ZiDi Case Study Final

PH5-045
2015
The Trials of a Social Entrepreneur: ZiDi™,

MicroClinic Technologies and Kenyan Healthcare
By fall 2011, physician Moka Lantum had already worked for 10 years as a healthcare systems
analyst and scientist in the private sector. Born in Cameroon and educated internationally, he
was ready to try his hand as a social entrepreneur—someone who builds a business that delivers
a basic human service to an underserved population. He had just started a two-year master’s
degree in healthcare management, and wanted to create an enterprise to which he could devote
himself well beyond graduation.
For many reasons, Lantum chose to focus on rural Kenya. First, there was copious information
available about the Kenyan public health system. Second, getting to Nairobi was relatively
convenient. Finally, while its public health system was relatively developed, rural healthcare
lagged. Access to clinics was difficult, curable diseases flourished, maternal and child mortality
rates were high and dangerous counterfeit drugs flooded the market. Outside urban areas,
accurate and timely health data were nearly impossible to get. Lantum wanted to improve public
healthcare for rural communities.
Over the next three years, his approach evolved continuously. His initial idea—to build small
clinics cheaply with indigenous materials—foundered quickly. Instead, Lantum developed a
technological solution that addressed multiple public sector healthcare problems through a
single IT tool: ZiDi™ (zidisha was Swahili for “go above and beyond”). ZiDi™ was a cloud-based
system that allowed frontline health workers to use mobile tablets to collect data. The system
could process a wide array of information, from individual patients and their symptoms to drug
supplies, the utilization rate of individual clinics, or staff absenteeism.
To run what Lantum hoped would become a beneficial and profitable enterprise, he established
two entities. In September 2011, he registered a non-profit in New York named the 2020
MicroClinic Initiative. Nine months later, Lantum and a Kenyan partner incorporated a for-
profit in Nairobi: MicroClinic Technologies Inc. (MCT). ZiDi™ launched in August 2012. The
goal was to demonstrate that ZiDi™ could improve maternal and child health in rural clinics and
dispensaries, and persuade the government to buy it.
Over the next two years, Lantum and his growing staff proved repeatedly that ZiDi™ could be
effective. The tool won endorsement from the Kenya Medical Supplies Agency, KEMSA, as well
as verbal approval from the Ministry of Health. MCT garnered numerous awards, some of which
© 2015 by the President and Fellows of Harvard College. This case was written by Kirsten Lundberg, MPA, under the
supervision of Richard B. Siegrist, CPA, MS, MBA, and Teresa Chahine, ScD, Harvard T.H. Chan School of Public
Health, as the basis for class discussion and education rather than to illustrate either effective or ineffective handling
of an administrative or public health situation. This publication may not be digitized, photocopied, or otherwise
reproduced, posted, or transmitted, without the permission of Harvard T.H. Chan School of Public Health.
The Trials of a Social Entrepreneur: ZiDi™, MicroClinic Technologies and Kenyan Healthcare PH5-045
came with modest funding. In early 2014, the team even responded to demand from county
governments by reengineering ZiDi™ to function in hospitals in addition to rural facilities. But
still there was no government contract; not even a request for proposal (RFP).
By August 2014, the slow pace of government decision-making was threatening MCT’s existence.
Apart from the award monies, Lantum and his partner had self-financed the enterprise for three
years, and his savings were gone. While MCT had always targeted the public sector, the question
loomed: should it seek private sector customers and financing? To do so could compromise the
mission and distract staff from winning a government contract valued at $28 million. A different
business model could dilute the partners’ equity, or add debt. Lantum’s business partner was
forcefully opposed to a private sector push. Lantum had to decide: stay the public sector course
or diversify into an uncharted market segment with a new set of unknowns?
Kenyan healthcare
The country Lantum had in his sights boasted, by 2011, a developed public healthcare system.
The Ministry of Health oversaw a network of 439 hospitals, 917 health centers and 3,880 clinics
or dispensaries. These were dispersed over the country’s eight provinces (subdivided into 47
counties).1 Kenya’s population of 42 million was diverse: 42 ethnic groups spoke over 60
languages. The country was classified as low-income, with a gross domestic product (GDP) per
capita of $998.2 Per capita healthcare spending in 2011 was 4% of GDP, 20% lower than five
years earlier (in 2006, it was 5%).3 Healthcare represented 6% of total government
expenditures.
Kenya had six levels of health facilities. At the top, ranked 4-6, were hospitals (divided into
primary, secondary and tertiary), which provided emergency, inpatient and outpatient care.
Health centers and nursing homes were Level 3. These were staffed by clinical officers (mid-
level providers licensed to perform general medical duties) and offered comprehensive primary
care; most demand was for maternal and child health. A typical health center served an area of
30-40,000 people. Level 2 was public health clinics and dispensaries—small, outpatient
facilities managed by nurses, which provided basic services such as vaccines, or treated ailments
like colds, simple malaria or diarrhea.4 At the bottom came community care (largely health
education), categorized as Level 1.5
The government owned the majority of public health facilities (51%), while private for-profits
owned 34% and faith-based institutions owned 15%.6 About 50% of the public health budget
1 In 2013, Kenya created 47 counties as administrative entities to replace the unwieldy eight provinces. The
provinces were Coast, Northeastern, Eastern, Central, Rift Valley, Western, Nyanza, and Nairobi.
2 The World Bank, GDP Per Capita 2010-2014. See: http://data.worldbank.org/indicator/NY.GDP.PCAP.CD
3 World Health Organization, Global Health Expenditure Database. See:
http://apps.who.int/nha/database/ViewData/Indicators/en
4 Marc Luoma et al, Kenya health system assessment 2010, Health Systems 20/20 Project, Abt Associates,
August 2010. Much of the information in this section comes from this report.
5 For a graph of the health pyramid, see Appendix 1.
6 Jane Chuma, Thomas Maina and John Ataguba, “Does the distribution of health care benefits in Kenya meet the
principles of universal coverage?” BMC Public Health, January 10, 2012. See:
2
went to hospitals.7 Overall, healthcare expenditures broke down as 61% from private sources
(individual patients and international donors), and 39% from the government.8 As of 2011,
government paid for all medical services for children under five—including immunizations,
nutrition, medications or HIV care. Patients over five years old paid a fee of Ksh10 (US$0.10)
per visit to a medical facility, plus other service fees such as lab tests or medications.9 For
maternity services, the government paid all pre- and post-natal services, while the mother paid
