver wrong recommendations and diagnoses (O’Donell, 2007). Additionally, the lack of resources and medicines contributes to poor effectiveness, and treatment costs become high due to charges and travels to hospitals.

Therefore, people living in poverty do not use health services even though they need it (O’Donell, 2007).

Sweden is one of the leading countries regarding digital services within healthcare (McKinsey, 2016). Treatment demanding diseases are growing as the population increases and therefore, it is important to improve the healthcare sector by increasing efficiency. Medical technology, also called MedTech, covers the technology that can be used in healthcare and has contributed to several advantages (MedTech Europe, n.d.). For instance, digital solutions enabling online consultation with doctors have contributed to a significant decrease in workload. The opportunity to talk to a specialist online, facilitates for patients that are in need of frequent consultations, for instance, patients with chronic diseases (McKinsey, 2016). However, the possibility to connect with a doctor that can be trusted and deliver correct medicines and treatments is not the same globally. In several developing countries is the population suspicious against the local healthcare services and does not believe that the provided treatments and medicines are reliable (The World Bank, 2019).

1.2 Problem definition

The living conditions in developing countries are radically different from the ones in developed countries. They have basic infrastructure, low incomes and high burden of diseases, which all leads to poverty and misery for millions of people. On top of that, the healthcare is barely accessible, and the majority of the populations do not trust the local services and treatments.

Hence, it is of importance that companies from more developed countries take on actions and provide alternative ways for the citizens to receive the care they need and deserve. Therefore, the research focuses on to investigate if digital healthcare could improve BOP markets current healthcare services by paying attention to the 4As framework (i.e., awareness, access, affordability, and availability). Hopefully, it could generate important impacts on each segment, which in turn could improve the developing countries' overall health status and living conditions.

1.3 Purpose

The purpose of the report is to investigate developed countries’ possibilities to implement digital healthcare services in developing countries.

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1.4 Research questions

RQ1: How could MedTech companies from developed countries improve the access, availability, affordability, and awareness to reliable healthcare in developing countries by introducing online medical advice?

RQ2: What are the possibilities for companies from developed countries to enter the healthtech market in developing countries?

1.4 Delimitations

The report is delimited to the medical industry, more specifically to digital healthcare services.

Furthermore, the report’s definition of developing countries is concerned with the ones that have the characteristics that are explained by the Bottom of the Pyramid, presented in the Theoretical Framework (Ch 3). In the report’s Empiric section (Ch 6), the focus is on Nigeria and Angola as developing countries and Sweden as a developed country. The purpose of investigating specific cases is to use them as references to the real world. It is important in order to develop a greater knowledge of the need for the service and to make it easier for the reader to understand how the Bottom of the Pyramid could be adopted in practice.

In the research process, four different sectors have been taken into consideration as presented in the mapping of stakeholders (Figure 3); the users, research fields, regulators, and competition. However, the report is focusing on three of them; the users, research fields, and the regulators. A deeper explanation of them is presented in the Methodology (Ch 4).

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1.5 Disposition of the report

The report is divided into eight chapters, which are presented in Table 1.

Table 1: Disposition of the report

Chapter Description

1. Introduction The chapter provides the reader with an introduction to the subject of the Master Thesis. It includes background information and a problem definition. It continues with the purpose of the research and a defined research- and sub-question. Finally, it concludes with delimitations and this disposition of the report.

2. Research Context The chapter presents written literature about the subject. The chapter is divided into three categories; mobile phones, health services, and MedTech in developing countries. They are all related to new innovations and initiatives that are contributing to the industries’ and countries’ development.

3. Theoretical framework The chapter presents the theories that have been applied when analyzing the collected material, which in turn has generated valuable inputs in order to answer the report’s research questions.

4. Methodology The chapter presents how the report has been executed as well as how the obtained results and findings have been interpreted, more

specifically; the research strategy, data collection, and data analysis. The chapter concludes with a discussion about the quality of the research.

5. Case descriptions The chapter presents in-depth overviews of the investigated countries, more specifically each country’s current health status, healthcare system, cooperation for health, and infrastructure development. Additionally, the chapter presents benchmark studies and previous research about other services that have been exported to similar markets.

6. Empirics The chapter presents the results and findings from the conducted semi- structured interviews, where the representation of the interviewees is found in table 1. The chapter is divided into the 4A’s that are discussed in the Bottom of the Pyramid.

7. Analysis and discussion The chapter consists of an analysis and discussion about the findings from both the empiric- and case description sections. The chapter answers the report’s research questions, where the first one is divided in the same way as the empiric section, with regards to the 4A’s.

