Higher hospital fees raise pressure levels on household budgets

Kenya’s top private hospitals increased outpatient consultation charges by up to 42 per cent in the past one and a half years, piling the pressure on insurance premiums and general cost of healthcare, industry data shows.

The hospitals, including Mater and MP Shah, raised the consultation charges by between Sh100 and Sh600, pointing to the rising cost of labour, utility fees and depreciation of the Kenyan shilling.

The increases are likely to further lock out poor households from accessing the top quality health services that the private hospitals offer, even as public hospitals struggle to improve the quality of treatment against massive budget constraints.

A comparison between the current consultation charges and those in 2014 shows that MP Shah Hospital had a Sh600 increase in consultation fee, which now stands at Sh2,000 compared to Sh1,400 one and a half years ago, a 42 per cent rise.

Consultation fees at Mater Hospital rose 23 per cent from Sh1,300 one and a half years ago to Sh1,600 currently. Some hospitals, including Nairobi Hospital (Sh2,000), Karen Hospital (Sh1,800) and Pandya Hospital- Mombasa (Sh1,000), have, however, maintained their rates over the period of two years.

Medical insurers have reacted to these increments with an increase in premiums that have in turn pushed health insurance beyond many low-income households.

“Our premiums are up by 15 per cent beginning April 1 for outpatient cover,” Ms Margaret Oyugi, the head of actuarial at Resolution Health, told the Business Daily.

“Unlike inpatient services, outpatient is the most used service that is significantly affected by any increase in charges. Inpatient is not so much utilised and even if the costs go up the impact is not severe,” Ms Oyugi said.

The increase in charges is not limited to consultation, with higher bed and laboratory test fees widening the gulf between what a majority of Kenyans can afford and the actual charges.

Households without medical insurance will be forced to dig deeper into their pockets to fund the higher cost of healthcare that has blocked millions of poor families from accessing quality treatment.

Only a quarter of Kenya’s population has medical insurance — mostly provided by formal sector employers.

The increases in premiums have added a direct cost burden on companies and individuals, who buy health insurance, risking a slowdown in growth.

This comes at a time when many firms are looking to cut costs in a challenging business environment. A record 19 listed  companies issued profit warnings last year, meaning their profits were at least 25 per cent less than those in 2014.

Hospitals that have raised their consultation fees include Avenue Healthcare, which now requires patients to pay Sh1,350, a 23 per cent rise over the Sh1,100 it was charging previously. Mombasa Hospital has raised its charges by 10 per cent from Sh1,000 to Sh1,100.

“Generally, the cost of medical services has significantly increased with inflation and the cost of labour as the key drivers,” the Association of Kenya Insurers (AKI) chief executive, Tom Gichuhi, said earlier.

“Other reasons given are rents and the fact that most of the medication is imported. Some would emphasise the depreciation of the shilling against the dollar which affects the purchase of medicine and other equipment.”

The shilling shed about 16 per cent to the dollar last year as tourism, tea and horticulture — Kenya’s key foreign exchange earners — fell even as the import bill rose.

The Kenyan currency hit a low of Sh106 in September compared to Sh90 in January last year and is currently trading at Sh101 to the greenback.

Inpatient fees have also increased, with some hospitals billing patients thousands of shillings in daily bed charges that now average Sh9,500  for a general ward bed in Nairobi.

Nairobi’s Karen Hospital charges (Sh7,500), MP Shah (Sh8,000), Mater Hospital (Sh8,600) and Avenue Hospital (Sh6,500). Mombasa Hospital and Pandya Hospital in Mombasa charge Sh6,000 and Sh5,500 respectively.

Government-owned Kenyatta National Hospital (KNH) recently raised bed charges for its private wing to Sh4,000.

Chief executive Lily Koros said the increments were a product of rising inflation on the back of expensive food and costly medical equipment.

A patient admitted for a month at Nairobi Hospital in a general ward bed has to part with an average of Sh285,000 in bed charges alone while at the KNH, this would amount to Sh120,000. The National Hospital Insurance Fund pays between Sh1,500 and Sh1,900 of the bed charges per day for its
contributors.

On the premium side, the charges for those who are admitted to VIP rooms are charged as high as Sh60,000 per day at Nairobi Hospital. Patients in the Intensive Care Unit (ICU) are charged Sh33,000 in Nairobi Hospital while Mater Hospital charges Sh24,000 per day.

More importantly, the rising burden of medical charges piles more pressure on insurers who have been reporting losses for years given that medical insurance accounts for a quarter of the general insurance business.

The AKI says in its 2014 annual report that medical insurance collected Sh25 billion in premiums but made an underwriting loss of Sh90 million, mainly hobbled by fraudulent claims and inflation of charges.