Health Financing: Can Digital Innovation Help?
The economic losses from preventable deaths due to weak health systems in Low and Middle-Income Countries was north of $6 trillion (a conservative estimate) in 2015 alone. Interestingly, according to a June 2020 GSMA report which polled top-level key informants in the health sector from seven developing countries including Nigeria, [health] finance was identified as the second leading cause (17%) of weak health systems after leadership and governance (18%). It can be argued that of these two, finance has a more direct impact on health systems.
The World Health Organization (WHO) defines a health system as comprising all organizations, people and actions whose primary intent is to promote, restore or maintain health. If effective, it successfully prevents diseases, delivers treatments, and provides cost-effective care to improve health in the population.
Similarly, health financing refers to the function of a health system concerned with the mobilization, accumulation and allocation of money to cover the health needs of the people, individually and collectively, within the health system. Its purpose is to make funding available, as well as to set the right financial incentives to providers, to ensure that all individuals have access to effective public and personal health care.
If successfully executed, health financing would enable the delivery of Primary Health Care, Universal Health Coverage, and Sustainable Development Goal 3. Thus, efforts seeking to initiate or identify and engage the most efficient way(s) for insuring health should be continuously supported by well-meaning stakeholders and policy makers in healthcare.
In his seminal work ‘The Healing of America’, T.R. Reid shared key insights gathered from a self-imposed odyssey to examine successful health systems around the globe with a view to synthesizing and prescribing the elixir for an ailing American model in terms of coverage, cost, and quality.
One of such insights (the basis of his thesis) is that effective frameworks for servicing health expenditures enhanced the capacity of some benchmark countries to provide care to residents at a reasonable cost. This encapsulates the three primary goals of health systems: to improve the health of populations; to enhance responsiveness to the population’s health needs and expectations; and to ensure the financial burden of paying for health systems is fairly distributed. Some of these countries are Germany, France, and Japan.
As you may have guessed, there are no two countries with identical health system models because it uniquely reflects their history, politics, and national values. Nevertheless, it is divided into 4 broad categories: The Bismarck Model (health care providers and payers are private, financed jointly by employer and employee); The Beveridge Model (health care is provided and financed predominantly by the government using tax funds); The National Health Insurance Model (health care providers are private, but payer is a government-run insurance program that citizens pay into); and The Out-Of-Pocket Model (health care provider is private or government, payer is the patient).
Nigeria, like most developing countries, practices principally the Out-Of-Pocket Model. According to the National Demographic and Health Survey, as of March 2020, 97% of Nigerians are without health insurance. This is a recipe for financial ruin from health expenditure and alienation from orthodox health systems for a country landscaped by poor health indices (life expectancy, Infant Mortality Rate, Maternal MR, Under-5 MR, etc.).
Further, in a recent press release by the World Bank, out-of-pocket expenditure on healthcare by people in developing countries amounts to about half a trillion US dollars (i.e. over $80 per person) annually. Yet, about 400 million people in these countries (particularly in Africa and Asia) lack access to essential health services including sexual, reproductive and maternal health; newborn and child health; infectious diseases, including tuberculosis, malaria and HIV/AIDS; non-communicable diseases; and mental health.
This begs the question, how do we optimize for improved financing in our healthcare system to drive universal coverage and egalitarian access, bearing in mind the eclectic nature of our current model? For answers, let’s take a stroll to visit our proverbial rich uncle, Banking.
The Governor of The Central Bank of Nigeria, Mr. Godwin Emefiele stated during a June 2019 reception for the Bill & Melinda Gates Foundation that Nigeria was en route to achieving 95% financial inclusion by 2024. Not surprisingly, as reported recently in a finance tabloid; nearly three in ten adults (29%) now have bank accounts, three in 100 adults (3%) have mobile money accounts, and the same number (3%) have non-bank financial accounts. These feats were owe their success to low-cost, far reaching digital innovations like internet banking, mobile money, e-wallet, payment technologies, etc. Thus, suggesting digital innovation may be our answer.
However, given the convoluted nature of healthcare, is a simple digital solution the line of sight to achieving optimal health financing and secondarily, universal health coverage and egalitarian access to care? Let’s now turn to C.K. Prahalad who in The Fortune at the Bottom of the Pyramid prescribed Hybrid Solutions for innovations targeting BOP markets which have distinctive characteristics as healthcare: convoluted, seemingly impenetrable, yet hold a lot of potential.
Hybrid solutions creatively combine the most advanced technologies with existing (and evolving) infrastructure in meeting needs. An example is the molecular encapsulation of iodine (K15) in salt production to combat Iodine Deficiency Disorder, whilst maintaining comparable pricing and distribution channels as traditional salt.
Adapted to health financing in Nigeria, hybrid solution would combine a customized model of healthcare with an advanced digital innovation framework designed for such a model. France which ranks number 1 in health systems according to the WHO for instance, has practiced a variant of the Bismarck healthcare model (whose inception dates back to 1883) since 1928. And successfully integrated the ‘carte vitale’ digital innovation framework in 1998. In this model, everybody belongs to a health insurance fund with cheap premiums and can go to any doctor or hospital in any part of the country to access care without cost concerns. Facilitating this is a mobile technology ‘carte vitale’ that enables financing (through digital claims/billing report) as well as continuity of care (through digitally stored health records); which are some of the hallmark features of casenote. The digital support is the secret weapon responsible for the efficiency of the French health care system.
Having established that digital innovation can help with health financing, Nigeria must show agency and prioritize creating a digitally supported custom care model to meet the needs of her growing populace which the United Nations projects would be the third largest by 2050 behind China and India. Our health expenditure (3.76% of GDP) is about a third of Brazil’s which has a similar population size (a little over 200 million) and a far cry from France’s 11.31% with a population size less than a third of ours.
Thank you for reading!