8. Conclusion The chapter consists of a conclusion about the main findings from both the empiric- and case description sections. The chapter ends with recommendations on further research.

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Chapter conclusion

To conclude, the chapter introduces the report’s subject and explains the background of the research. It is described that the mobile phone is one of the most used technologies, which can be used for more than just calling. The different application areas have opened up for new opportunities, for instance, within digital healthcare, where mobile health (mHealth) is such an innovation that provides patients with the opportunity to interact with a doctor wherever and whenever. The technology is already established in several developed countries and currently, it is under investigation if there is an opportunity for implementation in developing countries as well. A need for improvements within the healthcare sector has been identified.

Moreover, a great amount of the populations in developing countries lives in poverty and they could be referred to as the poorest of the economic human pyramid, also called the BOP. To be able to understand the characteristics of a BOP market, it is beneficial to use the 4As framework (i.e., awareness, access, affordability, and availability). Furthermore, Sweden is one of the leading countries in digital healthcare, and different initiatives within the are have generated more efficient ways of working.

The living conditions for the populations in developing countries are radically different from the ones in developed countries. The existing healthcare services are of low quality and access to reliable healthcare is limited. Therefore, it is of importance that companies from developed countries take on actions and provide the populations with innovative solutions in order to provide them with the care they need and deserve. It is beneficial to focus on the 4As framework when introducing digital care services to BOP markets, and hopefully, it could improve the overall health status and living conditions.

Moreover, the purpose of the research was defined: “The purpose of the report is to investigate developed countries’ possibilities to implement digital healthcare services in developing countries.” and, two research questions were developed. They are important to be able to understand if and how MedTech companies from developed countries could improve the healthcare sector in developing countries with regards to the 4As (i.e., awareness, access, affordability, and availability). Hence, it is the identified research area that will be investigated throughout the report and, the disposition of the report is presented in Table 1.

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2. Research Context

The chapter presents an introduction, based on secondary sources, to the investigated areas.

More specifically it is divided into three categories; mobile phones, health services, and MedTech in developing countries. They are all related to new innovations and initiatives that are contributing to the industries’ and countries’ development.

MedTech stands for Medical Technology and considers products, services, and solutions that are used in healthcare to improve the care for patients. (MedTech Europe, n.d.). MedTech offers several possibilities, for instance, it prevents diseases from spreading through detection tools and it is possible to perform diagnostic tests to identify the correct treatment. (MedTech Europe, n.d.). These innovations have improved healthcare and bring value to the patients as well as to the healthcare systems and the healthcare professionals. Additionally, it has increased the number of saved lives and contributed to a more sustainable healthcare (MedTech Europe, n.d.).

2.1 Mobile phone

During the last 20 years, telecommunication and information technologies have emerged quickly, and one main reason is due to the high increase of social media users (Licoppe &

Heurtin, 2001). It generates new opportunities, which has led to that first-time users of mobile phones are getting younger in ages. According to a survey made by Licoppe and Heurtin (2001), the main benefits of phones are to be reachable and to maintain relationships with relatives and friends.

By the end of 2019, the number of mobile phone users worldwide was over 6.8 billion (O’Dea, 2020). Phone calls and text messaging are no longer the only area of use, since reading news and watching entertainment as well as social media have attracted more people to use mobile phones. It has contributed to the fast growth of mobile usage (Rice & Katz, 2003). To develop high-quality applications and to ensure that the phone is easy to use, the word usability is a key element for companies when improving the technology. When developing new mobile phones and applications, companies should focus on three quality characteristics to measure usability;

effectiveness, efficiency, and satisfaction. By improving the usability, the mobile phones will have higher quality as well as more applications that facilitates people’s daily lives (Hussain

& Kutar, 2009).

2.2 Health services

Mobile health services, also called mHealth, are health services that are accessible through a mobile phone or any other personal digital assistants (Kayingo 2012). Mobile technology has transformed the healthcare and provides patients with the opportunity to receive different healthcare services easier (Blake, 2008). The mHealth innovation has improved the medical treatment as well as contributed to economic benefits for the healthcare sector (West, 2012).

The adoption of mHealth initiatives has been important globally, were the main reason for the

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18 development is considering the lack of well-functioning care in developing countries (Kayingo 2012). Furthermore, the increase of mobile phone users in the world, and especially in developing countries, is an important reason for the fast development (Kayingo 2012).

