Perceived Implications and Planned Responses to the National Social Health Insurance Fund Bill 2004 by Private Hospitals in Nairobi

Abstract

The Ministry of Health in Kenya has introduced a Bill in parliament, entitled 'The National Social Health Insurance Fund Bill 2004', which is currently under scrutiny by the Parliamentary Committee on Health, Housing and Social Welfare. If enacted into law, the Bill will create the legal framework for the introduction of the National Social Health Insurance Fund, which will introduce change in the operating environment for hospitals. The fund seeks to enroll the entire population through mandatory contributions which will shift the healthcare system from a predominantly fee for service to a pre paid insurance based system. A survey research was conducted among the 65 private hospitals in Nairobi and its environs to establish the perceived implications and the responses to the NHSIF Bill 2004 by these hospitals. A questionnaire was circulated to the Chief Executive Officers or Administrators of all the hospitals. This report contains the findings of the survey. 72.9% of the respondent hospitals in the study agreed that once the Bill is enacted into law, the fund would result in an increased number of patients in hospitals. However, the increase will be not be in cash paying patients since most of them will depend on the fund to pay for the cost of care. 70.9% of the respondents agreed that there would be a decrease in revenue from fee-paying patients. This coupled with the introduction of compulsory employer contribution will result in an increase in the working capital needs of the hospitals. The increased number of patients is expected to result in an increase in the number of claims processed and the staffing levels required at the hospitals. 51.4% of the respondent hospitals in the study were of the opinion that the quality of care will deteriorate but the increase in the number of staff may help maintain the quality. However, 54.2% of the respondents in the study agreed. that the existing number of staff will do more work for the same pay, which will result in staff with low morale and consequently lead to poor quality.

More investment in diagnostic equipment will be needed to handle the increased number of patients. Investment in information management systems (IT) to improve the claim administration process will also be required. All these will mean that operational costs will increase and the profits will go down. Since the claims will take longer to be paid, the hospitals will use loans, grants, and overdrafts to finance the extra cash requirement. They will also hire staff on temporary basis and put a hold on recruitment. The eventual result is a reduction in the quality of care. The hospital Administrators and Managers from the respondent hospitals have read the Bill and have attempted to lobby for amendments. They have made presentations to the Ministry of Health and the National Hospital Insurance Fund (NHIF). They have also made presentations to the Parliamentary Committee on Health. They have joined industry players to lobby for changes and enrolled the support of other stakeholders. Some, particularly the large hospitals have enrolled the support of the public using the mass media. These efforts have borne fruit and some sections of the Bill have changed and the benefits have been revised. The Bill has been shelved from discussion in Parliament until more consultations with stakeholders are done. The respondent hospitals will seek accreditation to the fund if the Bill is enacted into law. They will also look for additional working capital, invest in additional equipment and employ more members of staff. This together with the employers' contribution and late payment penalties may pose financial risk to the hospitals. Some hospitals indicated that they would file a constitutional reference to contest the Bill in a court of law. However, none of the respondent hospitals felt that the fund would result in their closure. They will therefore adjust and adapt to doing business in the new environment.