GlobalAccess Health (GAH) is a UK-based international non-profit focused on tuberculosis (TB) and other infectious diseases. It develops and distributes low-cost diagnostic tests to public clinics, NGOs, and private laboratories in low- and middle-income countries.
Historically, GAH has been funded almost entirely by large foundations and bilateral donors. Donors now want GAH to become more financially sustainable and have set a target that, within 5 years, at least 60% of GAH’s annual operating budget should be covered by earned income (fees from tests and related services).
GAH’s annual operating budget covers staff, training, logistics, and overheads and is USD 25 million, independent of volume within the ranges discussed in this case. Assume that manufacturing and shipping costs for the tests themselves are covered by a separate restricted grant for the next 5 years;
GAH has recently introduced modest prices for some partners, but earned income currently covers only about 40% of annual operating costs. Leadership is considering moving to a much more aggressive, tiered pricing and growth strategy, but is concerned about potentially undermining its mission to reach the poorest and most vulnerable populations.
GAH has hired your consulting team to advise whether and how it should pursue this more aggressive earned-income strategy while remaining true to its mission.
GAH’s board has asked:
“Should we pursue an aggressive earned-income strategy to reach 60% cost recovery in 5 years, and if so, under what conditions?”
How would you structure your approach to answering this question?
Looking at Exhibit 1, what are the main insights you can draw about GAH’s channel mix, pricing, and implications for a future earned-income strategy?
GAH’s annual operating budget (overheads, staff, training, logistics) is USD 25 million. Current earned income from paying tests is about USD 10 million, i.e. a 40% cost-recovery ratio.
Leadership wants to know whether a specific scenario could get them to the 60% cost-recovery target (USD 15 million) without changing prices for their most vulnerable clients.
Scenario for the next year:
- Government clinics: paying volume remains at 4 million tests, at $0.50/test.
- NGO partners: paying volume remains at 4 million tests, at $1.00/test.
- Private laboratories:
- Price per test increases from $2.00 to $3.00.
- Manufacturing and shipping continue to be fully funded by a restricted grant; the operating budget remains fixed at $25m.
- Today, GAH sells 2 million tests per year to private labs.
Questions:
1. What private-lab volume is required (in million tests) to reach 60% cost recovery under this scenario?
2. By what percentage would private-lab volume need to increase vs. today?
Show your steps.
Several programme directors are worried that pushing too hard on earned income might undermine access for the poorest communities and damage GAH’s reputation as an equity-focused organisation.
What 3–4 major levers could GAH use to increase its earned income while preserving (or even strengthening) equitable access and mission impact?
The CEO joins for a brief update and asks for your preliminary recommendation based on the analysis so far.
What would you recommend at this stage?
GlobalAccess Health – Funding the Next Million Diagnoses