Hospitals trim dollarized costs as economic pains threaten operations

Hospitals are aggressively cutting costs denominated in foreign currency in a bid to stave off operational collapse amid economic hardship.

Nigeria’s economic challenges, including high devaluation, inflation, and biting cost of petrol subsidy reforms, are forcing major hospitals to tighten their belts and find local alternatives to their business needs, BusinessDay’s findings show.

First Cardiology Consultant, Lagos’ top cardiac centre laid off 12 foreign expatriate staff members in April, facing unsustainable costs due to fluctuating dollar rates.

These experts had key inputs in performing different procedures in interventional cardiology and training local staff.

Yemi Johnson, the founder and chief executive officer said the hospital now utilises the services of equally skilled local experts, supplemented by consultants who occasionally come from the United Kingdom and the United States.

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The CEO said it has become increasingly difficult for hospitals to minimise their cost of operation while grappling with high import tariffs imposed on several medical consumables and devices, which the alternatives are not available in Nigeria.

“If you hired somebody and paid $1,000 a year and it cost N200,000 naira before, now it has gone up to about N2 million. It doesn’t add up any longer. So we had to let them go. But luckily we have trained our Nigerian staff and they are working just fine. We have the talent. It’s just how to retain them,” Johnson.

At Marcelle Ruth Cancer Centre and Specialist, the services are supported by a “tumour board” comprised of Nigerian diaspora consultants who provide advisory that is otherwise charged thousands of dollars for free.

At Marcelle Ruth Cancer Centre and Specialist Hospital, Nigerian diaspora consultants volunteer their expertise on a tumour board, typically costing thousands of dollars elsewhere, Modupe Elebute-Odunsin, the CEO told BusinessDay.

The gold-standard tumour board system ensures every cancer patient’s case is discussed by a team of specialists and a treatment plan that meets international guidelines is designed, improving the outcomes of patients.

This would have been an additional cost, ultimately burdening patients with higher healthcare costs, and limiting access to care.

“I think the currency fluctuation makes it very difficult to run a hospital financially and the problem is that costs end up back with the patient. So access to care is difficult because of the high costs,” the CEO said.

Highlighting the soaring cost of everything from medical supplies to equipment maintenance, Elebute-Odunsin said the dramatic naira devaluation has made essential imports more expensive.

Complicating these challenges is an excessive number of regulatory bodies with overlapping and unclear requirements, which creates a complex and costly registration process for hospitals.

Also, the challenge of inconsistent electricity supply has forced hospitals to rely on expensive diesel generators, further straining their finances.

Despite dialogue with the Federal Ministry of Health (FMoH), Bala Audu, Nigerian Medical Association president said there is a lack of clear timeframe for addressing the crippling impact of high energy costs and erratic supply.

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“FMoH is working closely with the Federal Ministry of Power to see that the designation of Hospitals is removed from band A, which is too expensive. The challenge of band A means it’s impossible for them (hospitals) to open,” Audu said.

Apart from localising expertise, another measure hospitals use to moderate the cost is to seek out locally produced medicines and consumables that are effective but cheaper than branded imports which have become out of reach for many patients.

Where local alternatives are unavailable, hospitals also use diaspora networks to access medical consumables and devices.

Olurotimi Badero, visiting senior consultant and head of Interventional Cardiology at Iwosan Lagoon, speaking on how diaspora health professionals can help improve the local health system in Nigeria at a recent conference in Lagos said hospitals can be supported with consumables to excessive costs.

“I try to help hospitals with consumables. Affordability of care is key. You can’t do all these wonderful procedures if patients cannot afford them,” Badero.

He, however, noted that skills transfer remains the fulcrum and partnerships with Nigerian diaspora professionals can be effective in training, lowering costs for patients, and curbing outbound medical tourism.

For instance, his work with the Iwosan Lagoon Hospital has seen a high volume of complex medical procedures performed – almost 60 cases in 40 days. They include multi-pressure stenting, chronic total occlusions, and limb-saving techniques.

Overall, health providers hope that the government gains an understanding of their plights and works with the private sector on how to address them.