Mobile phones have transformed the healthcare and it is, for instance, possible to send pictures or to perform video-calls with specialized doctors located in different countries. It could be valuable for people in rural areas or when there is a need for more doctors than just one (Kayingo 2012). Additionally, it has facilitated for patients with chronic diseases since it is possible to have online consultations, and they do not need to visit a hospital (Steinhubl et.al., 2013). Furthermore, patients, and especially elderly people, could be reminded by their mobile phones to take their dose of medicine. The increased use of mHealth by patients has saved time and money for hospitals and doctors (West, 2012). Additionally, a study made with nurses showed that 16 percent of mobile equipment users have minimized the errors in-clinic treatment (West, 2012).

2.3 MedTech in developing countries

Mobile technology has transformed the healthcare and generates important improvements and positive effects on societies. Of all modern technologies, mobile phones are the most used throughout the developing world (Duncombe, 2014). Innovation in applications has made it possible to receive higher quality in healthcare and improve the overall health systems (Kahn et.al., 2010). However, developing countries do not have the same opportunities and high quality on their healthcare, which is related to different reasons; the infrastructure is limited, lack of hospitals as well as resources, and the healthcare workers do not have the right experiences or knowledge (Kahn et.al., 2010). The amount of people that needs specialized doctors has grown rapidly in developing countries (Kahn et.al., 2010). Therefore, the option of self-care has become important. Moreover, the usage of mobile phones and access to the internet is high in developing countries, meaning the opportunities for mHealth are positive.

People living far away from hospitals could receive information regarding diseases, diagnostics, and other important news concerning their health situation online. (Blaya et.al., 2010). It would facilitate for the population, since it gives them access to specialized doctors and the healthcare opportunities would be more equal (Blaya et.al., 2010).

Africa is a developing continent where curiosity regarding mHealth has arisen (Aranda-Jan et.al., 2014). There is a high burden of diseases, where mHealth could have the potential to prevent them from developing further. Hence, several projects regarding implementing the technology have emerged and since a great amount of the population owns a mobile phone it would make the implementations smoother (Aranda-Jan et.al., 2014). The main benefits of mHealth are; improved communication with citizens in rural areas, decreased costs for patients, easier to book appointments, and improvements in data collection (Betjeman et.al., 2013).

Additionally, the population has shown an interest and acceptance in using mobile phones for healthcare services (Folaranami, 2014). However, a potential disadvantage with mHealth, is that a well-developed infrastructure is needed in order to access reliable networks. (Aranda- Jan et.al., 2014) Several African countries face challenges regarding their infrastructure

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19 development. However, mHealth implementations have improved parts in the health sector, but there are still several areas to improve (Aranda-Jan et.al., 2014).

To develop the healthcare in developing countries, international cooperation is crucial (Syed et.al., 2012). By implementing innovations from developed countries in developing countries, the cooperation could contribute to more effective solutions and improved healthcare. (Syed et.al., 2012). As yet, Africa and Europe have established a partnership between hospitals, which has been successful regarding providing services to remote areas by using accurate healthcare technology. Hence, there is high potential for partnerships and the transfer of knowledge from both parts could generate new innovations and solutions to problems. However, it is also important to understand that there is no guarantee that the existing knowledge and innovations in developed countries are appropriate for developing countries. (Syed et.al., 2012).

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Chapter conclusion

To conclude, mobile phones are one of the fastest developing innovations and they are used globally. Its development has made it possible for people to use the phone for other purposes than just calling or texting. A recent innovation is mHealth, which provides patients with the opportunity to perform video calls or other online consultations with specialists. It has led to advantages, such as cost savings and increased efficiency in hospitals and other health centers.

Moreover, the mobile technology and mHealth have emerged in developing countries, where it has contributed to improvements within healthcare. There is a potential for the current mHealth in Africa to develop further and to be improved by embracing partnerships and collaborations with other countries.

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3. Theoretical framework

The chapter presents the theories that have been applied when analyzing the collected material, which in turn has generated valuable inputs in order to answer the report’s research questions.

3.1 Bottom of the Pyramid

The Bottom of the Pyramid (BOP) is used as an approach when investigating environments with potential for innovation (Prahalad, 2011). It refers to the lowest socioeconomic segment in the world (Ramdori, 2015). There are different signatures of a BOP market; each individual lives on less than $2/day, it is poor access to education and knowledge, the communication and transaction are in both formal and informal market economy, and lastly, they are extremely open to embrace new technologies and innovations (Prahalad, 2011; Subhan et al, 2017).

