Nigeria’s healthcare delivery system which pales in comparison to many other countries in the world, appears to be getting worse as privately-run medical centres are finding it difficult to finance their operations owing to backlog of debt from health insurance providers.
Nigeria’s overall health care spend estimated at N2 trillion, has government spending about N600bn, health insurance funding put at N100bn while the larger chunk of N1.3 trillion is mostly paid out of pocket.
There are about 40 registered HMOs in Nigeria today, according to the Health and Managed Care Association of Nigeria (HMCAN).
The out of pocket medical expenses are often paid by millions of Nigerians who are not enrolled under one health insurance plan or the other, thus, paying more in direct cash when for a fraction, a health insurance provider could have handled same.
“Up to 80 percent of the population are still paying out of pocket because the health insurance we are operating is very small,” said Olaniyi Olatunde, a doctor at Araba specialist hospital, in Yaba area of Lagos. “If we want to develop the health system, we must properly develop our health insurance sector so that everybody can access healthcare and not through the traditional HMO system that we are using now.”
Sources within the health sector informed BusinessDay that hospitals are finding it difficult to operate as according to them, some Health Management Organisations (HMOs) fail to remit funds to them after patients may have been attended to.
In one instance, a HMO that had failed to make payments to a hospital where its enrolees where using, suddenly told them “the facility had been suspended.”
Whereas, the HMO had been indebted for several months, and instead of paying, opted to find a less dignifying way out.
The case appears not to be in isolation, as in other instances, HMOs after accumulating debt with one medical facility, simply move on to another provider to avoid paying what they owe.
Visits by BusinessDay correspondents to a number of private hospitals, and interactions with the medical directors revealed a tale of woes.
“80 percent of the HMOs I have worked with have defaulted,” lamented Ifeanyi Godwin, medical director of a Lagos based hospital who did not want his facility mentioned.
Godwin continued; “Our contract is for 30 days after seeing a patient. At the end of the month, we send the bill to them and we give another 30 days to process and pay so in all, the hospital gives them a credit facility of 2months. But almost 90 percent don’t meet this, hence there is a backlog on the hospital funding as you pay your staffs salary at the end of the months when you haven’t received these from the HMOs.
“Most HMOs owe for like 3 moths above and this can show you the amount of funds hospitals have lying outside.”
Godwin explained that in one instance, one of the HMOs his hospital had a problem with was sanctioned by NHIS, the regulator, but the case ended up in court and for two years, he said “our money that is running into millions are outside hanging, which should not be so, because as an HMO is folding up and cannot pay, the regulators ought to intervene with funds by paying the hospital affected.”
Umar Sanda, president, Healthcare Providers Association of Nigeria (HCPAN) also told BusinessDay, that majority of HMOs do not want to pay providers, and at the same time also want to pay fees for services (at rates) which are not agreeable with the private healthcare providers, who actually bear operational risks alone.
Furthermore, “They delay payments a lot when paying the fees for services, as you can put in your bills but not get anything for over three months.
“Another also is the cost they charge for drugs which is not commensurate with the present economic reality at all. They want you to give (quality) services but don’t pay what is commensurate to your services. That is exactly what is going on right now and we are trying to fight it out.
“We will want to have an agreeable tariff because the present situation is not acceptable to most private practitioners,” Sanda said.
The medical director of another Lagos based hospital who did not want to be named on record, told BusinessDay “We know that HMOs starve the hospitals of funds. This is because we have contracts with individual HMOs and it is a private thing where they get the clients, agree on the fee, the insurance, the premium and they pay some yearly, some quarterly, and some pay monthly. This has disrupted the disbursement of claims from the hospitals.”
The doctor also explained that while the HMOs have a habit of defaulting, some companies are also in the habit of not paying what is due, and when it is.
He said, “at times these companies will default, making the HMO in turn owe the hospitals for up to six months especially since the recession, we have seen situations where the HMOs write that we should stop treating people from a particular company, indicating that they are withdrawing the services because of non-payment.”
Regardless, predominant sentiment showed that HMOs could still be taking advantage of this to default in promptly paying claims to hospitals.
Kolawole Owoka, a former chairman of the Health and Managed Care Association of Nigeria (HMCAN), the umbrella body for HMOs in Nigeria, however told BusinessDay that his association (and its members) were before his handing over already 100 percent capitation compliant.
“We at HMCAN even say that if you can prove any HMO is not paying your capitation, please report because we want that HMO to be removed. If I am a provider, all I need to do is photocopy what I billed and what is paid by the HMO, then send to NHIS which is the regulator. The structure is simple, but people choose not to follow it.
“I have an HMO and I always say it anywhere I go that I am not owing anybody,” said Owoka.
He further explained that the regulator is asking HMOs to go collect letters of non-indebtedness from the providers they work with, and whoever has issues with the HMOs can at this point refuse to provide the letter.