graveyard

Graveyard of Hospitals

Editor’s note – This article was written by Dr Abayomi Sule and first appeared on his linked in page. Guests articles are welcome, contact us here with your submission.   

Lagos is the graveyard of hospitals in Nigeria. Hospitals and clinics in Lagos have a high mortality rate with many failing during the lifetime of their founders and much more after the demise of their founders. Countless carcases of once thriving hospitals and clinics now lie boarded up and crumbling in inner-city neighbourhoods and high streets of Lagos. Fading signages serve as tombstones; memorials of once glorious practices which provided healthcare and jobs.

There are only a handful of medical practices founded in the 1960s or 70s which remain in operation. Most practices in operation were founded in the 1990s or early 2000s. These are ageing along with their founders and likely to expire before or soon after the demise of their founders. After the founders’ demise, friends and relatives bury their bodies accompanied by elaborate ceremonies but soon afterwards in less elaborate and inauspicious moments without pomp or pageantry, employees and patients fizzle away and the practices are boarded up signalling the effective burial of such practices.

Many Nigerians are served exclusively by private practices. In many instances, the demise of these practices limits the access of their patrons/clients to healthcare. Some patrons may no longer have access to healthcare and many others will no longer have access to their medical records which are likely to be paper based and stored within the bowels of the boarded-up practices. Job losses also result and for many semi-skilled Nigerians employed by these practices it may be difficult to secure another gainful employment to meet their personal and family financial needs.

This situation isn’t peculiar to Lagos; it is typical of the healthcare landscape in Nigeria, as all practices are subject to the same intrinsic and extrinsic factors which hinder their survival beyond the lifetimes of their founders. These factors include:

1.  Subsistence vision of founders

Most practices are set up to meet the subsistence needs of their founders. Rarely are practices set up primarily to meet market needs. Even rarer is to have a practice set up and resourced to track and meet growing market needs. Once the practice can continually meet the personal and family obligations of the founder, he/she never bothers about the posterity of the practice. This is especially true once the founder’s children have graduated and are gainfully employed.

2.  Lack of or inadequate separation between the identity of the founder and the organisation

Prior to the onset of the National Health Insurance Scheme in Nigeria in 2005, it was typical for practices to operate using the personal bank accounts of their founders and remain unregistered with the national business registry (Corporate Affairs Commission). These practices are usually named after their founders and in instances when the practices are not named eponymously, the founders are identified by the names of such practices. This co-mingling of the founders’ persona and the corporate identity of the practice makes it difficult to separate the assets of the founder from those of the hospital/clinic consequently after the demise of these founders who frequently die intestate squabbles or disputes associated with asset inheritance frequently cripple or render such practices inoperable. It also makes it difficult or impossible to achieve a sale of the practice during the lifetime or after the demise of the founder as the founders and their family members are emotionally and economically attached to the practice.

3.  Inadequate management expertise and organisation structure

Many founders have minimal or no management expertise. Leadership is frequently confused with management capacity hence medical entrepreneurs rarely hire skilled management personnel to work with them. Even rarer is a partnership between a medical entrepreneur and a business co-founder consequently, these practices are poorly organised and operated. Staff are hired based on their affordability than their technical capabilities. Frequently staff operate without organogram, job descriptions or performance reviews. All staff report to the founder and take instructions from him/her. Once the founders are weakened by old age, illness or at their demise, dysfunctional organisations emerge which are unable to function or survive.

4.  Lack of succession planning or unrealistic succession planning

Many medical entrepreneurs fail to articulate a succession plan that ensures the continuity of their practices. Some founders expect their children or close family members to become physicians and take over the management of their practices. In some instances, they succeed in achieving the first objective of having a second generation of physicians however these physician descendants may pursue different career paths within or increasingly outside the country. This unrealistic succession plan hinders the founders from growing and incentivizing successors within the ranks of their employees or seeking out non-family members as successors.