According to the definition, the total BOP segment is about four billion people (Ramdori, 2015). In other words, the market is approximately half of the world's population. In order to support development and avoid exclusion from formal markets, the BOP markets are highly in need of innovative products. It would in turn generate better living conditions for the populations as well as generate economic growth for the developing country (BoP Innovation Center, 2010). Additionally, low-income segments have unfilled needs that innovative products could improve and generate service to people living in poverty (Ramdori, 2015). The growth and innovation of BOP are strongly connected to the development and adoption of cell phones and it is important to be present in these markets in order to accelerate in most sectors (Prahalad, 2011). It could be challenging for companies to do business in these markets since they diverge from developed markets. Therefore, organizations have to be careful when understanding the characteristics of a BOP market. (Ramdori, 2015).

However, it exists divided opinions whether it is fair for businesses to generate profit in a market, where the customers are among the world’s poorest. Critics mean companies should not have a business focus, but rather a customer focus- and a willingness to improve the populations’ lives when entering a BOP market. In other words, it should not be a source for future organisational growth and a way for companies to increase their reputational value.

(Simanis, 2013) A criticism of the BOP concept is coming from professor Karnani, who states that by reaching the poor will make them take decisions that are not lying in their own self- interest. Hence, it is seen as unethical and will contribute to negative impacts on the public welfare. (Karnani, 2007) On the other hand, C.K. Prahalad, who is a supporter of the BOP concept, argues that by penetrating new markets it will create new jobs and generate important income opportunities. As aforementioned, these markets are in high need of innovative products as well as new technology that will create economic growth and influence the countries’ developments. (Prahalad, 2011)

According to C.K. Prahalad (2011), a profitable innovation in a BOP market is about working within constraints, which he refers to as “the innovation sandbox”. It is considering:

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22 1. Identification of the need, where initiatives in the BOP market carefully observe the

emotional needs of the poor

2. Designing a product or service that is aligned with the global safety standards

3. Ensuring the product or service is scalable, meaning all the parts of a business have to be considered

4. The product or service is affordable and at the same time delivers profit

The most important as well as complicated part for companies is to align the global standards with local preferences. Moreover, all BOP markets are different from each other and it does not exist one single solution that works in the same way for all of them. Hence, it is of importance to create deep understandings of the citizens’ lives and daily habits (Prahalad, 2011).

3.1.1 The 4As in a BOP market

A helpful framework for companies to use when entering a BOP market is the 4As. The 4As framework consists of the segments; Awareness, Access, Affordability, and Availability (Prahalad, 2011). Awareness is related to the product or service and its purpose is to receive the populations’ attention. They have to understand the product’s value and how it will facilitate their daily lives (Prahalad, 2011). It could be done by focusing on sales, marketing development of advertisements, and distribution channels or by having representatives on schools and universities in order to create brand awareness (Anderson et al., 2007). The access is focusing on creating equal opportunities for all individuals to use the product or service and hence, it would not matter if you live in a remote- or urban area. (Prahalad, 2011)

Moreover, the product should be affordable, which also is the most complicated segment to achieve, since the quality of the product has to be high while, at the same time, keeping the price low (Prahalad, 2011). The majority of the consumers in BOP markets does also have low incomes, meaning they are sensitive to price and reflect carefully when spending money (Anderson et al., 2007). Lastly, the product has to be available for the whole population in order to establish a strong reputation and a loyal customer base (Prahalad, 2011). It may be difficult to overcome, since unlike developed countries, there are limited distribution channels in BOP markets (Anderson et al., 2007).

To summarize, the report has followed Prahalad’s point of view of the BOP concept. It has been of relevance since the report is investigating how a MedTech company from a developed country could improve the access, availability, affordability, and awareness to reliable healthcare in developing countries. It could be done by supporting the citizens with medical advice online, where the idea is not to deliver profit but instead to improve the living standards for the populations. The conditions of the specific case countries are aligned with the BOP’s definition of developing countries. Moreover, to develop knowledge in the area and to ensure the innovation (i.e. MedTech app) has the best prerequisites to enter a BOP market, the 4As as well as the innovation sandbox have been seen as valuable. When performing the interviews and thereafter, structuring the empirics and the analysis section the already defined themes (i.e.,

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23 awareness, access, affordability, and availability) have played an important role. A more in- depth explanation is presented in the Methodology (Ch 4).

3.2 Innovation management

3.2.1 Diffusion of Innovation

Diffusion of Innovation is a theory by Everett Rogers and refers to how well people adapt to changes in the environment. Rogers has identified five different kinds of innovation adopters, they are; innovators, early adopters, early majority, late majority, and laggards. Additionally, he has estimated the percent ratio related to each category. (Rogers, 2003)

Innovators adopt a change quickly and they stand for approximately 2,5 % of the population.

