Patients seeking care in Nigeria’s post-fuel-subsidy era could be up against another round of hikes in the cost of accessing care as health businesses grapple with the impact of the recent rise in fuel prices on their operations.
Although the sort of quick effect seen in heightened transport fares has not taken off on patients’ bills, private health providers say patients will face the brunt of the development in the medium term, unless the government initiates palliatives to cushion the effects of subsidy removal.
Hospitals, medical diagnosis operators, pharmacies, ambulance services and drug makers among other health businesses already battered by inflation pressure and low access to foreign exchange have struggled to stay afloat without burdening the out-of-pocket expenditure of Nigerians on health.
Adeyeye Arigbabuwo, national president of the Health Care Providers Association of Nigeria (HCPAN) said the overhead cost of keeping facilities running already strains healthcare delivery pricing, affecting affordability for most patients.
“In countries where these things have been done before, palliatives follow. You and I should expect a higher inflation rate naturally and it will affect every sector and you can imagine what the healthcare sector will suffer.
“Our patients will bear the brunt and so will providers. For instance, the cost of drugs, consumables, dressing, staff salaries and wages, and operational costs…a lot of things will just have bandwagon effect,” he said.
The fuel price has soared by an average of 174.6 percent in two weeks to N526.7 per litre from an average of N191.8 per litre, according to BusinessDay’s calculation of NNPC’s new/old price list, doubling transportation and production costs for businesses and households.
Nigeria’s annual inflation rate rose for the fourth straight month to 22.22 percent in April from 22.04 percent in the previous month, according to the National Bureau of Statistics (NBS).
Yemi Kale, former statistician general of NBS predicts it could hit 30 percent in June on the heels of the high fuel prices.
According to Remedial Health, a provider of patient medical records solutions, the rising inflation rate has seen antimalarial drugs such as Artemether and Lumefantrine more than double in price from an average of N1,200 to over N2,700 per pack, for instance. Ciprofloxacin, a popular antibiotic, has also doubled in the last year from N900 to an average of N2,000.
For neighbourhood pharmacies and Proprietary Patent Medicine Vendors (PPMVs) that represent the main source of medicines for the majority of Nigerians, these price increases mean there is added pressure to balance the need to provide lifesaving medicines to their communities and the need to run their businesses effectively, Samuel Okwuada, CEO and co-founder of Remedial Health said in a mail.
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Drug manufacturers are asking the government to make foreign exchange available, lamenting that the rise in the cost of transportation and logistics will eventually increase the cost of production and worsen the already high cost of essential medicines.
However, patients may get a reprieve in subsidised public hospitals such as the Lagos State University Teaching Hospital (LASUTH) where price hikes are not expected on patients’ bills due to the subsidy removal.
Adetokunbo Fabamwo, chief medical director of the tertiary hospital, told Businessday that fees will not be raised in the short or medium term to remain affordable to the teeming public.
“Instead of drastically or significantly increasing fees in the hospital as a result of the removal of subsidy, he (Babajide Sanwo-Olu, Lagos State Governor) will rather increase the subvention to the hospital so that we can keep our fees still the same,” Fabamwo said.
“We are the last hope of the masses. Private hospitals can afford to hike their fees if they like. It is people’s choice to go there. But we must remain affordable.”
Many health analysts have previously argued that it is a misplaced priority for the government to place issues such as petrol subsidies or under-recoveries ahead of strengthening the health system where substantial funding is required to bridge huge infrastructural deficits and depleting stock of skilled medical professionals in the country.
It is expected that the amount spent on petrol subsidy alone, which is more than the combined budget for health and education, can be applied to critical sectors like healthcare.
An analysis of fuel subsidy issues in Nigeria by PricewaterhouseCoopers (PwC), a multinational auditing firm suggested that the removal of fuel subsidy will enable the government to free up resources that would have been spent on the subsidy to invest in other critical sectors such as education, healthcare, security, and infrastructure. “This will not only improve the standard of living for citizens but also enhance economic growth,” PwC stated.
“According to the World Bank, Nigeria’s total revenue in 2000 was $10.8 billion. By 2010, this amount increased to $67.9 billion. Yet the Nigerian government has spent over $30 billion on fuel subsidies over the past 18 years. According to the Debt Management Office, the country’s public debt stock is increasing as the government borrowed N1 trillion to finance fuel subsidy in 2022.”
However, the hope of freeing up money for healthcare may not be as feasible as analysts project.
Mele Kyari, group chief executive officer of the Nigerian National Petroleum Company Limited in an interview with Arise TV last week said no funds have been released to the company for the subsidy since 2022, implying that there is no financing available to be diverted to more critical sectors.
He said the government made a subsidy provision of N6 trillion in 2022 and N3.7 trillion for up to half-year of 2023 to enable NNPC to continue supply at the subsidized rate.
“It is no longer issue around whether or not you remove subsidy, you are going to have money to do something else. You just don’t have the money. Since 2022, not a single naira was paid to the NNPC to provide those subsidies and the implication of this is that the cash flow for the NNPC to continue to supply petroleum into the country has become a daunting task.”