5.  Disruptions and harsh business climate

Medical entrepreneurs are rarely prepared nor open to social, technological, economic, and political changes. They are conservative and resist change, which in some instances may be of benefit to the industry or the population. The de-industrialization of the 1980’s resulted in the demise of practices which were dependent on the industrial corporates while the emergence of managed care industry has placed many practices on life support as robust retainer fees and reimbursements have been discounted by the intermediating HMOs. The emerging digital disruption of the 4th industrial revolution may imperil many practices and hasten their demise before or soon after that of their founders, as many practices are yet to adapt to emerging disruptive business models or leverage digital tools and innovation for patient care and customer engagement. In addition, medical practices are subject to the same harsh economic climate which constrain the growth and hasten the demise of other establishments. Inconsistent economic and health sector policies, declining incentives, multiple taxation and over regulation by a multiplicity of professional regulatory groups contribute to the stunting of the growth/development of private medical practices. Frequently by share willpower and relationships with government officials, founders may ensure the survival of practices during their lifetime however at their demise their successors may be unable to muster similar goodwill with government officials sufficient to preserve the operations of the practices.

To ensure that Lagos and other Nigerian cities and communities become thriving oases for healthcare practices rather than graveyards it is essential that:

1.  Medical education including residency should be reformed to include basic management and entrepreneurship education which will enable founders to understand the necessity for impact goals, unique value proposition, succession planning, organisation structuring and other critical business skills and competencies, ensuring the greater likelihood that practices succeed beyond the lifetime of physician owners. Medicine is built around a series of apprenticeships notably internship and residency programmes. It is essential that management education is integrated into these apprenticeships or emerges as an additional track available voluntarily or mandatorily. In lieu of this, physicians may seek out established and successful medical entrepreneurs with well-structured practices for mentorship, coaching and employment.

2.  Physician entrepreneurs need to separate the identities and persona of their businesses from their own individual personas and identities. They should subject their practices to fit for purpose governance and accountability requirements which are neither flimsy nor too elaborate.

3.  Physician entrepreneurs also must make deliberate choices such as identifying, grooming and incentivizing willing and competent family or non-family successors. It is also imperative that if possible management control and/or leadership is transitioned to these identified successors within the lifetime of the founder. Non-family members may include employees or third party buyers. Succession planning may also include the option of donating the practice to a community or public interest group.

4.  Physician founders and investors under the auspices of their professional trade associations such as the Nigerian Medical Association (NMA) and the Association of General and Private Medical Practitioners in Nigeria (AGPMPN) should make effort to engage proactively with government as partners in progress to request policies and incentives which facilitate the survival of their practices and businesses. In some instances, these associations may work closely with government executives or legislators to articulate bills or legislation which will make doing business easier. It is equally important that these professional trade groups partner with other non-medical trade groups such as chambers of commerce, the Nigerian Bar Association (NBA) e.t.c to articulate and solicit pro-business policies.

5.  Physicians need to embrace change. Each wave of change brings with it seeds of opportunity and peril. It is imperative to mitigate perceived dangers and exploit potential opportunities. It is essential that physicians constantly scan their landscape and beyond for emerging trends and innovations which may disrupt their businesses. It is essential that practices be resilient and plan to accommodate disruptive forces through co-opetition, innovation and inter/intra-sectoral collaboration.

Despite these recommendations some practices will die before or soon after the demise of their founders but I expect that the mortality rates of hospitals and clinics would decline, preserving more practices long after the demise of their founders and ensuring that they contribute to providing access to healthcare services and jobs for current and future generations of customers and employees. We can look forward to having lots of hospitals such as Cleveland Clinics founded in 1921, Pennsylvania Hospital founded in 1751 and the Mayo Clinics founded in 1889 which have survived many decades after the demise of their original founders.

I welcome your comments and do let me know any practices which you think have been structured to outlive their founders.

7 thoughts on “Graveyard of Hospitals”

  1. Your article is great with strategic analysis. I have equally noticed the poor state or death of previously thriving hospitals: St Shaddrack, Ajayi Memorial, Labi Hospital to mention a few. Nonetheless, the issue is not peculiar to healthcare alone. How many accounting firms, legal firms and other professionals survive their founders?

    Thus, there are fundamental issues intrinsic to Nigeria. I agree with the suggestions you made for healthcare practitioners but in general, businesses in Nigeria should embrace trust, diversification of ownership( including stock exchange listing) to have in place credible sustainability strategies.