Their characteristics are described as risk-takers, motivated for change, appreciation of new technologies, and open-mindedness, meaning they understand the importance of the change.

The early adopters stand for 13,5 % and aims to be the trend-setters. They are open to changes and does not need to be convinced. The early majority and late majority are the two categories that account for the majority of the percentage, more specifically 34 %. The most important difference is that the early majority adapt to changes before the average person, whereas the late majority is more skeptical. However, both categories need evidence that proves the benefits of the innovation and that it has been adopted successfully by others. The fifth category, the laggards, stands for 16 % and is highly skeptical and suspicious against the innovation. They need more evidence when being convinced the change will improve their current situation.

(Kaminski, 2011) Figure 1 presents Rogers’ theory of the diffusion of innovation.

Figure 1: Diffusion of innovation (Rogers 2003)

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24 The model has been a benefit when understanding how the population in developing countries would react to the new innovation. In this case, it opens up for totally new markets within the countries, and hence, by foreseeing the reactions it is possible to outline a strategy on how to respond to them.

3.2.2 Innovation Process Model

It is important for a company to understand how innovation should be managed and organized to become successful. Tidd and Bessant (2013) have identified the key steps that need to be taken into consideration when introducing the innovation. Figure 2 presents the innovation process model.

Figure 2: Innovation Process Model (Tidd & Bessant, 2013)

The first step is to search the environment, both internally and externally, in order to understand potential threats and opportunities related to the change. Secondly, a selection process of the options that was found in the search phase takes place, which also includes a development of arguments and explanations for each option. The third step is the implementation, where the company needs to identify how the innovation should be launched to the market of relevance.

In addition, tools and techniques to make it possible should be identified. Finally, value should be captured from the innovation by learning and developing knowledge. It is required in order to maintain their position or gain market share, as well as make successful improvements. (Tidd

& Bessant, 2013)

The model was useful for the report in order to understand the process of launching or implementing a new innovation (i.e., MedTech app) and hence, to be able to declare the outcome of an action. It has been important to investigate how to successfully bring the innovation to developing countries. Firstly, a careful research process about the countries was necessary to understand the different healthcare systems as well as the current health status among the population. Secondly, the characteristics of each country were investigated more in-

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25 depth to develop a greater knowledge of the innovation’s capability to succeed. Thirdly, possibilities to enter the healthcare market were identified in order to evaluate the options and hence, be prepared for potential pitfalls and barriers. Lastly, a predicted vision of future scenarios was carried out in order to understand how the innovation could capture value in a developing country. In addition, it may need to be adjusted with time, since it will be noticed how well adapted it is used by the population and government.

3.2.3 Rationalist and Incrementalist strategies

Rationalist and incrementalist strategies are of importance for the purpose of the innovation strategy. The rationalist strategy is influenced by the military and consists of three steps;

describe and understand the environment, determine a course of action, and carry out and decide the course of action. It is a linear model that intends to help firms to understand trends in a competitive environment, be prepared for future changes, focus on longer terms, and finally, to ensure coherence. (Tidd & Bessant, 2013)

The incrementalist strategy assumes that it is impossible to understand changes, which means the future can be predicted to a limited extent. Therefore, the strategy needs to be adapted as soon as new information and understandings arise. The three steps for the process are; make changes, measure and evaluate the effects of the changes, and lastly, adjust them if necessary.

(Tidd & Bessant, 2013)

The report’s approach to innovation is based on an incrementalist strategy since it currently does not exist a market for the innovation in the countries of relevance and the focus is on the customers rather than on a competitive market as a rationalist strategy has. Instead, the findings are grounded on predictions of how the innovation could generate a more equal and higher quality care. The investigation may change path and is flexible during the process, which depends on the information of the collected material from interviews as well as the secondary sources. Therefore, it is not recommended to follow a linear model as a rationalist strategy promotes, since changes and reflections are needed along the way.

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Chapter conclusion

To conclude, the BOP market consists of approximately four billion people, which is half of the world's population. Clearly, it exists divided opinions about the BOP concept and the report has taken on professor C.K. Prahalad’s point of view, meaning new innovations could fulfill the population’s needs and improve their living situations. However, in order to have the best prerequisites when entering the market, it is beneficial to understand “the innovation sandbox”

as well as, to pay attention to the 4A framework (i.e., awareness, access, affordability, and availability).

