First assignment for Kagwe is to make healthcare affordable

First assignment for Kagwe is to make healthcare affordable
  • The main factor behind patients flocking to India are high prices here.

  • We read recently how hospitals have been repurposed into money-minting machines.

  • Mr Kagwe should also reform the National Hospital Insurance Fund (NHIF), the largest parastatal under the ministry.

Mutahi Kagwe will shortly be taking office as Kenya’s fourth Health Cabinet secretary in seven years. Clearly, it has been a revolving door. Mr Kagwe comes in a time when many people who used to support the idea of a Cabinet made up of technocrats have become cynics.

With only two years left before a new administration comes in, the former senator for Nyeri may not be able to do much to make a big impact at to leave fingerprints and a legacy at Afya House. If he approaches the assignment as if he is a manager with solutions to every problem at the ministry, he may not make such a big impact.

Here is some food for thought and suggestions for the CS on some of the recent and emerging issues and areas he may consider focusing on.

First, can he consider leading a national discussion on what ought to be done to bring down the cost of private healthcare in Kenya.

Clearly, one of the single most important failures of policy in the medical sector is the cost of private healthcare. Kenyans are flocking to India in large numbers because that country has become the first resort of medical care to our people.

The main factor behind patients flocking to India are high prices here. A patient can afford to pay for air tickets for three relatives, receive a month’s worth of high-quality care while living with the relatives in rented quarters in India, and travel back to Kenya having paid far less than what he would have paid to a private hospital in Nairobi.

When you ask why hospital charges are high, you only hear theories and arguments that are not evidence-based — such as specialists demanding high reimbursements, overutilisation of specialists and too many referrals.

If you tracked the medical component in the Consumer Price Index, the trend you would see is that the cost of medical services has been rising faster than overall inflation. And, medical insurance premiums are high because healthcare provider prices are incredibly high.

Indeed, the cost of private healthcare in Kenya is a national scandal.

Mr Kagwe takes over in the wake of a raging debate about a recent media exposé on the invasion and takeover of several private hospitals by vulture-type private equity funds from Europe.

We read how hospitals have been repurposed into money-minting machines. We were all horrified about cases where patients were being admitted when they did not need it, clinical officers paid bonuses for admitting more patients and keeping patients longer in the wards and sky-high prices for minor procedures.

The new minister must provide leadership in finding a solution for this dysfunctional healthcare system.

I am not a supporter of price controls, though. I believe that prices must reflect the true costs and that prices must sufficiently reward healthcare providers. However, maybe it is time to debate a new light price regulatory regime to monitor, record and introduce some transparency in the pricing of medical services.

What we have now is a healthcare market characterised by such failures as information asymmetry, wide price variations for similar services across hospitals and lack of information on prices.

Or should we introduce some light consumer protection regime for private medical services? How can we make prices more transparent and at the same time blunt the monopoly private healthcare providers have, allowing them to raise prices at will?

Mr Kagwe should reform the National Hospital Insurance Fund (NHIF), the largest parastatal under the ministry. The turnover of CEOs is high while the board is just too wieldy and carries just too many interest groups whose ideas cannot mesh.

Last year, Mr Kagwe’s predecessor, Sicily Kariuki, appointed a task force to study the NHIF and recommend improvements to the fund’s effectiveness, especially as the country transitions to a regime of universal health coverage.

The most remarkable finding was that NHIF was not fiscally sustainable and faced governance challenges. I found that tame and timid.

The title of the committee was, itself, just too bombastic and left you with the impression that the whole thing was not well thought-out: “Health Financing Reform Expert Panel for the Transformation and Repositioning of the National Health Insurance Fund”.

It neither came up with nor discussed radical solutions on how to disrupt a system steeped in corruption and mismanagement. A good manager not only manages the urgent; he must keep his eyes on what is important and seek answers to the big issues and questions in the sector.

Why is the public health sector haemorrhaging nurses to advanced markets? Why does the ministry find it difficult to honour collective bargaining agreements signed with doctors and nurses?