Why Kenya must fix its healthcare financing now

Social Health Authority building in Nairobi. [Wilberforce Okwiri, Standard]

Recently, nine insurance companies made a bold move by suspending their services at Nairobi Hospital, one of East Africa’s top medical facilities. They cited the hospital’s steep rise in treatment tariffs, arguing that absorbing these costs would force them to raise premiums for their clients, making healthcare unaffordable for many.

The reaction was swift and fierce. Critics accused the insurers of prioritising profits over the welfare of patients. The Kenya Medical Practitioners, Pharmacists, and Dentists Union (KMPDU) even went so far as to compare the insurers to a cartel, claiming they were conspiring to deny Kenyans access to quality healthcare.

Yet, beneath the surface of this heated debate lies a significant issue about the structure of healthcare financing in Kenya. To illustrate this, let's explore a simple analogy of managing resources at home.

Imagine you have just Sh100 to feed your family for an entire week. While it may not seem like much, with careful planning, it can provide a balanced diet. Instead of spending it all on one lavish meal at the start, you enlist someone to manage that money wisely, ensuring that your family receives nourishment every day. This is the essence of medical insurance: pooling resources to make healthcare accessible and affordable for all members.

Now, consider this scenario: your favorite bakery suddenly doubles the price of bread. The manager handling your funds might rightly say, “If we keep buying bread from that bakery, we won’t have enough left for vegetables, beans, or flour.” As a result, they may decide to stop purchasing from that bakery altogether. You can still choose to buy there personally if you can add extra cash, but the collective fund cannot support it.

This situation mirrors the Nairobi Hospital crisis. Insurers are not prohibiting patients from seeking care at Nairobi Hospital; rather, they are stating that the collective Sh100 they manage for their clients can no longer cover the higher tariffs without jeopardizing the entire funding system.

Many Kenyans aspire to receive treatment at top hospitals, which is completely understandable. However, this demand has strained our healthcare financing system. Patients often skip primary healthcare facilities—levels 1, 2, and 3—that can competently handle common ailments, rushing instead to level 6 private hospitals like Nairobi Hospital for issues that do not necessitate specialized care.

This behaviour contributed significantly to the near-collapse of the defunct National Health Insurance Fund (NHIF). Private hospitals exploited Kenyans' desire for high-end services, leading patients to seek the most expensive treatments, often when simpler alternatives were available. The financial pool simply couldn’t sustain this demand.

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The newly established Social Health Authority (SHA) has sought to address this imbalance by instituting a referral system. Patients must first seek care at lower-level facilities and only be referred to higher-level hospitals when necessary. This policy acknowledges that achieving sustainable healthcare financing requires discipline from both patients and providers alike.

The dispute with Nairobi Hospital goes beyond just tariffs or profits; it reflects a more profound structural dilemma: how do we balance quality, affordability, and sustainability?

If insurers acquiesce to every price increase from hospitals, premiums will skyrocket, making coverage unattainable for many Kenyans. Conversely, if hospitals continue to raise tariffs, care will only be accessible to the wealthy, deepening the existing inequalities. Furthermore, if patients continue to demand high-end care for minor issues, the insurance pool will inevitably run dry.

Healthcare financing, much like managing those Sh100, is about making difficult choices and embracing collective responsibility. Patients must recognise that while they may prefer treatment at top hospitals, the resources in the pooled fund are finite. Hospitals should be aware that rising tariffs have broader implications for affordability and access. Insurers, in turn, must strike a balance between sustainability and fairness, ensuring that cost-cutting measures do not compromise quality or limit options unduly.

In conclusion, the Nairobi Hospital saga should ignite a critical national conversation about creating a healthcare system that is both accessible and sustainable for all Kenyans. It is not merely a showdown between profit-driven insurers and high-cost hospitals; it stands as a crucial reminder that healthcare is a shared resource that must be managed wisely.

The lesson is clear: when we entrust someone with Sh100 to sustain our families for a week, we must accept that not every desire can be fulfilled at the fanciest bakery in town. What matters most is that all Kenyans are nourished and cared for, ensuring that no one is left behind.

The writer is a communication specialist