The 4As would contribute to an understanding of the market, which is needed to overcome potential challenges. Awareness is related to the product and how to reach the population’s attention and make them understand the value of the product. If the company understands how people will adapt and react to the innovation, they can improve the awareness and implement strategies of how to overcome the challenges. Access is focusing on creating equal opportunities for all individuals, which is important for developing countries since a large part of the population lives in remote areas. Lastly, the product should be affordable, of high quality and keep prices low in order to be available for the whole population. It may be difficult to achieve, but with in-depth investigations of the market and with help from local organisations it would develop important understandings and knowledge. Additionally, “Diffusion of Innovation” is a beneficial model to use to understand the innovation’s development, and “The incrementalist strategy” is focusing on the customers’ adoption and prepares the innovators to change the product due to the responses. It is of importance when implementing an innovation, since reflection and adjustments are beneficial during the implementation process of a new idea.

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4. Methodology

The chapter presents how the report has been executed as well as how the obtained results and findings have been interpreted, more specifically; the research process, the research design, the data collection, and the data analysis. The chapter concludes with a discussion about the quality of the research and ethical considerations.

4.1 Research process

The research has been executed during a period of five months and to outline and follow a research strategy has been important in order to understand the next step and how to continue with the research. Figure 3 presents the different phases of the research process and their connections.

Figure 3: Research process

During the first phase, which was the thesis development, a discussion with the case company was important to understand their desires and also to develop the problem formulation, the purpose, and the research questions. Thereafter, the data collection process began, consisting of both primary- and secondary sources, with the purpose to identify current research within the subject as well as a research gap. As shown in Figure 3, phase one (i.e., thesis development) and phase two and three (i.e., semi-structured interviews and secondary sources) was an iterative process. It means that after conducting the secondary sources, as well as, performed the semi-structured interviews, new insights and information arose, and the problem formulation changed form. The finalization of the problem definition, as well as the research questions, took place when all the interviews had been conducted. It is possible, since the research process is considered as an exploratory research, which is explained more in-depth later on in this chapter.

However, when the data collection was done, the research process entered the fourth phase (i.e., data analysis). It consisted of a coding process, and since the themes (i.e., the 4As) already were decided, this phase consisted of identifying relationships. The analysis of the data leads to the last phase where the research questions were answered. During the whole process, the

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28 report has been developed as new information has arisen, and hence, it is seen as an iterative process.

4.2 Research design

The research design and strategy is presented below, which has been divided into three segments; (i) Research approach, (ii) Case study and thesis development and (iii) Theoretical framework

i) Research approach

When identifying the right approach for the research, two different kinds were evaluated; (1) Conclusive research, and (2) Exploratory research.

1. Conclusive research

The research design is appropriate to use when the purpose of findings is to reach conclusions or to make decisions. To be able to conduct such a study, the research targets and the sources for data collection have to be clearly stated. Usually, conclusive research processes require quantitative methods for the data- collection and analysis. (Dudovskiy, 2018) The approach was considered as relevant since the next step after presenting the report’s findings is to take action, more specifically; to decide if it exists opportunities for MedTech companies to enter BOP markets in order to improve the current healthcare sector.

2. Exploratory research

An exploratory research is investigating the research questions, where the purpose is not to deliver any conclusions or specified answers. It is mainly used for research fields that are not clearly defined and is providing the field with more developed understandings and insights.

Moreover, the researcher may need to change path and strategy due to the content of the collected data. The most used and appropriate method for collecting data in an exploratory research is semi-structured interviews. The advantages of exploratory research is above all its flexibility and adaptability to change. Moreover, they create the basis for future research in the field. However, these types of studies is usually perceived as qualitative, meaning it could be difficult to reduce biases due to the low amount of participants in the data collection process.

Hence, it is not appropriate to generalize the findings of an exploratory research to a wider audience. (Dudovskiy, 2018)

Considering, the research’s objective, where the markets of relevance are unexplored and Medicheck is one of the first to investigate the opportunities to provide them with online medical advice, the report is perceived as an Exploratory research. Hence, it is aligned with the definition of exploratory research, “a problem or opportunity that has not been studied more clearly”. (Saunders et al, 2012) Moreover, quantitative methods for data collection were considered as irrelevant, since the focus was on creating an understanding from a firm's perspective. Therefore, the report could be described as qualitative, which also is aligned with the aforementioned explanation of exploratory research, where the data collection has been based on semi-structured interviews and secondary sources. The focus has been on collecting

