Opportunity opens for healthcare funding with fuel subsidy gone

The removal of fuel subsidy in Nigeria has triggered a fresh demand for improved healthcare funding, with stakeholders urging the government to channel part of the freed up resources into the development of healthcare infrastructure.

For a start, they want adequate funding to be deployed to revive Nigeria’s primary healthcare system from the lethargies of poor infrastructure and shortage of qualified medical staff, as a measure to cushion the toll that the hike in fuel price will take on average patients.

Private health providers, which serve up to 70 percent of health needs that public primary healthcare centres (PHCs) could have handled, expect there would be an unavoidable spread of cost to patients soon, unless the government initiates palliatives to ease the pressure.

“In countries where these things have been done before, palliatives followed. You and I should expect a higher inflation rate and it is going to affect every sector and you can imagine what the healthcare sector will suffer. Our patients will bear the brunt and so will providers,” Adeyeye Arigbabuwo, national president, Health Care Providers Association of Nigeria (HCPAN) told BusinessDay.

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.

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.

Read also: Gas-powered vehicles now cost-effective as fuel subsidy ends

According to Remedial Health, a provider of patient medical records solutions, the rising inflation rate has seen anti-malarial drugs such as Artemether and Lumefantrine more than double in price from an average of N1200 to over N2700 per pack, for instance. Ciprofloxacin, a popular antibiotic, has also doubled in the last year from N900 to an average of N2000.

Neighbourhood pharmacies and Proprietary Patent Medicine Vendors (PPMVs) that represent the main source of medicines for the majority of Nigerians face added pressure to balance the need to provide lifesaving medicines and run their businesses effectively, Samuel Okwuada, CEO and co-founder of Remedial Health said in a mail.

The underperformance of PHCs on the other hand does not provide succour as their services are often limited to immunisation.

Less than 16 percent of 30,000 PHCs are functional, according to the National Advocates for Health and most analysts’ ratings often indicate a lack of capacity to deliver on their mandate.

The standard, according to the World Health Organization, is that more than 90 percent of essential services can be delivered through strong primary health centres, aiding early detection of disease outbreaks and giving people access to treat minor ailments at a reduced cost.

PHCs should respond to reproductive care, including maternal, neonatal, child and adolescent health needs at community levels, with the goal of curbing preventable maternal and child deaths in Nigeria.

But due to a lack of adequate government funding of infrastructure, modern equipment, skilled health personnel and low insurance coverage, people often bypass primary healthcare centres to seek care at costlier health facilities.

Only three of 36 states: Lagos, Ogun, and Anambra lived up to these expectations according to a 2019 ranking of performance by the National Healthcare Development Agency.

“How do you provide incentives for the growth of properly funded healthcare in this country? We have started with a petrol subsidy removal. The second is to fix issues around restructuring the national debt and the third is the harmonisation of the exchange rate.

For the long term, we need to look at floating the naira and abolishing foreign exchange controls,” Roger Ellender, managing director, NPL Nigeria told BusinessDay.

The arguments of most health analysts have been that it is a misplaced priority for the government to place 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.

The firm, citing the World Bank, said Nigeria’s total revenue of $10.8 billion in 2000, increased to $67.9 billion 2010. 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 shored up significantly with N1trn borrowed to finance fuel subsidy in 2022.

Reprieve

Patients may, however, 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, the state governor, Babajide Sanwo-Olu will rather increase subvention to the hospital so that we can keep our fees still the same,” Fabamwo said.