MICROCAPITAL STORY: Bangladeshi Society for Social Services (SSS) Subsidizes Health Microinsurance Scheme with Microfinance and Investment Profits (Part III of IV)

This article on the Society for Social Services (SSS) Health Microinsurance (HMI) program is the third in a series of MicroCapital case studies on HMI schemes in Bangladesh. Please also refer to Part I on Grameen Kalyan; Part II on the HMI scheme of the Bangladesh Rural Advancement Committee (BRAC MHIB); and Part IV, a wrap-up of the CGAP research paper “Health Microinsurance: A Comparative Study of Three Examples in Bangladesh”. As explained in the Grameen Kalyan article, public health services in Bangladesh are urban-based, elite-biased, and curative-oriented (p.vi), and the World Health Organization (WHO) identified inadequate healthcare financing mechanisms to be one of the biggest obstacles to improving health outcomes of the poor.

The Society for Social Services (SSS) is a nongovernmental organization (NGO) that was established in the Tangail district of central Bangladesh in 1986. It has since expanded to serve 12 districts of Bangladesh. SSS’ principle focus is its microfinance program, which was established in 1992. However, it also has programs in agriculture, fisheries, child development and education, and prevention of child labor.

SSS Health Program began in January 1996, in response to 16 childbirth-related deaths of SSS borrowers and staff. Within a year, SSS established a 20-bed hospital in a rented house in the town of Tangail. The hospital was financed through donations from numerous philanthropies and SSS staff, each of which donated a week’s salary. In January 2004, SSS upgraded to a 52-bed hospital with technical and financial assistance from Dutch charity Terre des Hommes (TdH). SSS also operates 16 rural clinics. Each clinic has one non-graduate full-time paramedic called a Health Assistant, and a part-time female Traditional Birth Assistant (TBAs). Qualified medical practitioners from the hospital visit the rural clinics once or twice a month.

Like Grameen Kalyan and BRAC’s Health Microinsurance (HMI) schemes, SSS’ HMI program operates using a health card system. Health cards are purchased by SSS microfinance borrowers for a registration fee of USD 0.34, equivalent to a premium. Enrolment is compulsory for all SSS borrowers living in the six sub-districts in Tangail in which the hospital and 16 clinics are located. SSS staff members can also purchase health cards for USD 0.17.

Cardholders are entitled to subsidized basic health care at a SSS clinic with a copayment of USD 0.57. Complicated cases are referred to the SSS hospital, which houses facilities for pathology tests, electrocardiography (ECG), ultra-sounds, and x-ray. If a cardholder is referred to the hospital, they receive a 30 percent (p30) discount on hospital charges.

Borrowers living outside of the six sub-districts cannot become cardholders, but can receive service from the clinics for a consultation fee of USD 0.68. Non-borrowers can also receive service, for a consultation fee of USD 0.85 (p30). The purpose of the fee structure is to cross-subsidize (p29) the SSS borrower’s registration fees with higher costs to non-cardholders. However, all fees were decided on through consultation with the community to determine affordability, and all prices are offered at a subsidized rate (p30).

As of November 2004, SSS Health Program had 45.4 thousand users, of which 27 thousand cardholders were SSS borrowers; 1193 cardholders were staff members; 9050 users were SSS borrowers from outside the six sub-districts; and 8110 (p29) users that were non-borrowers. SSS’ website does not provide information on current user numbers.

The only financial data available for SSS Health Program is from 2002 to 2004 in which it recorded an operating loss of USD 257 thousand. Head office expenses amounted to a surprising 60 percent of its operating expenses, at USD 161.3 (p49). SSS Health Programs main source of funds were investments earmarked for it by the parent NGO, and subsidies from the microfinance program’s profits. From 2002 to 2004, SSS Health Program received USD 218.8 thousand from investments and USD 40.2 thousand (p49) in subsidies.

In June 2004, SSS microfinance program reported USD 6.4 million in loans outstanding to 90 thousand active borrowers, USD 10.3 million in total assets, a return on assets (ROA) of 3.21 percent, and a profit margin of 15.59 percent to the MIX Market, the microfinance information clearinghouse. At the time, a CGAP research paper revealed that the parent NGO had no intention of cutting off subsidies to the Health Program. The paper argued (p49), “SSS Health Program has the potential to reach financial viability by revising its charges, improving the renewal rates, and rationalizing some of its head office expenses.”

Since 2004, the SSS microfinance program has grown substantially. In June 2008, it recorded USD 27.8 million in loans outstanding to 255 thousand active borrowers. It had USD 41.7 million in total assets, a 0.16 percent ROA, and a profit margin of 0.80 percent. Information is not available on what progress SSS Health Program has made in reaching financial viability.

By Ryan Hogarth, Research Assistant

Additional Resources:

“Health Microinsurance: A Comparative Study of Three Examples in Bangladesh”, by Mosieh Ahmed, Syed Khairul Islam, Md. Abul Quashem and Nabil Ahmed, CGAP Working Group on Microinsurance, Case Study No.13: September 2005

MicroCapital article, April 22, 2009: “Grameen Kalyan offers Health Microinsurance for USD 1.73 Per Year and Partners with Pfizer Inc, GE Healthcare, and Mayo Clinic. Is it Economically Viable?”

MicroCapital article, April 27, 2009: “MICROCAPITAL STORY: BRAC provides Micro Health Insurance in Bangladesh. Lessons in Financial Viability.”

MicroCapital article, March 25, 2009: Scalable and Sustainable Micro Health Insurance Just Around the Corner?

Mix Market: Society for Social Services (SSS) Profile

Society for Social Services: Home

Terre des Hommes Netherlands: Home

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