Ksh400 (US$4.60) for a delivery.10
There was a wide disparity between access to and quality of healthcare in urban versus rural
areas. Fully 80% of Kenyans used public healthcare, and 80% of those depended on rural
facilities for their health needs. Yet the rural public health infrastructure was weak. The majority
of deaths from preventable diseases—malaria, tuberculosis, pneumonia—occurred in rural
areas. The same held true for maternal mortality, which stood at 488 per 100,000 births.11 With
the birth of 1.6 million babies a year, that meant some 8,000 women a year died in childbirth. As
for children, 52 per 1,000 died at birth; 69,000 newborns a year died before their first birthday.
The HIV-AIDS rate was also high, at 6.2% of 15- to 49-year-olds. Life expectancy was 54.12
Private and nonprofit (largely religious) providers did exist. In general, private health clinics
were more expensive than publicly-funded facilities, and they could not provide subsidized
drugs. Most private clinics were run by nurses, although private facilities in urban areas had
doctors or clinical officers. Nationwide, private facilities delivered some 33% of outpatient and
14% of inpatient care.13
Drug supplies
Part of the explanation for high disease rates lay in access to care: rural patients often had
difficulty reaching health centers or clinics. But the drug supply to poor rural areas was also
inadequate. In 2004, the Kenyan government created a new agency, KEMSA, to address
discrepancies in drugs provided to rural versus urban locations. KEMSA annually disbursed
some $500 million worth of 100 essential drugs to facilities across the country.
Reliable data on drug distribution and use, however, remained hard to get. For one thing,
KEMSA and its medical facility customers tracked supplies manually. It also maintained parallel
drug supply lines for each of five major diseases—HIV/AIDS, malaria, tuberculosis, respiratory
infections, and diarrheal diseases. That system led both to over- and under-stocking. Even after
KEMSA had operated for several years, it was unable to quantify on an as-needed basis how
much of any given drug was required or had been provided, either per facility or nationwide. As
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3280172/
7 Ibid.
8 See: http://apps.who.int/nha/database/ViewData/Indicators/en
9 Ksh means Kenyan shilling. For simplicity, in this case study we use a uniform exchange rate of Ksh87=US$1.
10 This fee schedule changed in 2013; see below, p.12.
11 By comparison, Britain had last experienced a maternal mortality rate of 450/100,000 in 1890, and the US in
1935.
12 Luoma et al.
13 Ibid.
3
a 2010 report put it: “There are… serious challenges to collecting reliable, good quality data that
can be used for policy making in the [health] sector.”14
First steps
But Lantum’s original intent in Kenya had nothing to do with health data. Rather, he had read
about the difficulties rural Kenyans had in accessing care. Lantum thought the solution was to
build more clinics, and he had an idea: bungalow-type structures that could be built for $5,000
each from local materials.
Degrees
Lantum had come a circuitous route to this idea. Born in Cameroon, his father was the country’s
first public-health expert (he introduced iodine for treating goiter) and his mother was a school
principal and champion for girls’ education. In 1998, Lantum earned a medical degree from the
University of Yaoundé in Cameroon; he already held a 1995 diploma in nutrition and
international child health from the University of Uppsala, Sweden. He headed to the US for a
PhD in pharmacology from the University of Rochester, New York.
After graduation in 2002, Lantum took a job in private industry, as a unit director and senior
scientist in the toxicology division of Eastman Kodak Co. He managed 15 people and an annual
budget of $2.4 million; among other issues, he tested the safety of chemical products used in
film. Four years later, he moved to health insurer BlueCross BlueShield Excellus as a director,
and developed programs to improve quality of care for high-risk subscribers, including Medicaid
patients. He developed expertise in healthcare finance as well as logistics and supply chain
management. His initiative to lower readmission rates saved Excellus an estimated $1.4 million
over 13 months.
But when the company resisted his efforts to simplify enrollment for Medicaid recipients, he
became dissatisfied and began to look at other career options. Lantum was ready for his own
business—and he knew what kind: a social enterprise. He was looking for a new opportunity to
develop and deliver an effective, financially viable solution addressing a social challenge. Based
on what he had read, Kenya’s rural public health system needed help. He decided to explore
opportunities there. In September 2011, he enrolled in a healthcare management degree course
at Harvard’s T.H. Chan School of Public Health.15 He aimed to put his classroom lessons to work
immediately for his project.
2020 MicroClinic
On September 27, Lantum registered 2020 MicroClinic Initiative as a non-profit in New York
State. On October 10, 2011, he arrived in the Kenyan capital, Nairobi, to conduct a feasibility
study for a low-cost, high-quality health service delivery model. He had the inexpensive
bungalow clinics in mind. The challenge, he says, was “can we create a low-cost model for health
14 Ibid.
15 In January 2015, the school changed its name to the Harvard T.H. Chan School of Public Health.
4
care delivery that is sellable either from a public policy or global health perspective to create a
difference?”16
Lantum had already conducted detailed online research into local non-governmental
organizations (NGOs) active in western Kenya’s Kisumu County, an administrative district
within rural Nyanza province.17 He had read about the online profile of OGRA Foundation, a
local public health NGO and already a partner for Direct Relief International, a reputable
international group. Lantum called OGRA’s founder and, based on their conversation, decided
to visit. The foundation was able to offer services such as access to public clinics and logistical
support, and was willing to partner pro bono, without upfront administration fees. On October
14, 2011 MicroClinic and OGRA signed a partnership agreement. The foundation already had a
written agreement with the provincial public health office to strengthen services in 30 public
dispensaries and health centers. Under the agreement, OGRA was able to make data on those
clinics available to Lantum for analysis.
Over a two-week period, Lantum surveyed the 30 facilities. The clinics stood at Level 2-3 in the
public health hierarchy—near the bottom. The county was notable for its high rates of child
mortality, HIV, malaria, and malnutrition. To his surprise, he learned that new clinics,
affordable or not, would not address Kenya’s rural healthcare access problem. If anything,
existing clinics were under-utilized, many of them operating at 25% or less of capacity.18 “The
need,” he realized, “is not necessarily to build more clinics. It is to figure out what programs,
processes, or products can we put in place that will attract more customers” to existing clinics.
He returned home to re-think.
Defining the challenge

