Twenty hospitals cannot consume more than a quarter of the payments and still have a viable market.
Last week, a political activist took to social media to express his disappointment with a medical insurer. The disagreement revolved around a rejected claim for medical management and hospitalisation.
In the ensuing digital media engagements, lots of Kenyans opened up over similar experiences. Most being bad, but a few had positive sentiments to share. The overall assessment was that the industry regulator has not been responsive to many consumers’ complaints. This is vital if we have expectations of streamlining the sector.
The Insurance Regulatory Authority (IRA) puts a target of 85 percent customer satisfaction as its target for 2018. What the achieved metric was is not shown, but judging from the online backlash, many people are not happy with IRA’s job.
As the referee, frequent monitoring and arbitration is a key performance indicator of the Insurance Regulatory Authority. The mere fact that most Kenyans with insurance covers do not know or have never interacted with IRA is not impressive.
To use a football analogy, often times it feels like a soccer match where some teams score with their hands, do not follow offside rules, notwithstanding the referee’s presence on the pitch during the match. In the new soccer era, Video Assisted Refereeing VAR has come in to settle contestable decisions. This is what IRA should aim to be.
But to understand why this is happening, one needs only look at IRA’s top level management. As a strategic plan, its shortcomings is the composition of both the board and management: both have no single health worker or doctor.
Quite absurd, given medical will soon be the biggest if it is not already branch of insurance premium holders. The medical insurance uptake is growing (data suggests it is the biggest across the general class, and could potentially be larger than motor vehicle if NHIF is included. IRA’s data says Medical and Motor classes contribute 30.7 percent and 35.8 percent of premiums respectively.
A shocking revelation from the discussions is that consecutive year medical class losses predict dire consequences for stakeholders. Apparently over the last decade, out of the 30-40 or so odd players in the sector, those operating profitably are very few.
From the patients’ perspective, this may mean paying out of pocket in some cases. From the hospitals’ perspective, even tougher financial inflows as the average time it takes for bills to be settled after service delivery increases. This last point highlights just the tip of an iceberg of the industry-wide problem and should be the top task to be addressed: irrational payments to a select group of hospitals.
For industry insiders the only way to rationalise this loss making is to adopt outcomes based payments for all players. Twenty hospitals cannot consume more than a quarter of the payments and still have a viable market.
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Note: The results are not exact but very close to the actual.
