Veteran journalist Alex Chamwada’s features production, Chams Media, ran an episode recently on Nairobi’s booming real estate sector. The show, quoting experts, cited mind-boggling land valuation figures. Apparently, one acre of land in Upper Hill costs Sh545.7 million, Sh433 million in Kilimani, Sh418 million in Westlands, Sh310.7 million in Kileleshwa and Sh237 million in Lavington. Sobering figures, given prevailing Covid-induced economic catharsis in our sector too are astronomical.
The ramifications are high rents for tenants in these areas, including doctors’ offices, pharmacies, clinics and hospitals. With a lot of down shifting in many of our businesses, entrepreneurs have to make considerable book balancing decisions. Health system managers too have to decide whether domino effects of high end real estate setups are eligible for “inclusion” in medical bills, given the constrained premiums, layoffs and late remits from clients. Historically, the basic tenets of a health insurance package are equity; one for all and all for one. With increasing concerns over ballooning healthcare costs, insurers and medical fund managers are taking new approaches to ensure sustainability.
For new startups, location siting has been deemed as a prerequisite factor for attracting clients. Thus, high-end targeting service providers are located in such environs and by extension, usually charge higher service fees. These rates specifically as regards to rental charges for medical clinic and hospitals situated in such areas, are a concern as they ultimately wiggle their way into medical bills.
A recent costing exercise of hospitals within such areas reveals on average, fees for hospital bed charges and utility fees are higher. Not all such bills are catered for by insurers, some may end up being paid for out of pocket by patients. Certain patient demographics are ok with topping up, but a few other may get in trouble.
The solution, is to reimburse based costing of care delivery.
Revelations by the National Hospital Insurance Fund that a big chunk of its payments are to a select few hospitals, raise concerns, specifically because NHIF as conceptualised is ideally targeting smaller hospitals improvement.
Across the globe, a movement is growing towards economic models of healthcare delivery. This entails eliminating indirect healthcare costs while optimising efficiency for direct costs. To achieve this, Value Based Health Care is emerging as a way forward.
In this case, an argument arises for payments towards “costly real estate” not directly related to patient care. As a patient, your future insurance premiums are pegged on your past medical services consumptions. And this is why it should matter to you.
A healthcare services costing exercise is needed, if our medical insurance reimbursement journey is to continue sustainably.