Health care delivery: The capital market option
A while ago, I spoke on the deplorable state of the Nigeria’s health care facilities, just in the same manner several Nigerians have spoken about the problem. It is common knowledge, as alluded to above, that there is practically no functional public health care facility, properly so called, in Nigeria. Hence, this reality of the comatose state of Nigeria’s healthcare facilities requires no further lamentation as such could amount to kicking a dead dog. Consequently, my mission is to interrogate the possible options of salvaging the health care system in Nigeria, particularly the funding aspect. In my piece titled “Our Fate After COVID-19 https://theinterview.ng/2020/04/06/our-fate-after-covid-19/” written when the pandemic was at its peak in the country and several aids in form of donations in kind and cash were rolling into the health sector, I suggested some of the ways of rejuvenating the health care sector of the nation, seizing the opportunity of that momentum. As suspected and predicted in the write up, not much would eventually be achieved by the time the country is overwhelmed by the pandemic.
Today, I sincerely doubt if the various ventilators, ambulances, hospital beds, other equipment etc., donated and acquired during that period can be accounted for, much less still functioning perfectly. By this, I do not only mean existence in terms of numbers, but maintenance and sustenance of the equipment. If the donated tangible assets are incapable of tracking, how possible is it to account for the various huge monetary donations and other intangibles? I had suggested then that we prepare for the final destination of the donated and acquired equipment as well as their maintenance strategy. Part of my suggestion then was that we have a proper inventory of the equipment at the barest minimum. From my investigation so far, without quoting any personnel, nor mentioning my source, accountability for both the donated tangible assets and the cash is a farce; may be the Independent Corrupt Practices Commission that pledged to track the donations for the nation can help unveil the state of the donations. I read few days ago, precisely Monday, the 30th day of November, 2020 that a Court gave an order that the Central Bank of Nigeria should render accounts of all donations collected including the application of the donations. The question is, do the relevant officials of State require judicial intervention to know that they must render accounts and be transparent in the application? ME THINK NOT!
It is only hoped that the others that collected donations in respect of the health facilities at the various other levels will not wait for such mandatory order of court to be accountable and transparent. Suffice however to state that, even in the absence of such information on the applicability, what obviously is on ground depicts lack of any major critical investment or upliftment in the health care sector. Be that as it may, few months ago, the Capital Market Solicitors’ Association, of which I am a proud member, had its 2020 annual business luncheon essentially interrogating the capital market option of funding the Nigeria health care system. Some of my take from the various discussions is what will constitute the crux of our engagement in this column. Let me, from the onset, state that the consensus, as it appears to me, is that capital market funding is certainly a viable option for financing Nigeria’s health care system, particularly in view of the capital-intensive nature of the health care delivery system and the constraint of resources on the part of the government.
According to the Director General, Security and Exchange Commission (SEC) who gave the keynote address on the occasion, a lot of pharmaceutical companies like Pharmadeko are already beneficiaries of the capital market funding and in his view, the market is ready and fertile for the health care investment. As exciting as the conclusion and news could be, several pitfalls and challenges still militate against a successful adoption of this source of funding. By way of foundation, the Guest Speaker, Mr. Bode Agusto, relying on the work of Ezekiel J. titled “Which Country Has The World Best Health Care System” in a study of eleven frontline countries startled the audience with the reality that Nigeria requires minimum of two hundred dollars per person on health investment. Hitherto, the study had revealed that the United States of America spends a minimum of eleven thousand dollars per person on health care of her citizens while China expends minimum of nine thousand dollars per person.