    On the other hand, investors who are Nigerians should realize that it takes time to grow good business and should not expect quick profit. Failing to realize quick profit, shareholders tend to bring the business down with a view to recoup their investments. This practice should be avoided.

  2. Yeah, Medical Practices surviving past their founders continues to plague the very important healthcare sector. The author’s analysis is spot on and the recommendation should be followed by Medical Practice owners that want their practices to outlive them.

    In addition to the above recommendations most hospital practices are cottage in nature with few inpatient beds. The entry of international health investors into the Nigerian healthcare space (especially from India & South Africa) setting up large healthcare facilities may make the cottage hospital cost ineffective and unsustainable.

    These cottage hospitals need to form Consortium, rationalise back office operations if they are to become competitive. There will still be room for cottage practices but not as extensive as current numbers.
    Also the proliferation of Diagnostic only facilities are undercutting revenue streams of these cottage practices, this is also sending practices to early grave sometimes before the demise of the founder.

    The healthcare space in Nigeria will transform through disruptive innovations, what will ultimately decide each hospital future is clinical outcomes of it’s patient.

    Diran Famakinwa FCA
    Chief Finance Officer
    St Nicholas Hospital

  3. Oladimeji Afolabi

    Exhaustive Market analytical piece.
    Cottage hospitals within 🇳🇬, sustainablility and effectiveness within the the Nigerian socio-economic space.
    An interesting and informative analysis provoking thoughtful and prospective opportunistic challenges within the operating environment.
    Lessons to be learnt and land mines to be mindful of for prospective investors.
    The need for a thorough and thoughtful home work (feasibility studies) and current viable reviewable business plan for health care services delivery is critical for intending investors into our market place.
    Thanks for sharing. 🙏🏾😀👍🏾😎

  4. Olukemi Oluwagbemi

    Very well written article, insightful analysis, however on the issue of succession planning I do not agree that it is always the fault of the founder or failure to plan. There is a more insidious problem lurking below the surface. The average candidate for succession, junior collegues only want to save money to travel abroad or else go into a specialty. Current reality shows a huge decline in interest for private practice.The brain drain is massive. So even though you are actively looking for a successor someone to mentor into the role they seem not to be there.
    The way out seems to be as you alluded, to have a business model, not built around the founder, with the ability to function without the owner even in his/her life time by having business administrator/ accountant who understands the business of medicine and allow them to handle the business while doctors handle medical which is their own core competence. It will entail having written, documented policy for every aspect of the business. A board of directors can then be appointed to oversee the work of the administrator even in the life time of the founder such that when he excits the scenes the hospital continues to function seamlessly.

  5. ONYIAH IKEGWUONU DON FRCS. DR

    The write up is very apt. However I am surprised no mention was made of Group Practice as a means of sustaining an efficient practice that is both rewarding and more relaxing for the participants. As I pointed out in my earlier paper on Group Practice, a proper group practice must follow a properly written MOU by the share holders who do not need to be doctors. The terms for reward are clearly spelt out in the MOU. It is not really a complex matter but professionals are afraid to explore the goldmine. Any professional group can actually apply the scheme. Dr. I. D. Onyiah, FRCS, Enugu.

  6. I stronhly appreciate the details contained in this write up. Very apt. The author did a good job.
    I must let it be clear that all d four contributors before equally raised the bar on this discussion as their arguments are almost faultless.I agree with their submissions so will not repeat what they have argued but the probable workable survival strategy left for us is GROUP PRACTICE. The earlier we jetisson sole proprietorship which remains a recipe for poverty, the better.
    Thanks Mr.Author.
    Kay A Adesola.

    1. Olukemi Oluwagbemi

      Ever since I first heard about group practice, I fell in love with the idea of it almost 20yrs ago. Since then I have not seen anyone (its not for want of trying) who could help to take us from where we are now in our individual practices to group practice. The successful group practices I know of, all started as group practice ab initio.
      How do you migrate from where we are now where you have obligations and various needs to meet, with no other source of income to migrating into a group practice. I am yet to see anyone perform the feat. Over the years there has indeed been much talk, discussions back and forth, but no one seems to know the way to this desirable eldorado, yet ‘winter is coming’.

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