As part of the special report on the health insurance industry, The Guardian sat down with Mrs. Adesimbo Ukiri, Managing Director/CEO of Avon Healthcare Limited, a leading health management organisation (HMO) in Nigeria, to discuss changes in the landscape since the launch of Avon HMO last year.
As a key player, what is your overall assessment of the NHIS and the health insurance sector in Nigeria?
When we talk about the National Health Insurance Scheme (NHIS), it is important to remember that the NHIS has two roles – one as the industry regulator and, secondly, as the owner and initiator of the NHIS scheme. If we consider the NHIS as a scheme initiator, there have been a number of laudable programmes developed since its inception in June 2005. For example, there is the Formal Sector programme to which all the Federal Government civil servants are subscribed to; the Voluntary Contributions Health scheme that has met some level of success; various community health insurance schemes across the country as well as the Maternal and Child Health Project that seeks to reduce infant and maternal mortality. There is also the Tertiary Institution Social Health Insurance Scheme for University students. Unfortunately, despite the admirable aims of these initiatives, uptake has been lower than expected. The only scheme with a sizeable number of enrollees is the Formal Sector insurance programme. We can all agree that there is still a long way to go. However, we are moving in the right direction. I am encouraged; the better part of 2014 has seen Universal Health Coverage attract much needed attention from the highest echelons of our Government and the rest of the world.
We must remember that the objective of the NHIS is to attain Universal Health Coverage for all Nigerians. If we weigh all that has been achieved in reaching this goal, even though there is some success, we have no choice but to conclude that all of us within the industry still have a lot of work to do. The level of Health Insurance penetration is low – less than four percent of the entire population. Though we are mindful of the absence of publicly available figures or statistics to substantiate this, there is general agreement that this is a fair indication of how far the NHIS and HMOs have succeeded in taking Health Insurance and its undeniable advantages to the Nigerian people.
Discussing the NHIS as a regulator and licensee of all HMOs in the country, one can conclude that steady progress has been made. There are currently 77 licensed HMOs as we speak. Many of the HMOs, in addition with working with the NHIS to manage the variety of NHIS schemes stated previously, also offer private Health Insurance schemes to companies, associations, communities and individuals. The NHIS monitors and regulates the operations of HMOs in this regard as well. If we consider all of these regulatory activities alongside the management of the different NHIS schemes, we start to appreciate the scope and breadth of the NHIS activity across the country. At Avon HMO, we are excited to partner with our HMO contemporaries and our regulator to take Nigeria from the current coverage level of 4% to 30% or even higher by 2015. This may sound like a tall order, but we believe it is achievable.
Can you comment on the contributions of State Governments to the NHIS?
Every State Government prioritises health. However, each State Government has a different approach as to how they can best impact and improve the health of their people. In realisation of these individual approaches, the NHIS, HMOs and State Commissioners for Health have met several times and I am pleased to say that a common agreement has been reached. That is, in order to achieve Universal Health Coverage and to provide consistent and quality healthcare to the citizens of Nigeria, Health Insurance Schemes are the way to go.
In the course of this year and beyond, I believe each State will develop a strategy for what they believe will best work for them. Although each State may not be able to cover their entire population, I have the confidence that, given the level of ongoing engagement and discussions, there is and will continue to be progress. Indeed, with the tripartite discussions between the regulator, the HMOs and the State Health Commissioners, more states will implement health insurance schemes that will work for their citizens.
Nevertheless, from experience, we know that the model for each State Government and the level of participation is likely to differ from state to state. State Governments always stress that healthcare is on the concurrent legislative list. This has led to some ambiguity with regards to what functions and activities relating to Health Insurance falls under the remit and responsibility of the State versus the Federal Government. The States only want more autonomy in the management of healthcare insurance schemes in their respective areas of authority.
In a show of support, the Executive Secretary of NHIS, Femi Thomas, has on many occasions, told Health Commissioners and State Governors that the NHIS will provide technical support should they chose to operate the health insurance scheme at a State level. This is very encouraging and I think that State Governments will soon take up this initiative and start to develop, design, implement, and work in conjunction with any HMO of their choice who also shares in their vision.
What are your thoughts on the recapitalisation of the HMO industry?
It was a welcome move and has been implemented. Recapitalisation was an issue and the former Executive Secretary of the NHIS directed all national HMOs to have a minimum capital of N400M. Prior to this, the capitalisation requirement was N30M. It is important to remember that a much higher figure was initially proposed at the NHIS-HMOs Standing Committee meeting but this was scaled down as the regulator considered the age and maturity of the industry at that time. This final value was agreed at a Stakeholders’ Conference. As the industry grows over the years, there is a possibility that this capitalisation requirement may be reviewed.
Why is there such a gap private and public health insurance schemes? What steps are Avon HMO taking to reduce this?
Avon HMO, like other companies in this industry, has a wide array of health plans that are available as Private Health Insurance schemes which individuals, organisations and communities can subscribe to. So, an individual or company has a choice of subscribing to either a State government health insurance scheme (where it exists) or the Federal NHIS Health Insurance schemes, or a private Health Insurance scheme with an HMO of his/her choice.
