November 2019 Business Daily; Kenyan general labour costs, doctors’ fees and fraud are the largest components in the current pricing of healthcare.
The cost is especially huge for the treatment of cancer, which has now risen to be among the top killers in the country, ranking third biggest cause of death in 2017 after malaria and pneumonia.
The cost of doing an endoscopy to check for the possibility of oesophagus cancer, for instance, is three times higher in Kenya than in the UK.
The cost of engaging labour for pharmaceutical companies is also higher locally than in India and Bangladesh, for example, which are major sources of generic drugs.
Insurers and health experts say curbing these costs will contribute to greater access to affordable healthcare for the majority of the population.
“Medical inflation is among the biggest hindrances to insuring, managing and treating cancer today. There is one year in recent times when doctors’ fees were revised upwards three times. Again the cost of imported drugs has risen partly because of foreign exchange costs. And then there is fraud,” said McDonald Kang’e, general manager for medical business at CIC Insurance.
Mr Kang’e said medical insurance is majorly a low-margin business unlike others such as fire or engineering, therefore, the need to have tight control on costs. A major reason for this is the claims involved. For example, in 2018, medical insurance for all underwriters had 36 percent of all insurance claims amounting to Sh20.5 billion, coming only second to motor insurance that had Sh27.9 billion in claims.
In the past five years, medical insurance has only made a profit once — that is, in 2017 when it made Sh82.5 million profit for the entire industry. During the five years, it made the largest loss last year, which was slightly above Sh1 billion.
For medical reinsurance, there has been no underwriting profit at all in the past five years with losses topping Sh1.2 billion last year. “Globally cancer treatment is a highly expensive affair. The reason for this is that there are many steps in proper diagnosis and each one has to be paid for. It is a chronic disease where treatment can stretch for as long as 10 years,” said Othieno Abinya, resident oncologist at the Nairobi Hospital.
“Kenyan labour costs are so high that pharmaceutical companies cannot price drugs cheaply as in Asian countries.
“The reason drugs from India, Sri Lanka and Bangladesh are cheaper is that their labour costs are lower,’’ he said.
“Doctors’ fees are also high here. If you are doing an endoscopy for oesophagus cancer, for example, a doctor in the UK will charge 200 sterling pounds (Sh26,000), but the one in Kenya charges 600 pounds (Sh78,000),” said Prof Abinya.
The oncologist suggested that a tax targeting cancer, better performance of the National Hospital Insurance Fund and lower labour costs as solutions to the cost problem.