Like other Small Medium and Micro Enterprise (SMMEs) that dream of one day becoming big, there are always skeptics that dismiss such ambitions as wild dreams.
When it started in 2005, Itekanele Health Scheme, which targets a lower end of the market, pessimists thought it would collapse. Itekanele conceded that it was entering untested waters in which only heavyweights could stay afloat.
Four years later, the scheme has grown, with individuals coming up to sign up for the health cover although the other market they targetÔÇöthe studentsÔÇö ‘join today and discontinue tomorrow’.
“From 0 to 15, 000: looking at these numbers from the last four years; they are brilliant numbers. We cannot ask for more,” Solly Reikeletseng, Managing Director of the medical scheme, told Sunday Standard on Friday.
Itekanele was started by a group of young Batswana after the realisation that the health care did not come cheap, with a majority of the people left out and the perception being that medical aid was for the well off.
It also recognised that service was being compromised at government hospitals because of many people looking for service at government hospitals while it realised that the health profession was being dominated by non Batswana.
That was when a group of young sports fanatics and other medical doctors came up with the concept of filling the gap.
Like other small businesses, access to finance was difficult because financiers did not believe in the business model.
“We started with the little money that we had saved. It was difficult to convince people about finances and its viability,” stated Reikeletseng.
He revealed that most people believed that affordable health care in Botswana was not viable saying it was an expensive undertaking.
“What made it work was the smart partnership we had with medical doctors,” he stated giving the example of credible and popular doctors in Gaborone and Botswana.
“We lobbied government as well as manual workers, but it was difficult to penetrate that market. The manual workers really pushed our agenda.”
The Itekanele business model is not a corporate one, rather it centers on the individuals. It caters for an old lady selling airtime and domestics workers amongst others.
These are the gaps that the scheme focused on. Currently, the scheme has opened 7 branches around the country although the idea is to come up with service points in the major centers of Botswana.
It has two offices in Gaborone, the others are in Tshabong, Francistown, Palapye, Selebi Phikwe and Maun and they are looking at opening new ones in Ghantsi and Kasane.
Inspired by the Choppies’ business model, Reikeletseng said after establishing themselves, the plan will be to take the medical aid scheme to Zambia and Lesotho (where currently there is no such business).
“The response has been excellent. When you make a promise and deliver on it, it catches up. However, you will have issues and argue with doctors. It happens in the medical aid,” he observed.
The plan is to have service points in every corner of major centers around the country and have a full service to the client, including encouraging a family doctor system.
Like any other new business that emerges in Botswana, there are challenges that Itekanele faces apart from having to start without deep pockets.
Reikeletseng identifies the fact that the model is a new system in the market which needs medical doctors and the public to get used to.
He added that the mode of collection is another problem they face because they have to chase people around to pay their premiums, which has led to high default rates.
The monthly contribution for the scheme is P89 and clients get service without having to pay the 10 percent upfront that others need to see a doctor.
The collection method creates a challenge to Itekanele. They said that the difficulty is that because of their target market, they have realised that people do not understand medical aid and they end up abusing the scheme.
For instance, in a case where a client might go to a tuck-shop and purchase a panado, they will prefer to use the medical aid scheme to buy the same, which leads to more claims and less contribution and ‘this kills us’.
He has also made an observation that other doctors do not cooperate in fighting fraud. He said that some doctors ‘encourage clients to go to hospitals and not pay’.
Reikeletseng added that although they are hopeful that the scheme will grow, there are threats: they fear that at some point they will not get new business.
Although some members cancel their policies, Itekanele gets over 600 new people every month, which makes him believe that they could hit 50 000 by the end of 2009.
He says that their concerns are that companies are setting up medical aid funds, which presents a challenge for their survival and this is made worse by the fact that government has its own medical aid schemes.
However, they still get those from companies that cannot afford medical aid even though their employers subsidise them by paying 50 percent of the monthly premiums.
“By the end of the year, we are hitting the 50 000 target,” he promised.
Recently, Itekanele introduced a sport product and they are in contact with Sport Council to look into covering players after the recently launched Constituency Leagues by President Ian Khama.
They are also having a problem with students who they were able to convince to join the scheme in large numbers in Gaborone and Francistown at the height of promising growth in tertiary education system, with most of them canceling their policies.
However, Itekanele’s argument is that if the students in South Africa are covered by the government, then local students who are far from their parents should have a mandatory medical aid scheme covered by the government.
This is even made worse by belt tightening move from treasury where students’ allowances are likely to be cut from the current P1, 920 to prevent the collapse of government coffers.
Also to entice its clients, Itekanele pays back those members who did not use the scheme in 24 months with its Cashback Scheme.
Other products that the scheme will be introducing before the fall of 2009 include the ambulance and EMS programmes because they have realised most of their members do not have cars.
Reikeletseng said that there are two sides to the coin under the current economic recession. As blue chips retrench workers, they are forced to look for a cheaper medical aid as they downgrade, this is where Itekanele comes in.
On the negative side, some people cannot afford to pay their premiums as things get expensive and they get concerned about putting food on the table more than anything else.
“However, most of the clients are loyal,” he said.