By January 2012, Lantum had a new approach. He selected 10 of the dispensaries and health
centers he’d surveyed in October for an intensive analysis of processes and quality of care. When
he asked for three years of data, the clinics—which already knew him—responded generously.
Lantum stayed in Kenya from February 2-19, starting a pattern that would persist for years: a
week at Harvard (when the course was in session), a week at home in Rochester, New York, with
his wife and twin boys, and two weeks in Kenya.
In February, he wrote a public report he hoped Ministry of Health officials would read on his
findings in the field: clinic management was the bottleneck in public health delivery in Kenya. 19
Lantum learned, for example, that nurses at each clinic (there were no doctors) had to maintain
up to 18 different registers (account books) tracking various aspects of the job. The paperwork
16 Author’s interview with Moka Lantum on March 6, 2015, in Boston, MA. All further quotes from Lantum, unless
otherwise attributed, are from this interview.
17 For more on OGRA, see: http://www.ografoundation.org/. Among other activities, OGRA was helping 30 local
public health centers build capacity.
18 One estimate said that 75% of rural clinics in West Kenya operated below capacity. See:
https://www.ashoka.org/fellow/moka-lantum.
19 Lantum in July 2012 was able to validate these conclusions using the three years’ data analysis.
5
alone consumed 60 days a year per clinic. Then there was ordering drug supplies: the
cumbersome government order form required 1,440 separate entries.
Utilization & supplies

