Pooling medical services can help lower healthcare cost

(Photo: Courtesy)

The main challenge facing health providers is improving service efficiency and making treatment affordable without compromising the quality of care. This entails lowering the cost of treatment and tackling inefficiencies that hamper access to care. Two primary areas of focus in health reform are lowering cost of drugs and eradicating corruption and waste of resources. The high cost of drugs can be managed through increased use of generics with the same efficacy as the more expensive branded drugs. 


Inefficiencies typically include wastage, corruption, fraud and misallocation of human and non-human resources. These have been cited as a major factor pushing up the cost of health-care globally. By some estimates, six per cent of the annual global health expenditure of $5.3 trillion is lost to corruption. Up to 40 per cent of health spending is sucked by systemic inefficiencies. This is a huge amount considering the positive impact it would otherwise have on the lives of millions of poor people around the world. Eliminating such inefficiencies is therefore critical in cutting costs.

Eradicating corruption in procurement is often a volatile process with charged political undertones.Typically, inefficiencies drive the cost of healthcare up. Escalating costs invariably lead to higher medical insurance premiums. This hurts those covered by private medical insurers and even public health insurance schemes like the National Health Insurance Fund (NHIF). It also increases the claims ratios leading to declining revenue for health insurers.

Tackling such inefficiencies therefore requires concerted action by multiple stakeholders within and beyond the health system. One way to minimize inefficiencies in the health system is by encouraging the use of shared health/medical services and infrastructure. A good case in point is ambulance services. The role of ambulance services in any modern health system is primarily to offer emergency pre-hospital medical care. In advanced health systems, ambulances also operate as first line treatment units. What is initially reported as an emergency may turn out to be a manageable case. In this case, trained medical personnel manning the ambulance treat and release the patient. This would work wonders in Kenya where millions of Kenyans living in remote areas can barely access the most basic health care services.


Promoting public-private partnerships in provision of ambulance services would help improve efficiency. This entails encouraging public and private health care providers and insurers to invest jointly in such services thus freeing resources for other critical services. More importantly, it helps lower the cost of offering such services to the public. The National Health Insurance Fund (NHIF), the public health insurance provider in Kenya, should explore partnerships with private medical insurance firms to pool such services. This not only expands coverage but allows for optimal utilisation of assets thus justifying the investment.

Some counties have invested millions of shillings in purchasing and operating ambulance fleets. Such duplication results in wastage considering such resources are often idle. They could be put to common use and achieve better outcomes including reduced cost of emergency services. In essence, what we need are more ambulances serving a greater number of Kenyans than a few reserved for exclusive use of certain health facilities. The money saved this way could be used in training ambulance medical personnel to offer enhanced services. And this is just one example of how partnerships can be deployed in lowering the cost of treatment while improving the cost of care.

Another significant benefit from pooling health care infrastructure and services is reduced medical insurance premiums. Medical insurers would pass on the benefits of savings on the cost of providing services to consumers. It is high time we embraced partnerships as a modality for reforming our health system in the public interest. A good starting point would be utilization of scarce resources to achieve better health outcomes for all.

Ms Munene is the Managing Director, AAR Insurance [email protected]