“There were many ways of doing business in 2020 that were crazy and that we will be glad to leave behind,” noted Nordan, co-founder of New Medical, a company serving Costa Rica’s healthcare system through advanced biomedical and medical device products. “Last year was really hard for us. We buy our biomedical and medical devices from the US and Europe. At the beginning of the pandemic, we couldn’t buy products from the US and EU because governments prioritized domestic patients, and because raw material shortages limited their ability to produce them. The net result was that we did not receive new shipments for three to four months. In addition to issues with supplies, in Costa Rica, about ninety-five percent of elective surgeries were eliminated, for example, orthopedic procedures that utilize many of our specialty products.”
“In a small business, there is never enough working capital to go around,” said Miguel, co-founder of New Medical. During 2020, this scarce resource was further strained by changes in payment terms. New Medical buys products from a variety of suppliers from the US, Ireland, Spain, and Switzerland. Before the pandemic, most suppliers were able to offer 30-day payment terms. But they eliminated this credit during 2020, and now have to pay up-front. New Medical is hopeful they will soon be able to count on 30-day credit terms from suppliers. On the customer side, ninety percent of their client base are government affiliated hospitals and clinics. Before COVID-19, they paid in 30 to 60 days. Now, 60 days is typical.
To survive, the team at New Medical reduced working hours and trimmed operations that were not critical. The company’s five employees reduced their hours to three days a week. As at the end of March, the team is back up to a five-day week schedule.
“We don’t really complain too much because we found new markets and adopted more efficient ways of doing business due to COVID. The pandemic forced us to think big and take risks. For example, rather than focusing our sales efforts on individual hospitals, we decided to focus on the government’s centralized purchaser, the social security department,” said Nordan. Their efforts are already starting to see results. New Medical was selected as a pre-approved vendor for goggles. They have also added disposable gowns to their product line and provide them to a new hospital client.
Another change New Medical has made is that instead of arranging an in-person visit to hospitals to meet with doctors or other medical staff to explain things, now everyone is used to online meetings and he is able to show the products and demonstrate their use via video and remotely. “It has accelerated our transition to digitizing all aspects of our business,” Migel commented. Félix, the head of AGC’s financing partner in Costa Rica has been instrumental in New Medical’s growth and success. They have worked together for about three years. New Medical uses a few small business financing products including pre-factoring and factoring. Nordan noted, “There is no other company like them. Their model is very modern and different in Costa Rica. They have a really strong human aspect and focus on customers, which makes a difference. When we first started working together, we had one client: the trauma hospital. Now we have more than four clients for biological inserts, and within the synthetic line we have even more clients, such as children’s hospitals. Thanks to our partnership, we have been able to improve in various aspects of our business, to make new investments for daily operational expenses and improve cash flow. Without this support, we would not have been able to offer biological products to our clients. All of this helps to improve the life of the people.
We are contributing and strengthening the health system in Costa Rica.” With the support of partners like Félix and AGC, New Medical hopes to continue to serve the health of patients.
About Advance Global Capital
Advance Global Capital, Ltd. (AGC), is a global impact investment manager that supports responsible and inclusive economic growth in underserved communities worldwide. We specialize in financing invoices for small and medium businesses (SMEs) – the engine of economic growth and job creation and the foundation of resilient local communities.
Sudha Bharadia, Chief Marketing, Investor Relations and People Officer
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