What’s more, Lantum found that inefficiencies in the supply chain of medical products
contributed to the low rates of clinic utilization. The medical supply agency KEMSA accepted
drug supply orders only every 90 days, so four times a year nurses estimated their future
pharmaceutical needs. Because manual records took a long time to update, the nurses rarely had
an accurate picture even of existing drug inventory. Their estimates were mostly guesswork. The
result: some drugs were overstocked, many ran out during the 90 days, and some were never
available.
Patients detected the pattern, and used clinics accordingly. For the first month after a
pharmaceutical delivery, Lantum found that an average 75 patients a day visited the clinics he
studied. In the second month, that fell to 40, while in the third month there were no adult
patients at all. Patients turned instead to the expensive and dangerous black market for drugs.
Some black market drugs were simply smuggled out of hospitals or clinics. Others were
counterfeit; they could contain toxic compounds or lack essential ingredients. KEMSA estimated
that up to 30% of the pharmaceutical market in Kenya might be counterfeit.20 In fact, Lantum
himself had suffered when a counterfeit drug he purchased in Cameroon put him in the hospital
for three days.
Lantum came to what he considered a crucial insight: rather than simply track individual
patient records—the focus of multiple previous reform efforts—he could improve the system if
he also tracked commodities. He says:
The opportunity to impact the system was being able to manage commodities, personnel
and quality of service, and the efficiencies of service delivery. That was really a clear
objective.
Demand Challenges
Although the government paid nurses’ salaries and provided additional subsidies for operations,
facility earnings paid for local supplies, a night watchman, support staff and other needs.
Lantum decided first on a demonstration project to see whether he could turn around the
utilization rate and revenue of two facilities. He chose as his laboratory the smallest and largest
of the 10 Kisumu sites he had surveyed.
The Kasongo Dispensary measured barely 30 by 30 feet and employed three nurses; the
Nyang’oma Health Center had three buildings, 12 nurses and a clinical officer. Kasongo, while
20 United Nations Industrial Development Organization (UNIDO), Pharmaceutical Sector Profile: Kenya, Vienna
2010. See:
https://www.unido.org/fileadmin/user_media/Services/PSD/BEP/Kenya_Pharma%20Sector%20profile_TEG
LO05015_Ebook.pdf
6
small, had a bed for deliveries; its main business was pre- and post-natal appointments,
deliveries, and visits for children under 5. Public health authorities agreed that women and
babies with medical attention before and after birth, as well as a delivery in a medical setting,
fared on average better than those without such services.
Yet while both Kasongo and Nyang’oma were equipped for deliveries, there were not many.
Lantum learned that patients paid Ksh400 for each delivery, while for a standard outpatient
visit the cost was Ksh10. The dispensary averaged one delivery every other month and the health
center averaged 4-5 a month. Kasongo’s total earnings were Ksh3,000-5,000/month (US$35-
57), while revenue at Nyang’oma was Ksh15,000-24,000/month (US$172-276).
Lantum wanted to find a way for the clinics to increase revenues. They needed the extra money
for basic medical supplies that KEMSA provided only irregularly—bandages, soap, rubber
gloves, syringes, and so forth. Additional revenue would also help pay for support staff such as
cleaners or security personnel. Essentially, the money would serve as a petty cash fund to
improve the quality of care for patients, and job satisfaction for health workers.
Boosting revenue by increasing deliveries at the two facilities, concluded Lantum, would
improve the quality of maternal and child health services. Many women chose to give birth at
home for a variety of reasons: travel was difficult and expensive, and a substitute had to be
found to care for children and chores at home during the mother’s absence. But women paid a
home birth attendant Ksh1,000-1,500 (US$11.50-17.25), versus the Ksh400 charge at a health
center or dispensary. Accordingly, felt Lantum, it should be possible to increase deliveries at
Kasongo and Nyang’oma.
Karibu
Lantum decided mothers needed an incentive, and he settled on a product: onesies. The easy-
on, one-piece infant outfits with convenient snaps were expensive and hard to find in Kenya.
Volunteers in Rochester organized a US collection campaign for onesies, and he personally
carried the outfits to Kenya. He decided that this effort belonged under the umbrella of the
nonprofit 2020 MicroClinic Initiative, and in June invited Lynne Davidson to become vice
president in charge of operations and grants. Davidson had 25 years’ experience in international
development and academic administration, and knew Lantum from the University of Rochester.
On June 12, 2012, the New York-based 2020 MicroClinic Initiative launched its first program,
called Operation Karibu (Swahili for welcome,) at Kasongo and Nyang’oma. Any mother who
chose to deliver her baby at either location would receive three to five free onesies for the
newborn. Within two weeks, the delivery rate rose to six a month at Kasongo Dispensary, and 20
a month at Nyang’oma. Kasongo peaked at 15 deliveries a month and Nyang’oma at 40 by
September 2012. Monthly revenue from fees hit highs of Ksh12,000 (US$138) and Ksh54,000
(US$621) at Kasongo and Nyang’oma respectively, a fourfold increase.
At the same time, a healthcare management classmate of Lantum’s, Dr. Priti Lakhani, donated
$65 per clinic to start a seed fund for incidentals such as transportation for emergency deliveries
7
(there was no ambulance) or for the community health workers working for Operation Karibu.
In July 2012, thanks to donations from additional classmates and other donors, the program
