How hospitals and medics have turned insured patients into a cash cow

A new form of corporate greed played out on unwitting patients has turned routine hospital visits into a nightmare for many Kenyans.

In this money-spinning scheme, patients with private health insurance are routinely prescribed more medicine than they need and overcharged for it as well.

With hospitals and health insurers focussed on profit margins, patients with medical cover are losing out in a big way.

Pamela Kaunga took her five-year-old son to a private hospital in Nairobi’s Eastlands in November 2009. He had a cough that had persisted for a number of days. Because like nearly one million Kenyans she has health insurance, she decided to visit a doctor for a quick consultation.

“I thought he would just prescribe a cough syrup, and we would be back home after a short while,” Mrs Kaunga said.

She spent one-and-a-half hours at the hospital being sent from one specialist to another.

“First it was the general practitioner, then the chest specialist. An appointment with a blood specialist was to follow, then finally, an X-ray,” she told the Sunday Nation.

When the tests were completed, she was dispatched to the pharmacy with a prescription for her son.

“I was a bit confused to be handed several bottles of cough syrup. When I asked why, I was told just in case one fails to clear the cough, I would have alternatives,” she said.

Her experience is shared by many Kenyans across the country. Thousands of patients with insurance cover are being overcharged for services they could have obtained at much lower cost had they walked into the hospital with cash.

Billed twice

“Many patients do not bother to look at their receipts. In some instances, patients are billed twice for a single service,” said Atia Yahya of General Accidents Insurance Limited.

Patient naivety is only part of the problem. Investigations by the Sunday Nation indicate that another reason for the exorbitant charges at hospitals could be the high profit targets set by hospital administrators. It is feared these targets drive many hospitals to boost revenue collection by overcharging for services and taking patients through various unnecessary tests to obtain funds for ambitious expansion projects.

“A new crop of hospital administrators is taking every opportunity to get the maximum amount of money from insured patients. What patients do not know is that a huge chunk of their insurance premium is eaten up by exorbitant prices for non-essential services,” Ms Yahya said.

A policy holder may be charged up to five times the amount a non-policy holding patient pays in cash. For instance, she said, a simple procedure that might cost a cash patient Sh1,500  can cost an insured patients upwards of Sh9,000.

Dr Andrew Suleh, chairman of the Kenya Medical Association, however says doctors are not to blame.

“Physicians do not randomly decide how much to charge their patients. Even those consulting at private hospitals have standard amounts to go by.

You would be surprised at the amount of money doctors make from consultations,” he said.

General practitioners receive only a certain percentage of the total paid by the patient for consultation.

“You would be surprised that a doctor can get as little as Sh1,000 for a patient, even if the total bill is 10 times that amount,” Dr Suleh said. “Most of the money goes to other services such as lab tests, pharmacy costs and bed charges.”

Furthermore, he said, health insurance firms should put their businesses in order and stop blaming doctors for their losses.

“They need to expand their client base instead of saying doctors take too much from them. If so, why hasn’t any of the 11 million people benefiting from the National Hospital Insurance Fund (NHIF) complained of being overcharged?” he posed.

Instead of complaining, he said, they should come up with insurance packages that cater for the majority of Kenyans rather than opting for exclusivity and still hoping to make huge profits.

However, a section of health workers believe patients are definitely being overcharged.

“All Kenyans are entitled to adequate medical care, but some greedy individuals and private hospitals are thinking too much about their bottom lines.

As a result, they milk their clients dry,” said Luke Kodambo, chairman of the National Nurses Association of Kenya. “Some of these institutions have no integrity.”

The Sunday Nation has established that the most excessive charges occur at the pharmacy counter where customers, like Mrs Kaunga rarely take time to inquire about the prices of the drugs prescribed for them.

In some instances, pharmacists sell patients generic drugs while charging them for branded or original drugs. Generics are much cheaper than branded drugs.

“A majority just take the prescription slip to the pharmacy without looking at it. The pharmacist proceeds to dole out the drugs on the prescription sheet and other ‘similar ones’ and charge you for them,” Ms Yahya said.

Other services for which privately insurance patients are overcharged include issues dealing with surgery and maternity services, where almost every pregnancy has potential for a complication and thus a Caesarean section is recommended.

But with a lack of information on general health matters, some argue that patients are at a disadvantage when it comes to determining the kind of tests they need and the amount of money they are supposed to be charged for them.

“Every conversation between you and your doctor is shrouded in mystery. You cannot question his authority. We agree to whatever tests they subject us to regardless of whether we need them or not,” said Tiberius Barasa of the Institute of Policy Analysis and Research.

Data from the Association of Kenya Insurers shows that only eight of the 14 registered medical insurance providers made profits at the end of the 2007/2008 business year.

“Money meant to come back to insurers is gobbled up by hospitals. Some of these hospitals have the latest medical equipment around, which is good. But some justify their investing in these equipment by making patients pay for them unknowingly,” Ms Yahya said.

But the doctors are not always to blame.

Health insurance companies spend millions of shillings every year on advertising. Mr Barasa argues that by focusing more on curative care rather than preventive care, the insurance firms create a constant market for the doctors to tap into.

“At the end of the day, the health industry is big business. Each of these organisations needs to sit at a table somewhere and calculate their profits. That is why they always tell you to ‘seek medical attention if symptoms persist’ instead of telling you to maintain a healthy lifestyle and avoid the symptoms in the first place,” he said.

He says the knowledge gap ensures a constant supply of gullible patients.

“If a doctor says he has reason to believe you need a CAT scan for your brain, it will be very hard for you to refuse, even if you had gone in with a running nose,” Mr Barasa said.

All this can be avoided by a little prudence on the part of the patient who doesn’t think about the amount of money he spends on health insurance.

For instance, a family of five has various options for health insurance premiums. A well-to-do family can opt for a five-star medical cover that costs an average Sh140,000 annually. A middle-class family can opt for one going for Sh90,000 a year, while the rest can opt for a reduced package of Sh60,000.

Since insurers say 90 per cent of premiums for insured individuals are met by their employers, it can be assumed that individuals will pay their premiums for the rest of their working lives. Assuming employment begins at 30 years and the official retirement age at 60 years, the client will be paying his premium for 30 years.

Eventually, these premiums cost the family between Sh1.8 million and Sh4.2 million, all of which is non-refundable.

“If the patients thought of things this way, they might be more prudent with the way their money is spent,” said Mr Barasa.

But Ms Yahya says most health insurance firms do have budgetary allocation for public awareness campaigns. Whether such campaigns genuinely increase the clients’ knowledge of public health does not reflect on the companies’ bottom lines.

“It is a business for us, too. So it would make more sense for us to try and keep our clients healthy,” she said.

However, the question remains: if such huge amounts of money are paid out to health insurance firms with a no money back guarantee, is it in the interest of the patient or the providers to monitor charges levied by doctors?

Ms Atia said both insurers and patients stand to gain.

“Approximately 35 per cent of the premiums are lost through theft or paying for luxuries such as larger rooms, or extra blankets while in hospital care,” Ms Yahya said.