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29 information from carefully selected stakeholders, rather on the amount of interview participants, which also goes under the definition of a qualitative report. In addition, the report is taken on an inductive approach, since it is used to explore and investigate an area where limited written resources exist. During the process, patterns have been identified from observations and the direction of the report’s development has been decided along the way. In other words, the process is not decided in an initial stage and only, generalizations can be drawn from the empirics. It is not until the research is completed, the actual findings and answers can be presented. (Thomas, D.R., 2003) This approach has been applied, due to the unexplored investigation area and changes have been relevant along the development.

ii) Case study and thesis development

The case company of the thesis is the healthtech company, Medicheck. They are located in Stockholm, Sweden, and provide patients with expert online medical advice by using video calls and messaging on phones, tablets, or computers. Only qualified specialists in both chronic diseases and temporary problems are admitted to interact with the patients, in order to deliver professional healthcare services. Moreover, Medicheck is one of the first Swedish healthcare organisations that are deep-diving into the field of exporting digital care services and the research is proceeding from them when investigating how a MedTech company could enter a BOP market to impact the 4As (i.e., awareness, access, availability, and affordability) to reliable healthcare. Hence, Sweden is defined as the developed country in this thesis.

The selection of the thesis’s developing countries, was a quick process, since the case company had already made a decision. Local organizations in two developing countries in Africa, namely; Angola and Nigeria, had reached out to them since a need for their services or similar had been identified. However, to involve the researchers in the process, it was not decided if both the countries should be of interest or just one. Moreover, the research questions were not declared and the researchers had the opportunity to create the direction of the thesis. The procedure was seen as an iterative process, since the research questions as well as the methods and theories to use when answering them, changed with regards to different insights from participants (i.e., classmates, professor, and supervisor) at the seminars at KTH the Royal Institute of Technology and supervisors at the case company, Medicheck. After conducting existing written literature about the case countries, it was stated the field of interest (i.e., healthcare sector) was similar and the researchers decided to focus on both of them. The introduction to the Bottom of the Pyramid (BOP) came from the professor, Cali Nuur, and regarding the characteristics of the case countries, it was stated that they could be identified as BOP markets. Hence, the purpose of the report was defined as:

The purpose of the report is to investigate developed countries’ possibilities to implement digital healthcare services in developing countries.

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30 Moreover, the iterative process did also form the two research questions:

RQ1: How could MedTech companies from developed countries improve the access, availability, affordability, and awareness to reliable healthcare in developing countries by

introducing online medical advice?

RQ2: What are the possibilities for companies from developed countries to enter the healthtech market in developing countries?

The research questions have been in top of mind during the report’s development and they did also form the dialogues with each interviewee, which is detailly explained in the Data Collection (Ch 4.3).

iii) Theoretical framework

In exploratory research, it is recommended to use theoretical frameworks that will guide its development and they are based on existing knowledge and testing in practice. They are important to reduce biases and to avoid affection by human nature (i.e., values and beliefs).

(Adom et al., 2018) It exist three key advantages with theoretical frameworks;

● To help define the report’s key concepts (i.e., analyzing the findings)

● To evaluate, adopt and/or synthesize appropriate models

● To declare any assumptions (Adom et al., 2018)

Professor S.N Imenda (2014) argues that a research with no theoretical framework misses to develop an accurate direction during the process as well as of the findings, since the theoretical framework supports the research’s problem formulation when finding the solutions. Moreover, to be able to select the theoretical framework, the researcher(s) has/have to understand the problem and the purpose of it. If the selection process is poorly done, it could mislead and confuse the research(s), rather than guiding the process. (Adom et al., 2018) In this case, the theoretical framework shifted form after the first meeting with other students, the professor, and supervisor at KTH the Royal Institute of Technology. At first, other models were of interest, such as; the SWOT analysis and the PESTLE model. They were seen as relevant at that time, since the focus would partly have been on market entry strategies. However, considering the fact that it was not yet declared if it existed any opportunities for MedTech companies to introduce their services to developing countries, the models were concerned as irrelevant for the report. They could be of interest for future research if a decision to enter any of the markets are made.

Instead, the selected models should support the research development by guiding it through the process, while in the same time investigate potential answers on the problem statement. Hence the models used for the report are aligned or correlated with; 1) the Bottom of the Pyramid (BOP) and 2) Innovation management

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31 1. The Bottom of the Pyramid (BOP)

The model has been important in order to understand and develop knowledge within the industry of interest (i.e., the healthcare sector) in two in developing countries. Considering the conditions of the investigated countries (i.e., Angola and Nigeria), it was concluded they were aligned with the definition of a BOP market. As described in the Theoretical Framework (Ch 3.1), there exist divided opinions regarding developed countries attempt to create businesses in such markets. The report is undertaking C.K. Prahalad’s point of view due to the purpose of Medicheck’s initiative; the goal is not to deliver profit, but rather to increase the populations rights and possibilities to receive the healthcare services they deserve and hopefully, be able to positively influence the countries’ welfare and living conditions. Moreover, Prahalad believes BOP markets are extremely open for new innovations as well as technologies. It will generate new job opportunities and an economic growth, which in turn will have an important impact on the infrastructure- and other industries’ development.