added three sites. In its first year of operation, Karibu delivered 1,065 babies.21
Building a solution
In parallel, Lantum built on his insight into the importance of commodity tracking and real-time
reporting. In February 2012, he held a focus group with 25 nurse-midwives in Nyanza Province
to further explore what constrained their work. He found a consistent set of complaints:
nowhere to sleep or rent near the health center for those working early or late shifts; no
management training or continuing education opportunities; no discretionary funds to pay for
patients’ transportation or other incidental expenses. They also voiced frustration that 50% of
the job was non-clinical: oversee support staff, write reports, pay bills, buy lab supplies,
maintain drug supplies, or organize patient transport.22
Matu
On February 4, 2012, friends in Nairobi introduced Lantum to Mary Matu, owner of two Kenyan
medical supply companies.23 She distributed drugs in Kenya for such pharmaceutical firms as
Pfizer, Merck Millipore, and Becton Dickinson. With an MA from the University of Alabama, she
had 20 years experience in Kenya’s public health system and medical commodities logistics, and
an abiding interest in maternal/child health. “She knew the ins and outs of how it works in
public procurement,” recalls Lantum.
Meanwhile, Lantum decided to explore whether it was possible to develop a computer software
application to address some of the problems constraining rural healthcare workers. In February,
he hired his first employee, Isaac Kimotho, a young Kenyan who had created a polling
application for the upcoming 2013 national elections. Another three employees followed, none
older than 25. “None knew anything about healthcare,” recalls Lantum, but they did know about
customer-facing mobile apps, inventory management systems, user interface and database
management. “I depended on them for everything, since I didn’t know IT,” says Lantum. “They
poured their hearts into it.” Lantum paid the developers as freelancers, about Ksh25,000 a
month ($287). Each held other jobs as well.
The development team decided to design an app for use on computer tablets, and chose
Androids because they were the best priced. A tablet, they reasoned, was cost effective, portable,
secure, and could operate for hours off a battery. They called their project an enterprise health
management system, designed specifically for use by the government. “The business plan was
completely around how can we provide services to the public sector,” notes Lantum.
21 The government’s incentive structure later changed. In June 2013, it raised the reimbursement rate for a skilled
delivery in a dispensary or health center to Ksh2,500. (A hospital birth was compensated at Ksh5,000, but
hospitals were rare in the countryside.)
22 Moka Lantum, “Management and Maternal Mortality in Kenya,” Harvard College Global Health Review,
Spring 2012. See: http://issuu.com/hcghreview/docs/complete_final_draft_10.25
23 The two were Angelica Medical Supplies Ltd. and Holden Medical.
8
While the IT team worked on the app, Lantum pursued other priorities. Matu introduced him to
program officers at KEMSA and officials at the Ministry of Health. Were their computer app to
succeed, they would need good relations with both government entities. Lantum says he was
trying “to understand what hoops we would have to go through to get government to adopt the
system.” They also arranged meetings with representatives of the World Bank, the US Agency
for International Development (USAID), and other public sector financers.
MCT
By June 2012, the IT team confirmed that it could build what Lantum was looking for. Matu
formally agreed to join him. They agreed to focus on Levels 2 and 3 of Kenyan healthcare:
dispensaries and health centers. They hoped to help individual facilities improve rural maternal
and child services, increase revenue and better manage their drug supply system, patient
records, and personnel. “It was really about the base of the pyramid… health centers and
dispensaries which are nurse run and operated,” says Lantum.
It was time to incorporate. He and Matu had the option of creating a second nonprofit, but in
Kenya the for-profit registration process was far simpler. A nongovernmental organization
(NGO) would require a six-month wait for approval, while a nonprofit society required a board
with a minimum 10 members, a potentially unwieldy group. A nonprofit also meant nonstop
fundraising. Lantum preferred to create a self-sustaining business. So on June 15, they
registered a for-profit company in Nairobi, calling it MicroClinic Technologies Ltd. The law
required a Kenyan partner; Matu became MCT partner and board chair while Lantum took the
title of managing partner.
Proof of concept
In August 2012, the new health management system—which they christened ZiDi™ —was ready
for its maiden flight. ZiDi™ was a cloud-based software service that ran on tablets, laptops or
mobile phones, both online and offline. A nurse at Kasongo registered the first patient on
August 20, and ZiDi™ went into beta testing on September 10.
MCT decided on three test locations: Nyang’oma Health Center, Kasongo Dispensary, and
Chemelil Dispensary in Muhoroni Health District, Kisumu County.24 Lantum hired a field
coordinator, Peter Okul (also on staff at the OGRA Foundation), to manage daily operations
across the three test sites. He paid the coordinator some Ksh25,000 ($287) a month. He also
hired technical assistants for each clinic, paying each Ksh5,000 ($57) a month.
As testing started, Lantum surveyed the competitive landscape. To his satisfaction, no other
system was as comprehensive as ZiDi™; anything similar was donor-financed and driven, and
therefore focused on whatever disease the donor specified. “Nobody was really looking at it from
the perspective of an enterprise system, let alone the commodities piece,” says Lantum.
24 All three were also Operation Karibu sites.

