africa healthcare

in Science & Medicine

A Solution for Better Healthcare in Africa

As I fly over the Atlantic ocean on my way to Las Vegas to attend a new wave of Internet Domain Conferences addressing the newly emerging Top Level Domains currently being released by ICAAN, I am reading an article by Onno Schellekens et al (2007), which addresses a new paradigm for increasing access to quality affordable healthcare in Africa. It is an incredible article (which won 2nd prize at the Financial Time Essay competition out of 750 submissions from 90 countries in 2007) and I felt compelled to write some words on it.

The model is actually summarized in this well presented 2-minute video:

Public healthcare systems in almost all African countries are not able to the growing demand for healthcare required by the population, and in many cases actually boarder on dysfunctional. Early studies have shown that 88 cents in the dollar are lost in inefficiencies leaving only 12% benefiting the consumer. Africa holds 14% of the world’s population and yet is responsible for over 44% of the global burden on communicable diseases. Africa spends less then 1% of all global health expenditure. To put spending in numbers, in sub-Saharan Africa (excluding South Africa), people spend on average $18 per head on healthcare, compared to $3641 in developed countries and this includes donor spending which often accounts for over 50% of National budgets.

The public sector’s inability to deliver quality care to its people results in 50-60% of the population reaching to the private sector, with healthcare being paid for out-of-pocket, causing unnecessary poverty and resulting in a poverty trap for the majority of most African countries. This type of healthcare expenditure is the most expensive and least efficient way to pay for healthcare.

Furthermore, for a public healthcare system to work, basic laws of health economics need to apply. A relatively high GDP per capita is needed, which is lacking in most African countries. It was also shown that as a country grows richer (increased GDP), out-of-pocket healthcare expenditure decreases. This means that as long as African countries remain relatively poor and GDP per capita remains low, a public healthcare system will never be realized without the correct interventions to “kick-start” the system and the correct infrastructure in place to support the system.

A healthcare reform in Africa is needed where the public and private sector (Public-Private-Partnerships) needs to work together to deliver healthcare to its people. One of the major hurdles to overcome however is the stubborn insistence of the donor community (International Aid) to support government initiatives at the expense of the private sector. It is partially fueled by suspicion of profit motives, inefficiencies, high-cost, prices and inequity.

Out-of-pocket spending for expensive and often over-priced (due to low demand) private healthcare services is having a very negative impact within poorer communities, resulting in lose of income, lower quality of life and inequities. And because the private sector spending is out-of-pocket, this means there is no regular predictable revenue flow for healthcare providers, resulting in high risk, high cost and poor quality of care. It a vicious circle: Low financing (demand) by the people who do not trust what they are paying for resulting in Low Supply (Medical care supply) by clinics, GPs, pharmacists etc… This low demand / low supply cycle is resulting in an increasingly ineffective and unreliable private health care system that with the correct structure and support could be reversed, resulting in an upward spiral of increasing healthcare efficiency.

This is where the article comes in to explain a solution to this growing problem. Through creating a system that supports access to affordable quality healthcare by subsidizing health insurance to the people that need it (demand) and providing financing and quality standards to the clinics delivering the care (supply), you are able to work on both sides of the supply chain resulting in increased demand (people insured) and supply (services).

To accomplish this, the Health Insurance Fund (HIF) was created in 2005 and received a significant 100 Million in funding from the Dutch ministry of foreign affairs (in 2006). The fund helped to subsidize health insurance premiums to lower the hurdle for people to join the program and increase the demand for healthcare in a risk-pooling system that we are all grateful for in our developed countries eventually resulting in UHC (Universal Health Coverage).

The HIF also set out to support new initiatives to address the supply side of the chain by subsidizing loans from banks to provide working capital loans to clinics so they can improve their infrastructure to deliver better quality care. This was facilitated by the Medical Credit Fund (MCF – in 2009) and repayment rates have been extremely high (±98%) to date. The HIF also supported the creation of SafeCare (2011), which helps clinics implement and adopt better quality standards to gain trust from the people, governments and outside investors and in turn allow clinics to provide a higher level of care, which will drive up the supply of healthcare to those clinics (more people trusting the system and using the services). This increased responsibility to increasing the quality of care through proven standards in turn qualifies the clinics and hospitals for more access to capital to further improve their medical infrastructure resulting in an upward spiral of quality care.

In order to facilitate private investment (both within the country and Internationally), the IFHA (Investment Fund for Health in Africa) was formed in 2007. This fund allows investors to invest into healthcare infrastructure and to date has seen very solid and consistent returns. The IFHA have made significant equity investments into the HMO (Health Management Organizations) and Insurance companies (eg. Hygeia – the largest HMO in Nigeria) as well as drug delivery pharmaceuticals and medical supply companies. This allows for development of economic activity and growth while facilitating a new emerging investment vehicle for both National and International investors. The IFHA is the first private equity investment fund to invest in primary care delivery in Africa.

On top of all this activity, there is the PharmAccess Foundation and the Amsterdam Institute for Global Health and Development (AIGHD), which links disciplines, resources and innovative programs from academic institutions and implementing partners in both the developed and developing world, with the ultimate aim to lead the way to access to higher quality health care. They do all the impact evaluation to make sure that we learn from the experiences on the ground and more forward in a pragmatic approach towards a common vision: Improve access to quality health care for everyone on this planet.

I hope this has been informative. Feel free to reach out to me should you have any questions.

Leave a Reply