However, Prahalad states it is more difficult to succeed in a BOP market, than in any other market. Hence, it is beneficial to combine the BOP with “The 4As Framework” (Ch 3.1.1), and “The Innovation Sandbox” (Ch 3.1). Hence, to be consistent and to be able to apply the BOP model in a correct manner, the report has followed Prahalad’s suggestion. The 4As (i.e., awareness, access, affordability, and availability) have played an important role, since they have been used as the themes for the report. Their contribution and how they have been used are detaily described in the Data Analysis section (Ch 4.4).

2. Innovation Management

By considering the BOP’s contribution when guiding the research through a selected industry in developing countries, the report had to be complimented with models that affected the innovation of interest (i.e., MedTech app). It was important in order to understand what to consider if it should be implemented and how new initiatives would be adopted by the populations. The theories that are corresponding to Innovation Management and that are used for the research are; “The Diffusion of Innovation” (Ch 3.2.1), “The Innovation Process Model” (Ch 3.2.2) and “Rationalist or Incrementalist Strategies” (3.2.3). The former is developed by professor Everett Rogers, and one of his publications is named after the theory.

The two other theories are originated by the professors, Joe Tidd and John Bessant. Regarding all the professors’ expertise areas and high competencies within technology and innovation management, the theories were considered as trustworthy to use when analyzing the findings.

4.3 Data collection

The information has been obtained by collecting data through primary and secondary sources, where the most important ones have been semi-structured interviews. The aim is to keep them informal, where the interviewees are comfortable with speaking freely and are able to share their main thoughts and opinions about the subject. The researcher has specific topics in mind for the discussion but is keeping the interview flexible in order to collect a great variety of information. (Adams, 2015) To be able to receive the help needed to leverage a reliable report, there have been ongoing dialogues with the representatives at the case company, Medicheck,

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32 as well as with the assigned supervisor at the Royal Institute of Technology. All of them have delivered valuable inputs and information when executing the report.

Semi-structured interviews

The primary sources used in the report are semi-structured interviews. The purpose of the interviews was to develop greater knowledge of the healthcare sector in the case countries, Angola and Nigeria. It was of importance to be able to understand if it existed a need for developed countries to implement digital healthcare services in Angola and Nigeria, and also if the locals would make use of it. Moreover, the interviews were highly valuable in order to identify the possibilities to enter the healthtech market in developing countries. To be able to collect a wide range of information, organisations within different industries as well as people with diverse expertise areas participated. In that way, a great variety of perspectives could be obtained. Figure 4 presents the mapping of stakeholders used for the report.

Figure 4: Mapping of stakeholders

In the research process, four different sectors have been taken into consideration as presented in the mapping of stakeholders; the users, research fields, regulators, and competition.

However, the report is focusing on three of them; the users, research fields, and the

regulators. As aforementioned the research fields have been the most important to explore in order to gather different knowledge and to be able to answer the research questions in the best way. The research fields used for the report are; healthcare, mobile phone- and

telecommunication development, developing countries, and digital services, where the performed interviews are covering healthcare, mobile phone- and telecommunication development, and developing countries.

Digital transformation of healthcare services in developing countries

Digital transformation of

healthcare services in developing countries

An exploratory research of healthtech opportunities in Bottom of the Pyramid (BOP) markets

AMANDA RUNDQVIST AMANDA VON SCHINKEL

Digital transformation of healthcare services in developing countries

by

Amanda Rundqvist Amanda von Schinkel

Digital transformation av sjukvårdstjänster i utvecklingsländer

av

Amanda Rundqvist Amanda von Schinkel

Table of Contents

List of Figures

List of Tables

Abbreviations

Foreword

1. Introduction

1.1 Background

1.2 Problem definition

1.3 Purpose

1.4 Research questions

1.4 Delimitations

1.5 Disposition of the report

Chapter conclusion

2. Research Context

2.1 Mobile phone

2.2 Health services

2.3 MedTech in developing countries

Chapter conclusion

3. Theoretical framework

3.1 Bottom of the Pyramid

3.2 Innovation management

Chapter conclusion

4. Methodology

4.1 Research process

4.2 Research design

4.3 Data collection