9
Still, costs were high, and most expenses were paid out of Lantum’s pocket. He had anticipated
that it would take years to establish the project, and had budgeted accordingly. “I put it all in,”
he says, from his 401K retirement savings plan to a rental property he owned.
I knew that you cannot sit on the fence. I also knew that the fiscal commitment was less
than the personal commitment… Usually it’s a four- to seven-year run for a product to
stick and for all the elements to fall into place: contracting, pricing, consumer awareness.
“Soft” requirement
The costs were about to get higher. Lantum had learned that the government had an informal
requirement that any new product operate for a year in at least two health facilities to prove its
worth. Only then would the government even consider a contract. That posed a major expense
for the service provider—but it was unavoidable. In January 2013, MCT formally declared ZiDi™
pilot projects at Kasongo Dispensary, Nyang’oma Health Centre, and Chemelil Dispensary. MCT
collaborated with the Muhoroni District health management team, as well as their ongoing
partner, the OGRA Foundation.
It was time to put ZiDi™ through its paces and prove what it could do. Lantum ran two data
collection projects simultaneously. From January 4 to March 31, Lantum and his team used
ZiDi™ tablets to collect detailed data about drug inventory and use at two of the three pilot sites:
Kasongo and Nyang’oma. In a separate survey from January 14 to April 18, they surveyed the
use of child and maternal health services at the two facilities.
Inventory
On the drug inventory front, the results confirmed much of what Lantum’s year-earlier survey of
30 clinics had indicated. In general, the health center overstocked and the dispensary
understocked medications. ZiDi™ documented that the health center, for example, had on hand
only 82 of the 100 drugs listed by the government as essential, while the dispensary had only 42
of the 100. Over the three months of the study, 69% of the 82 drugs at the health center were
overstocked, while 18% were understocked or unavailable. At the dispensary, 28% were
overstocked, with 67% understocked or absent.
Converting those percentages to money values, Lantum calculated that the overstocked items
were worth Ksh1.5 million (US$17,240), while the value of the understocked/unavailable drugs
was Ksh100,598 (US$1,156). Extrapolating those costs to 473 health centers and 2,393
dispensaries nationwide over 12 months meant that Kenya was wasting Ksh1.6 billion ($18.4
million) on overstocked drugs that would have to be disposed of unused when they expired.
ZiDi™’s accurate tracking capabilities, argued MCT, would allow the Ministry of Health to
eliminate those losses and turn the $18 million to better use. By spending less on overstocked
items and more on those in short supply, KEMSA could improve service without any extra
expenditure. ZiDi™ could unclog the system, save on unnecessary warehousing costs, and
reduce the risk that patients would turn to unsafe alternative drugs.
Mother/child
10
During the survey of maternal and child health services, nurses entered data on ZiDi™ for 4,022
patient encounters at the pilot health center and dispensary. In the three months January 14–
April 18, the two facilities collected Ksh122,316 ($1,406). ZiDi™ documented that visits from
patients of reproductive age, 15-49, represented 58% of visits and earned 61% (Ksh74,613 or
$858) of the two facilities’ total fees. Women represented 60% of the total 15-49 patient
population. They made 167 pre- and post-natal visits, and had 33 deliveries. The relatively few
deliveries earned fully 68% of the reproductive health fees, even after accounting for an
estimated 47% loss from fees waived for reasons such as inability to pay.25 Children under 5
represented 21.1% of visits and only 8.8% of fees. While services to young children were free, if
the patient for example needed drugs unavailable via KEMSA, the family had to pay.
By the time Lantum wrote up his findings, the government had announced sweeping healthcare
reforms, but had not yet set the individual reimbursement rates. Lantum calculated that if the
government decided to reimburse delivery services at the prevailing out-of-pocket rate of
Ksh400 per birth, Kenya could anticipate monthly spending at Level 2 and 3 health facilities of
Ksh35.5 million ($408,046) for deliveries alone. He recommended that the government
commission a follow-up study of 300 facilities to determine how to direct that spending toward
improved outcomes for mothers and children.
Lantum recorded his findings in two reports and made them available to public health and other
government officials. He published the first, Commodity Tracking Needed, in April 2013. The
second, Accountability—the Next Frontier in Healthcare, appeared in May and illustrated how
ZiDi™ could track facility utilization rates and accountability in mother and child health
services.
Changing landscape
Meanwhile, the healthcare landscape had changed. National presidential elections on March 4,
2013 put President Uhuru Kenyatta in office. In his inaugural address on April 9, President
Kenyatta announced an ambitious program to abolish within 100 days all maternity fees and to
make all services at Level 2 and 3 public dispensaries and health clinics free of charge.26
Effective June 2013, instead of mothers paying KSh400 per delivery as before, government
reimbursed clinics Ksh2,500 (US$29) and hospitals Ksh5,000 ($58) per delivery.
Lantum maintained his contacts within KEMSA and sought to cultivate new relationships at all
levels of government. However, there was still no contract for MCT. Lantum was learning just
how long the government business cycle was. “Programs change. Departments change.
Management changes. Guidelines? Nobody is clear,” he summarizes. Moreover, the government
budget for pharmaceuticals was flat, there was very little new money, and most development
dollars were earmarked for other purposes.
25 For 33 deliveries, the facilities could have expected Ksh13,200, but Ksh6,150 were waived.
26 For President Kenyatta’s inaugural speech, see: http://www.assatashakur.org/forum/afrikan-world-
news/56290-president-uhuru-kenyattas-inauguration-speech-april-9-2013-a.html
11
The trick was to demonstrate that ZiDi™ could do more for less money. Setting the price was
fairly straightforward. The government paid based on cost, plus a percentage for management
and consulting, plus a risk management premium. Approved total direct costs included planning
meetings, devices, the installation of a local area network (LAN) and workstations, software
licenses, cloud data storage fees, and training. But the service had to represent a savings.
“Basically, selling to government is a matter of cost/benefit,” explains Lantum.
We wanted to demonstrate very clearly that the manual approach costs ‘x,’ versus the
automated is ‘y’… we are saying that what we are offering should not cost you as much,
and you can shift those dollars toward more program implementation.
For example, the government and donor programs spent an inordinate amount of money to
monitor and evaluate public health needs and services. That required people on the ground,
computers, training—and with all that, the data was often two years out of date by the time it got
into the hands of decision-makers. Lantum, applying the cost accounting principles he had
learned in graduate school, broke out costs down to the individual patient level to compare
existing cost structure per patient to anticipated costs using ZiDi™. MCT argued that it could do
better—continuous, real-time data collection for policymakers and public managers.
His efforts began to pay off. In February 2013, KEMSA endorsed ZiDi™. In an official statement,
CEO Dr. John Munyu noted that, because nurses entered drug consumption data manually,
there were inevitable errors, delays, incomplete records, data loss, and low reporting rates. He
affirmed that ZiDi™ could document patient records in real time, generate timely reports and
forecast drug needs for individual clinics. KEMSA had become the lead advocate for ZiDi™’s
adoption in the public sector. On July 14, 2013, ZiDi™ won a key endorsement from the
governor of Kisumu. Governor Jack Ranguma’s official letter to KEMSA said that Kisumu
County would like to be included in an expansion of ZiDi™ to five counties, should that prove
feasible.27 On August 30, the new administration appointed a task force to study MicroClinic
Technologies. The task force report, issued in October, recommended that Kenya adopt ZiDi™
for health information management.
But meanwhile, a new obstacle arose. It was time to test ZiDi™ beyond Kisumu County. Some 10
counties were interested in trying the system. But as Lantum approached other regional
governments, they told him that, to be acceptable, ZiDi™ had to function in hospitals as well as
in clinics/dispensaries. Among other functions, governors wanted a system that tracked revenue
collection, including in-patient services. “We were caught off guard,” recalls Lantum.
Our strategy kind of hit the wall, because we were focused on health centers and
dispensaries where the majority of care is provided, with the bulk of inefficiencies. That
is where the quality of care is substandard. That is where patients are dying.
Counties were newly sensitive to hospital funding. Under President Kenyatta’s new vision for
healthcare, the federal government had shifted responsibility for hospital operations and
funding to the counties. Hospitals now had either to become self-sustaining or turn to local
27 For a copy of Governor Ranguma’s letter, see Appendix 2.

