Government’s Role in the Healthcare Industry


What is happening to Nigeria’s health care sector demands we bring our Game A to this all-important sector.

First, it is a business with a strong social dimension; however, it is still a business – there are cost and revenue projections, and someone needs to pay for the care. The government simply does not have the resources to do a blanket subsidy for the sector. And, as we have learned from the petroleum industry, it is best to focus subsidy (via social intervention programmes) to those who really need it, rather than subsidizing the entire value chain.

The current blanket subsidy (in government-run infrastructure) is not sustainable and those who really need subsidy hardly get it. Also, it creates distortions in the incentive structure for the healthcare workers themselves. If, as a health care practitioner, you really want to serve the underserved in Nigeria, there is little infrastructure to do this. The crowded government hospitals in the city are actually not efficient; patients pay more than they receive in care, and the rural areas where the care is needed lack infrastructure and sufficient fund allocation.

Government’s role in the healthcare industry should be limited to governance. By this I mean resource pooling (via taxation and ensuring NHIS compliance) such that government-regulated private stakeholders (social ventures) deliver the care. Japan, for example, implements an “NGO-only hospital model”; and since all NGOs are regulated by government it is a good way to ensure adequate governance without the bureaucracy of government.

For example, there are about 5 million people in Anambra State; and at N12, 000 each per annum we can provide basic health care to them through 250 NGO providers serving 20, 000 clients each.. Hence, the government’s job is to raise this N60billion. If 3 million (60%), can afford this N12, 000 (either as health tax or as mandatory insurance premiums), the government can focus N12billion on those who can pay half of the 12k, i.e. 6K. That’s N500 a month for a year of health care.

As it is, Anambrarians spend much more than N60 billion on basic health care; malaria alone will account for upwards of N15billion/annum; the inefficiency is colossal.

The good thing about this model is that with this nearly guaranteed N60bn/annum pumped into the industry every year, we won’t have this NMA/JOHESU dichotomy issue and we would easily achieve up to N500bn investment by the private sector in the state within the first three years of implementation.

Another beauty of managed care is that it induces pro-activeness. If, for example, my firm is in charge of one centre (20, 000 lives), we would prefer to spend money on preventing the illness than waiting for clients to come and claim their care. The reason the Nigerian government and healthcare providers don’t spend on prevention as much is that we mostly pay out of pocket; so, it is simply not good business to prevent diseases in Nigeria. The market size of health care in Nigeria is predicated on the growth of chronic diseases. However, once we have a structure like this, prevention becomes a business imperative.

For states where the percentage of indigents is higher, the government can reduce the component of “basic care” to the essentials.


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