Tom Lantos and Henry J. Hyde United States Global Leadership Against HIV/AIDS, Tuberculosis, and Malaria Reauthorization Act of 2008--Continued

Floor Speech

TOM LANTOS AND HENRY J. HYDE UNITED STATES GLOBAL LEADERSHIP AGAINST HIV/AIDS, TUBERCULOSIS, AND MALARIA REAUTHORIZATION ACT OF 2008--Continued -- (Senate - July 16, 2008)

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Mr. COLEMAN. Madam President, I strongly support the reauthorization of the President's emergency plan for AIDS relief. The fight against pandemic AIDS is an important international priority, and I am very pleased that we can work toward a bipartisan consensus on this legislation. We have the benefit of 5 years of lessons learned to integrate into this bill, and the resources that we are putting into action through this measure will deliver lifesaving medicines, basic health care infrastructure and hope to millions of people around the global who face the threat of HIV/AIDS, malaria and tuberculosis.

I have had a particular interest in the area of health care infrastructure in Africa, and have worked closely with my colleagues Senators Durbin and Feingold on legislation relating to this. I am very pleased that some of our language and ideas have been integrated into the current PEPFAR bill. The fact of the matter is that we face great challenges in the area of health infrastructure in Africa, including serious shortages of health care workers, clinics, and hospitals in many areas of the host countries that limit our ability to reach the millions of people who need care and treatment. It is my view that at least some of the answers may be found in the private sector, and it is my hope that U.S. agencies will reach out to the private sector to help us meet the overwhelming needs of the affected countries.

I would like to share with my colleagues the success of one unique nonprofit from my home State that has harnessed the powerful force of franchising to establish a sustainable network of health clinics and pharmacies in two PEPFAR countries. This program, run by the HealthStore Foundation, was established more than a decade ago to ``prevent needless death and illness by sustainably improving access to essential medicines.'' Since that time, the HealthStore Foundation has established a network of more than 65 franchises in Kenya, serving roughly 525,000 patients and customers in 2007. Currently, the program is expanding to Rwanda, and the first franchise should be open within a few weeks. By 2012, the HealthStore Foundation plans to expand its network to over 14 countries serving millions of patients per year.

Each HealthStore franchise is locally owned and operated by a licensed nurse or by a community health worker. Some hire employees, creating still more jobs, mostly for women. HealthStore operates as a typical franchisor, and franchises are licensed under the Child and Family Wellness Shops, CFW shops, brand name. The model incorporates key elements of any successful franchise network:

strong branding, proven operating systems and training; strict quality controls enforced through regular inspections; and well-chosen locations. It is worth noting that franchising the distribution of health care and pharmaceuticals has also helped to curtail incentives for corruption, as franchisees risk losing their business if they fail to comply with franchise system standards.

I describe the HealthStore Foundation program as a ``microfranchise'' model, because this model shares many of the unique characteristics of the microlending efforts led by the Grameen Bank. In Kenya, clinics are easily accessible, located within an hour's walk of the communities they serve. Each clinic offers a range of government-approved, tested medicines and products along with basic health care services from licensed nurses. Up front costs for each franchise unit are modest, and the stores generate a steady income for their owners. To ensure that capital is available, the HealthStore Foundation provides financing for up to 88 percent of the required initial capital, although many owners raise funds through family and friends. Most importantly, these clinics operate to turn a profit, and it is the long-term maintenance of this profit that sustains the system.

Franchising delivers certain competitive advantages, including economies of scale, centralized distribution of high-quality drugs, central management of regulatory and legal issues, and a critical mass of locations that can share best practices and leverage resources. Apart from the benefits accrued through these competitive advantages, franchise owners also receive extensive training, marketing and promotions support, technical advice, and an established, trusted brand name.

The genius of the HealthStore Foundation's strategy for building a sustainable infrastructure of health care delivery in Kenya and Rwanda is the adoption of the franchise business model. Franchising is such a tried and true business strategy in this country that most Americans take it for granted, but franchising is taking place all around us. In fact, a recent report by the International Franchise Association Educational Foundation shows that roughly 909,000 franchise businesses in the United States account for 21 million jobs and more $2.3 trillion in annual economic activity, and franchising has been growing at a faster pace than the overall economy. In the United States, franchising is a business strategy that works because an entrepreneur with a great idea or great product can quickly and efficiently develop a network of businesses to deliver a consistent, high quality product in every State, city and town across the Nation.

The goal of this legislation is to halt the spread of pandemic diseases in a large part of the world. Certainly, the HealthStore Foundation has proven that microfranchise businesses can be capable partners in this effort, but the ownership opportunities provided by franchising also offer us other benefits. We know that ownership is a powerful incentive. Ownership gives people a stake in the future. In Kenya, owning a HealthStore clinic has become an attractive career choice for health care workers, helping to slow the pace of emigration of these trained professionals. The microfranchise model also supports the development of a strong small business infrastructure in villages and towns throughout the PEPFAR regions, and the lessons learned through franchised health care clinics can be repeated in other kinds of businesses.

For these reasons, the Senate should work with U.S. agencies to consider microfranchise business creation among the strategies for putting these resources to work in the PEPFAR region. In order to continue to raise awareness around this important approach that has been tried by the HealthStore Foundation, I plan to follow up this statement with a colloquy with one of my Senate colleagues.

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