Many countries including Kenya face the daunting task of taming the spiraling costs of health care. This calls for efficiency in the health system. However, achieving efficiency involves a delicate balance between cutting costs and ensuring quality and availability of services. Inefficiencies typically include wastage, corruption and misallocation of resources.
These have been cited as a major factor pushing up the cost of health care globally. By some estimates, six per cent of the annual global health expenditure of $5.3 trillion (Sh530 trillion) is lost to corruption.
Up to 40 per cent of health spending is sucked by systemic inefficiencies. This is a huge amount considering the positive impact it would otherwise have on the lives of millions of poor people around the world.
Eliminating such inefficiencies is, therefore, critical in not only cutting costs but freeing resources to expand access to health services by all citizens. Another key factor driving up health costs is the tendency to over-service those who are able to afford health services.
Over-servicing happens when a medical practitioner provides medical services or makes medical recommendations that are unreasonably required, or considered excessive.
Such practices include prescribing unnecessary drugs, procedures and use of expensive medicines where generics would be efficacious. Inflated consultancy fees and hospital charges also serve to hike the cost of health services.
Whether or not the “fee for service” model in which Kenya’s healthcare mostly operates is to blame for the spiraling cost of healthcare is a debate for another day. “Fee for service” means that healthcare providers receive a fee for each service they provide. For example, they will receive a separate fee for a consultation, a test, and a procedure, rather than a bundled fee.
Could a capitation model work out more affordable for the patient? This is a question that I would encourage the various players in the private and public health sector to ponder.
Escalating health care costs affect patients, hospitals and health systems. It invariably leads to higher medical insurance premiums. This hurts those covered by private medical insurers and even public health insurance schemes like the National Health Insurance Fund (NHIF). It also increases the claims ratios leading to declining revenue for health insurers.
Improving efficiency is the first step toward bringing down the cost of health care. This entails offering improved quality and accessibility to health services at the same cost or less.
By cutting corruption, wastage, fraud and other inefficiencies in the health system, it is possible to generate cost savings that can then be channeled to improving health infrastructure and expanding coverage of the population.
Overall, changing the way we deliver health care will require process redesigns that improve quality and limit cost growth, thereby making health care more efficient.
Also, we will need to seriously come up with ways of countering the surge in Non-Communicable Diseases (NCDs) such as diabetes, heart disease, cancer among others which account for 27 per cent or 100,000 deaths in Kenya annually.
Treating NCDs is an expensive and protracted affair. Even for the privileged few who have access to medical insurance, managing NCDs is a daunting task. Sometimes the medical insurance cover may not be adequate in meeting the entire cost incurred in treating such debilitating yet largely preventable ailments like diabetes, hypertension and even many types of cancer.
Another key area for improvement is procurement, distribution and prescription of medicines. The World Health Organization estimates that medicines account for up to 30 per cent of global health spending.
It also identifies inadequate controls and unethical practices such as over-prescribing or excessive markups as substantially contributing to the high cost of medicines.
Ensuring transparency in procurement, imposing tighter controls on suppliers and improving prescription standards are just some of the measures that would help reduce the cost of health services. Sound management of health institutions including reduced bureaucracy further improves cost management and efficiency. Technology can also aid reduce costs.
Use of mobile apps and modern techniques like telemedicine can boost access to treatment. It is not enough to have modern diagnostic and treatment equipment in hospitals. Ensuring proper use and maintenance is critical in boosting quality of health care.
Strict adherence to regulatory standards and promoting codes of conduct will help weed out fraud and other unethical practices. Improving working conditions for medical personnel eliminates the incentive for moonlighting and corruption. However, for efficiency gains to be realised there must be collaboration between public and private health sector players.
While it is easy to apportion blame, the fact is that inefficiencies cut across the spectrum of health service delivery. What is needed is a concerted effort focusing on bringing down the unit cost of health care. That way, we can increase resources for investment in health infrastructure and more critically, in expanding coverage to all citizens. —The writer is the managing director of AAR Insurance