We acknowledge that a wide gap in coverage exists between the public (NHIS) and private health insurance schemes. To understand why, we must look to the history of the health insurance industry. When the NHIS scheme took off, it was made mandatory for Federal Ministries, Agencies and Parastatals. To date, Federal civil servants and their families constitute the lion’s share of the populace covered by Health Insurance. For all other public and private organisations, the NHIS Act, as it exists today, makes the decision to subscribe to a Health Insurance scheme a voluntary one.
The earlier HMOs therefore focused their efforts on the Federal Ministries and their agencies. The level of investment HMOs needed for marketing, public awareness, infrastructure and technology to service this mandatory group of Civil Servants was, and still is, far less than that which is required to convince, acquire and service the other segments of the population who are free to choose whether or not to subscribe to a health insurance scheme.
Considerably higher levels of all these investments and more are needed to increase penetration and customer satisfaction with Private Health Insurance schemes. If we look outside of Nigeria, we will find that investments in these areas, though steep, have always led to a difference between the public and private health insurance, in terms of responsiveness, efficiency and speed of service.
Another reason for the gap is because prior to now, Nigeria had not developed the right level of technical competency in actuarial analysis and underwriting. With this reality, HMOs have found the venture into private schemes very risky and often a painful learning experience. This explains why some HMOs do not offer health insurance schemes to individuals but restrict themselves to companies and other large groups where the risk is diluted. However, at Avon HMO, we are able to provide health plans to individuals and families. We invested in the actuarial competencies to design the right products and also in technology and automation to help us manage and minimise the risks.
What does the introduction of mobile health insurance signify for the sector?
Any use of technology that enables Health Insurance products and services reach the mass public and is able to provide payment options that are flexible, modular and convenient is exciting news to all of us within the sector. The Health and Managed Care Association of Nigeria (HMCAN), the umbrella body of HMOs, is in discussion with the NHIS in regards to this initiative. We are passionate about ensuring its success.
Success will hinge on the full commitment of key stakeholders, namely the hospitals, HMOs and those that that provide back-end services. Success will equally depend on the ability to enroll as many members of the public as quickly as possible; if an assumption has been made that one million people will sign up to the scheme, yet in the first six months there are only fifty thousand enrollees, the sector will be in trouble.
As such, our discussions include ensuring the commercial model behind the project is able to secure the commitment of the hospitals, HMOs and other stakeholders. Other questions that we are considering include – how robust is the actuarial analysis behind the pricing? What was the assumed or projected spend on medical costs? Will this be sufficient? How well mitigated are the anticipated risks? For example, an enrollee pays the premium for the first three months and does not fall sick within this time. At month four, the enrollee may shortsightedly decide to buy some clothes in lieu of paying for subsequent months. These are all factors that, when taken into consideration and reflected in the commercial model, will help ensure the long-term viability and success of the scheme.
That being said, there is still a need for people to understand how health insurance works. No one approaches an insurance company for a policy after a car accident and demands to submit a claim to cover the cost of the car repair. Insurance is meant to take care of future unforeseen events that may and may not happen. If one already knows the risk will materialize, then it is no longer insurance. Many sick people and those aware that they need procedures or surgery might rush and buy this health insurance plan at its inception. There is a need to mitigate this through the use of moratoriums (waiting periods) and other means to limit the adverse effect this could have on the continued viability of the scheme.
Avon HMO has been operating for almost two years now. As we consider the company’s effort to cover the informal sector, how will you make health insurance more appealing to Nigerians?
To make health insurance work, we must continuously educate the populace. We cannot and should not stop talking about it. At Avon HMO, we don’t pass up any opportunity to talk about the benefits of Health Insurance to individuals, groups and associations. The more health insurance is understood, the more likely people will commit themselves to it.
We are intent on making health insurance more appealing by continuously re-educating people; talking about its benefits and finding testimonials that demonstrate its value. These testimonials will provide first-hand accounts of experiences that will illustrate how having health insurance has made a significant difference to people’s lives. They will also highlight the affordability of health insurance and underline how it has helped avoid the otherwise crippling expenses associated with medical care. Avon HMO has a private health plan that can be bought for as low as N15,000 a year. When this plan was first introduced, many were surprised at the low and affordable cost.
Insurance is the pooling of resources and risks in a manner that dilutes the risks and reduces the cost to individual members who contribute to the pool. When people see that over a period of time even if they have personally not accessed care, their health plan has benefited members of their family, friends or a neighbour, they begin to appreciate its value. Moreover, it is highly likely that if they remain on the health plan long enough, they will use it one day. It is like the local ‘esusu’ of the Yoruba people, one day it will be your turn to collect. No one prays to be ill or to develop those diseases with catastrophic financial impact, but we all know people who have been affected by this. Be it cancer, cardiovascular disease, diabetes, or even injury sustained from car accidents or robberies, they do occur and we should be prepared – if not for ourselves but for our families.
What are the misconceptions about health insurance that people should be aware of?
