Lending rate caps should warn hospitals to harmonise charges
Health is a matter of life and death across the world, making it different from any other business. PHOTO | FILE
The capping of bank lending rates seems to have jolted the operations of many lenders. Most have had to go back to the drawing board on how to ride the anticipated ramifications of the caps, especially the possible dwindling profits.
While the ripple effects have mainly been felt by financial institutions, one wonders what would happen if such a thing were to happen in the medical filed. The reason for advancing such thoughts is the variation in the cost of services in our sector.
While professional fees is regulated to an extent, especially among doctors, most hospital service charges are not well controlled. A look at the survey data, for instance, of Caesarean section deliveries, can raise eyebrows among patients.
How much should a CT scan or MRI cost? What about surgeries? What is it that makes hospital A charge different fees from hospital B and why are they not in sync with public hospital charges?
From a consumer’s perspective, the other question that arises is why such a discrepancy should exist if factors of production are common? A common concern among regular users of public health services on visiting private facilities is the huge variation in fees.
As a private sector health entrepreneur, the variations in health care production costs are sometimes lost on the public.
Private sector players do not enjoy many of the State-supported public facilities receive, grants from donors or tax exemptions. These may add up to a big chunk of potential patient discounts.
That said, some of the cost variations are way too high these items notwithstanding.
While ability to pay dictates where patients choose to get health care services, health care holds a special case even as a business. Mainly because it deals with life but also because it is an underserved area globally.
No single nation has adequate public health services or human resource as such “engineering” has to be done to achieve a good mix.
This creates a tough balancing act between offering incentives to stimulate private sector entrepreneurs who invest in health services while at the same time ensuring services are available at a reasonable fee.
Fee-capping regulations may inadvertently lead to fewer private enterprises being set up, while permitting unregulated fees locks out many patients from key services.
Two ways out of the situation are available. The first one is of course to remove whatever operational environmental barriers health entrepreneurs face. The second one is to engineer a situation where many private sector health facilities can exist in.
An interesting scenario is seen in the CT scan and MRI imaging fees recently. As the number of operators increases, the service fees reduce.
The government through such schemes as the National Health Insurance Fund (NHIF) can ensure private facilities have adequate utilisation charges per client.
The selling point is, “better have lower margins and higher volumes than higher margins and lower volumes.”
In such a situations, the promotion of consumption of a service has directly lowered the cost to patients. Other existing providers have to lower theirs.
For health entrepreneurs oblivious of such a possibility, anticipating such a happening always a good contingency plan.
