How to lower costs in African healthcare and make it more accessible

How to lower costs in African healthcare and make it more accessible

Over the past ten years, there has been an unprecedented growth globally – and in Africa in particular – in the number of people rising out of poverty to achieve middle-class status. This population, often referred to as the Middle of the Pyramid (MOP), has a significant disposable income meaning an increasing demand for healthcare. As countries grow wealthier, models of healthcare provision and financing need to adapt to increasing expectations and new demands for healthcare. In many countries, there is growing interest in developing affordable universal health coverage.

The question of how to meet the increasing demands and expectations of a growing MOP population is a huge challenge for both the financing and provision side of health care. Particularly because often increasing levels of technology, irrationally high pharmaceutical use and unnecessary, expensive procedures are interpreted by consumers to mean higher quality.

Ensuring that individual providers are low cost is only the first step. Payers and policy makers also need to create systems and incentives to ensure patients are treated at the most cost effective level of care. Defining appropriate coverage packages, and working with patients to encourage cost conscious behaviour and to support them in looking after their own health are also important strategies. Beyond this is a need for improvements in regulation and public information to ensure consumers do not equate high cost with higher quality and are not induced to use services that do not offer value-for-money, or worse yet expose patients to unnecessary risks.

Step 1: Low cost providers

There is more to low cost provision than just keeping input costs as low as possible. Evidence points to the importance of how resources are used, the skill with which they are deployed, and the approach to the management of the provider that makes the difference. While many models are looking for low cost per transaction, future strategies will be focussed on improving value along the continuum of care.

There are four key areas where providers need to focus to succeed:

  1. Be clear about the patients to be served and the business model
  2. Have highly efficient processes based on standardisation and flow
  3. Develop models for workforce, technology, buildings, technology and logistics that drive quality and low cost
  4. Create systems to manage this and drive continuous improvement

Step 2: Creating a low cost system

Payers and policy makers also have an important role in the creation of low-cost systems. Limiting prices and controlling costs by imposing high deductibles and co-pays can have some effect but to develop a low cost system some different strategies are needed. We see opportunities in four main areas:

  1. Coverage decisions
  2. Measures that address how patients use the system
  3. Approaches to paying providers
  4. Shaping the provider system

This assumes the basics of good governance are in place and there are reasonably well developed systems for regulation of professionals and organisations, provider payment and identifying and dealing with fraud. If not, the strategies will of course need altering accordingly.

Our advice to providers and policymakers

In isolation, the individual building blocks for creating a low-cost high-quality healthcare system are already fairly well understood. One issue however is that some are counterintuitive and contradict firmly held beliefs about how to run a hospital or a health system. There are a number of things that seem to separate the successful operators of these systems from the rest:

  • Skilful execution and in some cases a first mover advantage, particularly where this has enabled them to create large-scale operations
  • A willingness to experiment and an environment to take risks
  • An ability to redesign the care process, workforce and systems for delivery
  • In many cases, a strong mission based on creating value and expanding access
  • Investing in staff and their training
  • Ensuring very high quality and efficient support services
  • A payment system that creates space for innovation and that measures and pays for value

As with many elements of health system design, the local context, regulatory environment and other characteristics of the local market are crucial and it may therefore be difficult to replicate successful models without significant experimentation and adaptation.

We expect to see more innovation and challenges to accepted ways of running a health system and in what patients expect. The big risk to traditional providers is that expectations will rise faster than they can keep up – this is when revolutions happen. Those that cannot adapt could be swept away. The potential for bad decisions and in particular for copying existing, unaffordable models from the West is very great but so is the opportunity to create services and business models that change the face of healthcare.

David Okwara

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