Opinion: Why Living Goods left the entrepreneurial model

As momentum grows around paying community health workers, or CHWs, entrepreneurship is increasingly suggested as a possible solution. At the end of my tenure as CEO at Living Goods, I’ve been asked about our journey away from our original entrepreneurial model. This was a deliberate move and one we put a lot of thought into over many years. Although entrepreneurship can be important to bring in income, it is not a model we support for remunerating CHWs for their work.

Living Goods was founded in 2007 in Uganda to solve a major problem: how to get health care to those who need it most. Inspired by the U.S. network of Avon ladies who went door-to-door selling beauty products to their neighbors, we envisioned a cadre of CHWs who would sell affordable, high-impact products while offering health services.

Our hypothesis was that by selling impactful products, CHWs would gain access to hard-to-reach households and provide communities with greater access to care. At the same time, they would earn meaningful income for their work.

Early evidence showed this worked. A randomized control trial demonstrated that Living Goods’ approach reduced under 5 child mortality by 27% at less than $2 per person reached. We thought surely we had found a scalable model.

Shifting away from the entrepreneurial model

Around this time in 2014, I was hired as Living Goods’ product director to refine our basket of products. In turn, sales increased, CHWs’ in-stock rate surpassed 90%, and shrinkage reduced significantly. However, we realized that Living Goods was unlikely to increase its own revenue to more than 10% of total expenditure, and CHWs were only making around $5 a month. This was not sufficient or dignified pay for the work they were doing. I began to question the model.

In 2016, we opened operations in Kenya, and I also became country director. We strongly promoted this selling model to complement health service delivery. While health indicators improved, sales plateaued, generating little additional revenue for Living Goods and again only modest income for CHWs.

So we decided to do some testing. In one subcounty in Kenya, we stopped selling everything but medicines and saw no significant decline in health service delivery. We also tested a no-margin approach that led to a 20% increase in testing and treatment rates, confirming that user fees were a barrier to consumers. To offset this, we increased CHW stipends, and CHW motivation and household visits stayed steady.

We dug into more numbers and realized that our top seller, a highly nutritious porridge, was not selling at the volume needed to materially impact children’s nutritional status. Our next best sellers, efficient cookstoves and solar lights, were becoming more available through other sources. This led us to stop selling products other than essential medicines. We increased payment to CHWs, optimized at about $20 per month for their part-time work.

This was around the time I became CEO in 2018. We had been scaling rapidly, and our modeling showed that while continuing with user fees allowed us to support more CHWs, it resulted in fewer lives saved. We were concerned about how we could afford to stop selling medicines altogether, but the logical choice was to transform to a free model and replace CHWs’ sales income with a stipend. It was the best way to ensure the long-term sustainability of our mission and maximize our positive impact on community health.

The path to sustainable solutions

So, if this entrepreneurial model was not the sustainable road map for community health, what was? And how did you ensure the CHWs were stocked with critical medicines and fairly compensated for their work?

Three key developments shaped our evolution:

1) Refining our model. Results of a second, scaled randomized control trial with 4,000 CHWs — 9 times as many as the first — led us to codify a data-driven performance management framework. This required that CHWs were digitized, equipped, supervised, and compensated, or DESC —  which became the foundation for scaling our operations.

2) Partnering with governments. In Kenya, we transitioned into a health system strengthening partner. There was beginning to be wide recognition that CHWs should be considered a professional cadre and the DESC elements being provided by the government was the goal. A global movement also began to push for similar approaches with the launch of the Community Health Impact Coalition and others.

3) Adapting to the global pandemic. The COVID-19 pandemic highlighted the importance of CHWs’ roles in safely providing essential health services to families in their homes — which was critical in regions with severe lockdowns. We responded by transitioning to a free medicine model, and we saw a doubling of treatments.

Today, Living Goods prioritizes co-financing community health with governments, the natural “doer and payer” at scale. CHWs in our co-financed operations in Kenya are now earning about $40 per month from the government, which is great progress.

Meanwhile, in our learning sites, we fill medicine gaps where needed and support our government partners with forecasting and supply chain strengthening. In Kenya, this has led to increased access to government-provided medicines, ultimately achieving 70% in-stock rates.

In summary, we learned that an entrepreneurial model is not a sustainable solution for scaling up community health. While it may offer a short-term solution for ensuring access to medicine in resource-constrained areas, it often results in inadequate and inequitable compensation for CHWs and imposes financial barriers on patients through user fees.  We encourage governments and implementers to follow the evidence: eliminate user fees and invest in comprehensive health service delivery models that emphasize accessibility and equity, including care by professionalized CHWs. 

Visit Living Goods to learn more about their help to save lives at scale by supporting digitally empowered community health workers.