Currently, Nigeria funds the health care at the rate of 12.7 dollar per person, about five thousand naira. If the baseline of two hundred dollars per person is taken, it means that Nigeria is expected to fund her health care to the minimum of forty billion dollars per annum, sixteen trillion naira per year using the old exchange rate, the summation of which is much higher than the current 2021 proposed budget of the nation. This obviously reveals the incapacity of government to fund the minimum health care requirement of the nation. In the circumstance, therefore, funding options must be exploited. Currently, there are three major ways of meeting medical expenditure in Nigeria. The first is the direct payment by the beneficiaries of health care services; second, financing through the health insurance scheme by the subscribers ( UNIVERSAL HEALTH INSURANCE SCHEME) and the third, direct funding by various levels of government. In all these, there is still massive gap in terms of the coverage. To illustrate this funding gap, less than six million people are currently subscribers under the health insurance scheme, implying than over two hundred million Nigerians are expected to be under the two alternative modes of direct payment or government funding. The total health investment by all the levels of government in Nigeria is in the neighbourhood of a trillion naira according to Mr. Adeniyi of AXAMANSARD.
This is still a far cry from the minimum indicative expenditure of 16 trillion naira alluded to above. According to the experts mentioned above, the only option in the circumstances, is to gather a pool of fund for the purpose of meeting the threshold of indicative expenditure. For instance, as suggested by Adeniyi, health investment trust fund as in that of Real Estate Trust Fund, or Innovative Premium Savings could be adopted. The realization of this, however, still lies in the exploration of the capital market. The success or otherwise of this will depend on the agreeable operating model by all the stakeholders, particularly subscribers to the fund. Secondly, appropriate pricing of health service and thirdly, legal framework that will birth the applicable template. In order to make this work and guarantee continuous inflow into the fund, compulsory health insurance, just like the contributory pension schemes, is a must. Another interesting proposition from the Luncheon, courtesy Mazi Sam Ohuabunwa to which I subscribe, is the need to formally recognize the traditional health care delivery system alongside the orthodox health care system without subordinating one to the other. According to him, this will reduce, if not eliminate the dependency on the orthodox health care system and provide alternative medical care to those who would have been otherwise unable to afford the orthodox medical care.
It must be borne in mind that majority of nigerians in the country, particularly in the rural settings patronises the traditional health care system. This will substantially resurrect the vanishing traditional health care and improve the quality of dispensation. The truth as agreed by all is that the country continues to relegate the traditional health care, forgetting that the orthodox Medicare requires a lot of foreign inputs that the country lacks local capacity to develop. Apart from the expensive nature of the technology required, the country equally lacks sustenance capability. A good narrative is the treatment of the pandemic in which the country continues to heavily rely on foreign researches. the earlier we are able to standardise traditional health practice, particularly along the line of specialization, the greater the window of opportunity for investment in the traditional health care sector, said Prof Wale Sulaimon.. As much I appreciate the proposition of the capital market option, I suspect that its’ possible adoption is still fraught with a lot of challenges. In my view, if the appropriate pricing of services are to be applied, it is doubtful if many Nigerians will be able to afford the cost. Regrettably, without this benchmark, no investor will be willing to put his fund into the pool. The solution in the short time will appear to be a form of subsidy in the determination of the appropriate price, at least for the period of stabilizing the mechanism.
This reminds me of the similar scenario when I was Commissioner for Public Transportation in Lagos State and I sought to use the capital market to fund the State’s rail system. The simple response that nailed the initiative from the World Bank was simply that it was impracticable due to the affordability element. As for the insurance aspect, the poor renumeration of the people will impair the ability to subscribe to the insurance scheme. Hence, compelling Nigerians to subscribe to the health insurance scheme, as sought to be done in the bill being presently considered by the National Assembly, can only largely succeed in the public sector as rarely would it work in the informal sector . The last straw that mars the possibility of success is the inflationary rate in the country. While the returns on investment is said to be between 4-6 percent per annum, inflationary rate is around 14 percent. No sane investor will, therefore, be willing to participate in the funding scheme contemplated in this discussion. The atmosphere seems not to be conducive and receptive to such investment in the sector, particularly if it is recognized that this is a business and not a social investment. Regrettably, public, private partnership is equally not likely to be successful in this nation as government interference, coupled with ever-changing policies and regulations will kill the initiative.
It is in the light of the above, whilst concurring that the capital market funding is an option for the rescue of the country’s health care system, I see more work still required to successfully birth the capital market funding in this regard in addition to the promotion and standardization of the traditional health care delivery system.