Every year hundreds of thousands of dollars of medical equipment is donated from hospitals in developed countries and sent to developing countries. In a previous NextBillion post, I highlighted how inappropriate donations cause equipment graveyards in developing countries, and proposed a blockchain-based medical equipment donation platform to address the problem.
But while such a platform sounds attractive in theory, it would be difficult to entice medical equipment donors, recipients and other stakeholders to use it. In this follow-up article, I discuss how blockchain and a token-driven marketplace could incentivize these stakeholders to participate in the platform.
The Value of Tokens
In blockchain terminology, tokens represent a unit of value, which could have social, economic or some other form of utility. Types of tokens could include gift cards, movie tickets or even shares of a company. In each instance, the token represents an asset that the user can exchange for goods, services or cash: For example, a Starbucks gift card allows the user to buy a latte at Starbucks.
With blockchain, there are many types of tokens, the most popular being bitcoin. It represents a digital or virtual currency (cryptocurrency) that allows users to make payments on blockchain. But cryptocurrencies are just the tip of the iceberg: A network of peers can create a token on blockchain, attribute a value to the token, and create a market around it. The inherent value that the token holds in the market incentivizes the individual peers in the network to participate, while respecting the shared interests of the whole network. This is why the blockchain “token economy” is an exciting and growing field. It has the potential to capture and represent value that was previously excluded from economic activity.
A token-driven medical equipment donation marketplace could align the interests of stakeholders in the donation ecosystem and incentivize them to action. The idea is to associate a digital token, which I’ll call “maintenance tokens” or m-tokens, with the serial number of the medical equipment that is being donated. The m-tokens would act as a virtual currency that recipients could use to procure medical equipment supplies, spare parts or maintenance services for their specific donated medical equipment in the marketplace. The marketplace would consist of sellers who accept m-tokens for the goods and services they offer.
Let’s look at how this solution could help increase the sustainability of medical equipment donations by solving three common problems – and why this might be attractive for stakeholders.
Problem 1: Medical equipment operational costs are usually not factored into the donation
In most instances, medical equipment donors and recipients don’t consider the cost of supplies, spare parts and repairs before a donation is made. This is partly due to a lack of awareness and understanding about these costs. Sometimes recipients may receive a few supplies with the donated equipment, but they are left on their own to replenish the supplies once they run out – and they often don’t have the financial resources to purchase more. The same goes for buying spare parts and hiring technicians to repair broken donated equipment. Without resources to purchase supplies or make repairs, recipients are more likely to give up on their donation, increasing its chances of ending up in an equipment graveyard.
Solution: M-tokens would make it possible to fund the donated equipment’s operational costs. For example, as part of the donation process, the platform could inform donors and recipients about the operational costs for the equipment being donated. Donors could then allocate funding by exchanging real currency for m-tokens stored on the blockchain. The m-tokens would be linked to the equipment donation, and available for the recipient to use to buy supplies or services from sellers on the marketplace. Sellers would be paid in m-tokens, which they could exchange for cash that was provided by donors. Since all m-token transactions would be on blockchain, there would be a transparent trail of records that donors could reference to see how their donations and funds were being used. This visibility would connect the donors to their impact, and could increase their willingness to participate on the platform. This approach would offer a way to fund operational costs, and reduce the chances of recipients lacking resources to keep the equipment running.
Problem 2: Recipients have limited options to buy supplies and spare parts for donated medical equipment
In many low- and middle-income countries, there is a lack of both availability and access to medical equipment supplies and spare parts. Equipment supplies and spare parts for specific brands and models may not be readily available locally, and must be imported. Also, because donated equipment generally tends to be older, there is a greater likelihood that the equipment is discontinued and not supported by the manufacturer. This makes it even more difficult to get hold of supplies and spare parts. These factors drive up the price, making them unaffordable for recipients.
Solution: An online marketplace would offer recipients access to both sellers of medical equipment supplies and providers of maintenance/repair services. It would open doors for both local and international sellers to participate. Having access to multiple sellers would give recipients more shopping options, driving sellers to compete on price and on customer service, which would greatly benefit the recipients. As part of the donation process, the platform could also check to make sure that only equipment models that are supported by the manufacturer are donated. Likewise, the prerequisite check on each donation could also ensure that equipment supplies and spare parts for the model are not in shortage or at risk of becoming scarce in the immediate future.
Problem 3: Recipients have little incentive to report on their donated equipment’s usage
Currently, recipients don’t have an easy and simple way to collect and report data on how they are using their donated medical equipment. They are overburdened with serving their populations and running their under-resourced health facilities. They don’t have the capacity to routinely carry out time-consuming data collection and reporting activities. Furthermore, equipment donations are often facilitated by intermediary organizations, so recipients and equipment donors may not even know each other. When a curtain separates two parties, it’s much more difficult for the parties to relate with one another and act with mutual interest in mind.
Solution: M-tokens would align donor and recipient interests, and create an incentive for recipients to collect data on the equipment’s use and report it back to donors. For example, a smart contract could be formed between donors and recipients whereby m-tokens are only released to recipients when they report about the equipment’s use. Likewise, recipients who commit to reporting – and actually do so – could be eligible for future equipment donations. Potentially, the donated equipment could even be fitted with a power monitoring sensor that tracks its electrical consumption and automatically sends the usage data to the blockchain for donors to see. This would free up the recipient from having to divert time to data collection.
Unleashing untapped social and economic value in medical equipment donations
These approaches could leverage m-tokens to unlock new social and economic value in the medical equipment donation ecosystem. An online marketplace would bring new sellers to a customer segment that previously was ignored because recipients were not seen as buyers. And because the m-tokens would be backed by donor funding, they would represent a guarantee in the marketplace. This guarantee would make the marketplace more attractive for sellers, as it would give them assurance of payments. The marketplace would therefore represent a new source of revenue for the sellers, while creating access to quality medical equipment supplies and maintenance/repair services that were previously inaccessible to recipients.
In addition to sellers of medical equipment supplies, the marketplace could also attract medical equipment service providers (e.g. biomedical engineers or technicians who maintain and repair medical equipment). In that way, the marketplace has the potential to encourage small business entrepreneurs in emerging countries to serve the recipients of donated medical equipment. For example, a technician could start a medical equipment repair shop and negotiate a contract with the marketplace’s recipients to repair and maintain their donated equipment. The entrepreneur would be more willing to risk starting a business when he or she knows these recipients are less likely to default on their payments. In that way, the marketplace could boost job creation and build local capacity for managing medical equipment.
While this online marketplace would primarily focus on donated medical equipment, it could also be leveraged for buying new medical equipment. Medical equipment manufacturers wanting to reach customers in low- and middle-income countries could market their products on the marketplace, making transactions through the same m-tokens used by donors. And looking beyond the medical equipment market, m-tokens could give donors new options for donating to other specific causes that resonate with their interests and beliefs. Blockchain-driven tokens and marketplaces could open avenues to a more transparent and efficient medical donation system – and the approach could be applied to many other areas.
However, this sort of blockchain marketplace would likely require the involvement of a nonprofit or other organizing entity, to establish the network and manage and coordinate its activities. It could be an intriguing opportunity for organizations working in the global health field – particularly those that are focused on making medical equipment more widely available. You’re welcome to contact me at [email protected] if you have questions or comments about the potential of an m-token marketplace.
Vikas Meka is a consultant focusing on finding solutions that improve health for people in low-resourced settings.
Photo courtesy of Geoff Greenwood.