The first misconception is the view that health insurance is only needed when an individual falls ill or sustains an injury. The truth is everyone needs health insurance, especially when they are healthy. A person subscribed to a Health Insurance scheme has a guaranty and peace of mind that at the point of medical need, he/she is covered and the stress and agony of how to meet the payment of healthcare bills will not arise.
Another misconception is the insinuation that HMOs do not pay hospitals promptly leading to a perception that the HMO patient receives inadequate care compared with private patients. While one cannot deny that there are instances where this has occurred, it is not the norm; credible HMOs do exist. The regulator NHIS is able to identify and sanction any erring HMOs. Once you are on a health plan from a credible HMO, no matter the hospital you go to and as long as you have your HMO card, you will have access to good quality diagnosis and treatment. I dare say that Avon HMO can beat its chest in this regard. There is nowhere you would go to with your Avon HMO card and be told that Avon HMO does not pay. The truth is that credible HMOs, like Avon HMO, contribute consistently and significantly to the bottom line of hospitals. Therefore, hospitals are keen on maintaining a good relationship with these HMOs and treat their enrolled members with care.
One final misconception is that HMO patients are given generic drugs (i.e., drugs that are not branded) that are not effective. This is incorrect for several reasons. Firstly, generic drugs work. Secondly, we have drug formularies that are given to the hospitals in our network from which they prescribe medication. Every drug on the formulary has been fully tested for efficacy, efficiency and potency and is fully registered by NAFDAC. However, should there be an instance in which a member covered by our health plans believes the drugs administered by the hospital is not effective, we request that it be given to us and we will get it tested at one of our partner medical laboratories.
What is the relevance of HMOs in the healthcare delivery system? How do they add value?
HMOs play a number of crucial roles. The first important role is the ability to gather the modest contributions of millions of people together into a pool. This gives HMOs the financial capacity to meet the individual needs of the members of this pool, for we know that they will not have the same healthcare needs at the same time. This means that, inasmuch as you are part of a health insurance scheme and your health needs are covered by your plan, we have the financial ability to look after you. As a practical example, most of our plans cover maternity and childbirth. Childbirth can be straight forward or complicated, and, depending on the complication, delivery may require surgery and the attention of multiple Consultant specialists. If we imagine that for a normal delivery, depending on the hospital and location, the cost can be between N40,000 to N120,000, whereas a complicated Cesarean can set you back as high as N200,000 to N800,000, if not more. Whatever the case may be, with an HMO you are covered; you will not be asked to pay more money should your (prayed for) normal delivery suddenly develop complications. So beyond the financial might of the HMO, we also provide peace of mind. A Health plan that costs between N25,000 to N40,000 a year and covers maternity and delivery will provide you with services that might cost up to N350,000 or much more.
Another very important role of the HMOs is quality assurance of hospital services – service quality, clinical quality and even drug quality. Many people may not be aware of this, but we have Disease Management Protocols that are shared with all the hospitals in our network. These protocols are based on World Health Organisation guidelines and developed following advice of leading Nigerian specialists. They focus on the management of the more common and prevalent diseases found in our country. If a hospital is not following these protocols, they have deviated from the standards that we agreed with them. Through our medical staff who visit these hospitals, we measure and reward adherence to these protocols. Avon HMO has a dedicated Provider Services Department staffed by doctors and nurses who act as Care Coordinators and Case Managers. They work with the hospitals to determine if our Disease Management Protocols are being followed and they check on admissions. So, if a doctor is expected to follow steps one, two, three and four in line with the treatment outlined in the Protocol but only follows step one and four, this will be picked up by our Case Managers.
Projections of HMO industry in the next five years?
I believe in the next five years, health insurance will become a priority for Nigerians and will form part of the planned monthly and yearly expenditure for the average man on the street. This will happen because in the next three to four years, it will be apparent to all that health insurance is the best way to secure your health and that of your family. When young men and women graduate from university, they immediately start thinking of finding work, paying rent and starting a family; subscribing to a health plan will be soon be one of these key considerations. The advantages are just too compelling for me to think that this will not become a reality.
I also believe as an industry, we will be able to establish and communicate these advantages more clearly. It is very important to demonstrate the benefits that will illustrate how it pays to buy our health plans. This is the only way the expected gains can be realised. It will also have a remarkable effect on the country’s medical services for we will have efficient world-class healthcare systems within Nigeria. HMOs and hospitals are working hand in hand to make this a reality. We are pleased with this relationship and it is extremely collaborative. It is in all our best interests that our industry grows. The more we expand, the better it will be for the hospitals as they will get sustainable, regular and predictable revenue provided on a monthly basis without fail. This will help them in managing their cash flow and meeting overheads. It will also facilitate access to finance that can be used to upgrade equipment and bridge the gap with the rest of the world in terms of medical technology.
In conclusion, achieving Universal Health coverage in Nigeria is not a sprint to be won overnight. At Avon HMO we have the passion, investment commitment and collaborative attitude required to work with all stakeholders in the sector to make the national Universal Health Coverage dream a reality.