12
government for subsidies. County governments had a budgetary interest in reducing hospital
costs while enhancing revenue.
Lantum and Matu were taken aback. They had pledged to serve health facilities at the bottom of
the healthcare pyramid. Now it looked as though the price of accomplishing that might be to
assist those at the top as well. That meant a return to the drawing board.
New design
By early 2014, Lantum and his group had decided that ZiDi™ would accommodate the county
government requests. However, despite repeated appeals, the counties refused to help finance
the re-design. Lantum knew it would cost upwards of $250,000. “I was losing sleep, that’s for
sure,” he recalls. But MCT had little choice if it wanted to win a government contract. So MCT
signed a Memorandum of Understanding with Kiambu County, near Nairobi, to scale ZiDi™ to a
hospital setting on a pilot basis. Recalls Lantum:
We had to backtrack and say, OK, now we have to scale ZiDi™ for a hospital, that is Level
Four or Level Five. We had a perfectly working system for health centers and
dispensaries, and now we have to upscale… We looked at it as a necessary investment to
do business with government.
A year earlier, MCT had envisioned ZiDi™ as exclusively cloud-based. It had taken three months
to realize that while that could work in a stable IT environment, it would not work in Kenya with
its intermittent electricity supply. So they were already deliberating how to create a hybrid
arrangement of local server plus cloud storage. Now they also had to find a way to accommodate
multiple users.
Microsoft
Multiple users meant more computing power. Tablets would be insufficient; MCT would have to
turn to computers. Android tablets had worked well so long as data was recorded by one user on
a single tablet. But with the prospect of multiple users on various devices updating a single
record, Lantum and his team needed a more robust operating system. In December 2013, the
Microsoft 4Afrika fund gave MCT a $30,000 grant to migrate from Android to Windows, and
MCT became a Microsoft partner. Along with the grant money, Microsoft enrolled MCT in a
BizSpark-plus program that entitled it to $60,000 worth of data storage a year plus free
consulting services. Microsoft typically charged for cloud storage services based on the amount
of data stored and retrieved. At Microsoft’s assumed rate of $5,000/month for ZiDi™, the
program gave it about 12 months of services at no charge.
Re-design
In clinics, nurses used ZiDi™’s web-based app to collect data on individual patients using a
single tablet, then uploaded the data to the cloud in near real-time, where it became available to
far-flung stakeholders like KEMSA. In hospitals, however, multiple users from doctors to lab
technicians using different devices needed to enter data on the same patient. Each individual file
had to update between department entries. That meant reexamining the cloud-based application
13
and devising instead a local area network (LAN) solution, which would allow for updates even
when Internet service was spotty. Says Lantum:
I had to redo the whole back-end to accommodate the hospital environment without
overwhelming the [model for] health centers and dispensaries which, at the end of the
day, is 80% of the market.
Instead of testing before selling, as a private sector company typically would, MCT developed
and tested the hospital product live. “[We were doing] real time development, real time testing,
real time post-development quality assurance,” notes Lantum. “That’s crazy if you think about it,
but that is what social entrepreneurs do.” There was no funding for a different approach. “We
said, hey, can you use it today? Can we see how it works? We get five or six doctors to use it, and
troubleshoot with them.”
More awards
Meanwhile, ZiDi™ continued to attract critical acclaim. In early 2013, MCT had won the 2013
Best Mobile App Award at East AfricaCom, an annual mobile telecom conference. In December
2013, ZiDi™ was one of four to win the GlaxoSmithKline and Save the Children Healthcare
Innovation Award for outstanding health care innovations in emerging markets. It came with a
prize of $100,000. The Sankalp Forum, which recognized social entrepreneurs, selected MCT
for its 2014 Social Enterprise award in healthcare. In March 2014, the US-based Center for
Health Market Innovations singled out ZiDi™ as East Africa’s “most promising new innovation.”
The Financial Times (London) and the International Finance Corp. (World Bank) co-sponsored
a Sustainability award, for which MCT was a finalist in May 2014. In August 2014, the company
won a healthcare IT customer value leadership award from the US consulting firm Frost &
Sullivan.
But MCT still had no government contract. In fact, the government had not even issued a
Request for Proposal (RFP), the first step in the public contracting process.
Selling the product

