A survey of environmental developments and Firms' responses in the health insurance sector in Kenya

Abstract

Environmental turbulence is a phenomenon facing organizations globally and locally as they strive towards achieving their set objectives and goals. The environmental changes cut across different contexts and sectors. Kenya organisations are no exception to this. This study focused on environmental developments in the health insurance sector in Kenya, the main objectives being to establish the challenges facing the sector and the strategic responses by the organisations affected. The study employed a census survey methodology to collect the relevant data. The population of interest was 25 organisations i.e 13 private insurance companies, 11 HMOs and 1 social health insurance scheme. These are the organisations in the business of health insurance in Kenya. A Questionnaire was designed and used to collect data through personal interview and drop and pick approaches later. A response rate of 60% (i.e. 15 respondents) was attained. The study reveals that 60% of companies studied are fully locally owned, 53.03% have a capital base of less than Kshs 1 billion, over 66% of companies studied indicated limited delegation of authority and responsibility and 93.3% do have mission statements. There was consensus that premiums and claims have been going up over the last 5 years.

The results of the study reveals that organisations in the business of health insurance in Kenya faces a number of challenges and the escalating healthcare costs leads them all. It was also revealed that in coping with these challenges, various strategies are pursued. All the organisations revealed they do carry out the scanning of the business environment, formulate strategies that will enable the firms cope with changing environment, and develop capacities that matches the developed strategies to the firms' activities. The findings indicate that trends in the business environment leads forces influencing strategy formulation i.e with a mean score of 4.47 which tends towards the most important score which is 5. It was further revealed that of the companies that responded 73.3% pursue a combination of both emergent and planned strategies. Escalating healthcare costs was revealed to be a major challenge. It cut across the respondents that Networking and cooperation amongst the players in the sector is the most preferred approach to tackle most of the challenges they are facing. The study focused mainly on the health insurance sector. There is need for a further study to be carried out to examine the developments and responses in the broader scope of health care management to which health insurance is just part of