Graduate School

Journal #4

A critical analysis of purchasing arrangements in Kenya: the case of micro health

insurance

Kenneth Munge, Stephen Mulupi, Edwine Barasa, Jane Churna

Course:

Hospital Financial Management

Jennilyn P. Talavera-Nopueto MD
Masters in Hospital Administration
A critical analysis of purchasing arrangements in Kenya: the case of micro health
insurance

Kenneth Munge, Stephen Mulupi, Edwine Barasa, Jane Churna

SUMMARY
The rationale behind the utilization of micro health insurance companies (MHI) is to
provide additional means to strategically purchase health services for the informal sector who
were not covered by health insurance. It is a step towards maintaining the momentum that Kenya
has gained towards achieving Universal Health Care (UHC).

The objective of this study is to assess and evaluate the practice of MHIs in Kenya.

The study was conducted using a qualitative descriptive method, where two MHIs were
selected and also included was an insurance underwriter. Semi-structured interviews were
conducted with the providers. The audio recordings from these interviews were transferred to a
secure computer. Each was assigned codes and was transcribed in verbatim. After the
transcription, the material was assessed and evaluated for validity.

The authors found out that the country lacks government regulations and specific health
insurance laws to govern MHIs. No guidelines for contribution rates and benefit packages were
seen. Although there are proposals from MHIs regarding particular cases such as waiting times,
there is currently no legislation to support it.

Another finding is that in selecting healthcare providers, they purposely contracted low to
mid-tier providers over which they can negotiate with in regard to costs and coverages.

Although there are efforts to accommodate client or purchaser feedback, the system was
found to be tedious and poor. This is largely due to the existence of multiple level of escalations
that serve as barriers to direct contact with the MHI. As a result, quality assurance was weak and
there is no way to ensure resolution of issues partly because this is part of the responsibility of
the insurance undertaker, not the MHIs.

It was also found that there is a weak incentive program for providers and as a result, the
system was prone to overuse and fraud.
 These are just some of the issues identified in the research. Other problematic areas
include the exclusion of primary health care benefits such as vaccination within the contract and
inadequate financial protection of purchasers from out-of-pocket expenses brought about by
capping.

In conclusion, the authors believe that although MHIs are now part of the healthcare
system in Kenya, these insurance providers may not be able to contribute to the succeeding steps
in achieving UHC. This is because of the lack of strategic purchasing practices.

Reflection
The practice of MHIs is not entirely new. Several companies offering health insurance
coverage to low to middle income earners have been around the industry in the last decade or
so.

In a field where competition is a natural tendency, one of the main problems for these
companies is contracting providers for their purchases. If they are able to, most of the time, these
providers would be almost inaccessible since they are mostly located in fair distances from the
residences of the consumers, does not have many clinic and hospital affiliations, and is always
unavailable or appointments are always full. This situation places the clients in a tight spot.

Feedback is almost impossible since you would be directed to a contact center where you
would be asked to wait for an email confirming the receipt of the complaint and wait a few more
weeks to hear from them again.

Most of the time, the physicians and the providers that you want, and need are not covered
by the MHI that you have just purchased. This is the reality of the micro health insurance industry
in the country.

There are only a few big insurance companies or what we call (Health Maintenance
Organizations) HMOs in the Philippines. Even the major ones have their own shortcomings
including caps on coverages and unreasonable limits on hospitalization frequency expenditures.

What we need is a firm and comprehensive legislation on health care provision by

insurance providers to assure quality and comprehensive coverage for their paying clients.
Application to profession

Physicians as healthcare providers are at the forefront of healthcare services. We

constitute the contractors for these insurance providers, apart from the hospital affiliations that we
have.

Nowadays, attending physicians prefer to be paid in cash and it’s not difficult to understand
why. Health insurance companies do not pay them on time and if they do, the fees are below the
current standard for professional fees. This leads some specialists to decline coverage from
HMO’s and opt for out-of-pocket fees.

As much as this hurts the clients and patients, it may hurt the practitioner too since only
when you have built enough credibility and practice are you able to demand and dictate their key
rates. For new physicians and newly minted specialists looking to build a strong presence, they
are left with little choice but to resort to minimal fees from HMO’s to be able to cater to more
patients and consequently build their practice.

Same with hospitalization benefits. HMO’s pay a relatively small amount to attending
physicians for each patient seen and admitted under their care, not considering the costs of
making rounds every day, sometimes more than once a day, plus the inflation rate of day-to-day
expenses. The companies tend to protect and serve their clients and purchasers but were unable
to provide their providers with enough incentives to continue to be contracted and serve their
clients.

As this continues to be the norm, more and more physicians are opting out of insurance
coverages, leaving the purchasers at a loss on when and where can they utilize their premiums.
The system, including the insurance providers should be able to align these shortcomings with
quality healthcare provision to be able to better serve the public and possibly contribute to a
positive step towards Universal Health Care. |