Lantum and Matu had never stopped trying to persuade government officials at all levels to
purchase ZiDi™. On January 29, 2014, MCT Board Chair Matu through her professional
connections had arranged for Lantum to brief Minister of Health James Macharia and Minister
of Information, Communication and Technology (ICT) Fred Matiang’i about ZiDi™’s
capabilities. Yet again, Lantum made the pitch: that Kenyan medical facilities reported less than
30% of national health indicators, and then six to nine months late; and that 30% of national
health expenditures went to salaries, yet nurses too often spent their time compiling reports
manually rather than caring for patients.
Using ZiDi™ to automate health service delivery could mean significant savings on personnel
costs, among others. Lantum and Matu were heartened when, in April 2014, the Ministry of ICT
conducted an independent evaluation of ZiDi™ and awarded MCT the Best ICT Innovation for
Healthcare Delivery in Kenya.
14
At two years old and counting, ZiDi™ could do a lot more than in its first incarnation in mid-
2012. By identifying drug supply breakdowns and automating the supply of free or publicly
subsidized drugs, it could reduce mortality from malaria, measles, pneumonia, and other
curable diseases. The data from each patient encounter generated detailed reports of projected
inventory needs. Other reports captured valuable, contemporaneous information on child
welfare, immunization records, family planning, prenatal, maternity and post-natal care, HIV
treatment, and tuberculosis treatment. ZiDi™ could also document utilization rates at individual
health facilities, produce detailed financial statements, and track human resources. But MCT
was not generating any ongoing revenue from customers.
Private sector?
In summer 2014, Lantum began to consider more seriously something that had first struck him
forcefully when MCT won the Sankalp award: what about selling ZiDi™ to the private sector,
with its 5,373 facilities? Most of those were clinics similar to dispensaries and health centers in
their scope of operations. It was over two years since MCT had incorporated. While the
enterprise in 2014 had earned $30,000 for a small project for the Grand Challenges Canada
Program, and over $100,000 from awards, Lantum and Matu still paid the brunt of its expenses.
If the Kenyan government were to sign a contract for ZiDi™, it would be worth over $100
million. But how much longer might that take?
The question, as Lantum saw it, was whether MCT should wait for the government to move
forward with its procurement process, or turn instead to the private sector for equity and/or
sales? There was already interest in ZiDi™ from over 150 private hospitals and small- to
medium-sized owner-operated clinics. MCT could potentially raise money from private
investors, or borrow it from banks on the promise of sales to private health facilities, both in
Kenya and eventually throughout Africa. That could mean giving up some ownership and
control over the company, but would provide much-needed funds for growth and development.
MCT Board Chair Matu was strongly opposed. “The private sector was not very developed,” she
notes. “We would have to go door to door, conduct proper marketing. We didn’t have the
capacity.”28 Of course, MCT could pursue both the public and private routes—at least in
principle. But in practice, with only a few employees, MCT did not have the capacity to pursue
both with equal commitment. Lantum, in particular, would have to reorient himself for a
significant time almost exclusively to the private sector. What’s more, going after private clients
would risk distracting MCT from its mission of serving the public health needs of the poorest
segment of the population.
A private sector marketing push also changed crucial pieces of the business model. For one,
what was MCT selling? A license to use ZiDi™? ZiDi™ as a software service requiring cloud
storage? Or was it preferable for MCT to purchase the computers needed to run ZiDi™, and sell
the whole package as a hardware/software service? That would require a substantial capital
28 Author’s telephone interview with Mary Matu on May 25, 2015. All further quotes from Matu, unless otherwise
attributed, are from this interview.
15
outlay to buy the computers. MCT would also have to re-do its pricing mechanism for private
sector clients. Instead of total cost—the only acceptable approach for a government contract—it
would have to select an optimal price metric: price per user, per patient, or per workstation?
If MCT chose to wait, the government contract eventually would more than cover MCT’s outlay
so far and provide guaranteed business for the life of the contract. On the other hand, if MCT
went to the private sector now, it could provide desperately needed revenue quickly. Should
Lantum spend his time seeking investors or focus on the government? Should he seek a bank
partner? Or look for grant funding to bridge the gap until the government contract came
through? If MCT were to target the private sector, the effort would have to start soon.
16
Appendix 1
17
Appendix 2
18
19
Appendix 3: Map of Kenya Counties
Source:
Wikimedia Commons
(https://commons.wikimedia.org/wiki/File:Map_showing_Counties_underthe_new_kenyan_constitution..gif)
20
Appendix 4: Volunteers sorting infant clothing, including onesies
Source: ZiDi™ marketing slide, by permission MicroClinic Technologies
21
Appendix 5
22
Appendix 6
23
Appendix 7: MicroClinic Technologies Ltd. spreadsheet 2012-2014
Source: Moka Lantum, by permission
24
Appendix 8
“Mel” talk: Paying the Price: the Promise of e-health in Kenya

Moka Lantum, Managing Partner, MicroClinic Technologies Inc., Kenya
delivered Saturday, October 12, 2013, University of Rochester
see: https://www.youtube.com/watch?v=8WBQ0xdthO4.
25

ZiDi Case Study Final

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

ZiDi Case Study Final

Uploaded by

Copyright:

Available Formats

PH5-045

The Trials of a Social Entrepreneur: ZiDi™,

Defining the challenge

Utilization & supplies

24 All three were also Operation Karibu sites.

27 For a copy of Governor Ranguma’s letter, see Appendix 2.

Selling the product

Appendix 3: Map of Kenya Counties

Appendix 4: Volunteers sorting infant clothing, including onesies

Source: ZiDi™ marketing slide, by permission MicroClinic Technologies

Source: ZiDi™ marketing slide, by permission MicroClinic Technologies

Source: ZiDi™ marketing slide, by permission MicroClinic Technologies

Appendix 7: MicroClinic Technologies Ltd. spreadsheet 2012-2014

Source: Moka Lantum, by permission

“Mel” talk: Paying the Price: the Promise of e-health in Kenya

You might also like