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Why KNH should build that private hospital

Friday November 22 2019

By KWAME OWINO
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One of the biggest lies that Kenyans tell repeatedly is that the Government of Kenya is good at writing excellent policies but much poorer at implementing them. Kenya’s development record after fifty years should be the perfect answer that the government is poor at setting and implementing policy.

More recently, I have come to worry that many Kenyans also do not understand what good policy is. The proposal by the board of the Kenyatta National Hospital to build a private health facility demonstrated this inadequate understanding of policy.

The gist of the formal request was that the board was intent on finding a private sector firm to construct and run the hospital under a public private partnership model. It has dedicated 3.6 hectares of land for construction of a 300-bed facility for paying patients. Many Kenyans who read the notice opposed the thought for many reasons starting with one that the KNH is a public institution and should not accommodate a profit centre under any circumstances. They added that a referral hospital that is poorly run was attempting the impossible through this quest.

WRONG-HEADED

The fervent opposition to the idea that the KNH would build a new hospital providing service on commercial terms is wrong-headed. The KNH is Kenya’s main referral hospital and most patients seek medical help, which are often costly, from it for serious ailments. While it is the most conspicuous public hospital in Kenya, its poor services do not affect overall health outcomes by much. The reason for this is that most primary healthcare is provided by the underfunded county level hospitals. Therefore, the public gnashing of teeth was unnecessary and merely another illustration of the love for histrionics as replacement for public reasoning.

Article 209 (4) of the Constitution of Kenya allows both levels of government to impose charges for services that they provide. Thus the KNH as an agent of the national government is not constrained by either the Constitution or the State Corporations law from making this investment and imposing charges from it. Aside from Kenya’s awful record in negotiating PPPs, the request to utilise the land resources to attract a firm to build and run the private facility is defensible.

The opponents of the proposal are fixated with the view that a private facility could raise profits. The Board of the KNH clearly stated that the profits raised from facility will be used to support the rest of the hospital. To make private and richer patients to subsidise those who cannot afford private medicine is humane and savvy. Only people obsessed with morbidity would be making the ignorant and unsavoury statements implying that it is better for the KNH to stay as a poorly run facility mediating suffering and premature death.

INCREASE COMPETITION

Kenya has a vast industry of private medicine and these hospitals are run under different ownership systems but clearly compete for paying patients while diverting the poorer citizens towards the public facilities. A new investment of Sh15 billion would increase competition at the mid to high end side of this market. The entry of a new hospital of this size would expand choice for all patients in Kenya irrespective of their income level. One effect of this entry would be to moderate costs and reduce the price gouging that the leading private hospitals are known for.

To situate a private hospital beside the existing KNH also creates an interesting experiment. For instance, the board of KNH may be able to compare the performance of the two facilities and decide what measures it may institute to raise the performance level of the public funded one. This is unacceptable to ideological puritans who have the view that private payment is bad for public welfare despite the evidence showing the opposite.

The most aggressive opponents of the hybrid system that the board of KNH is determined to try are the public sector unions. This is baffling, especially because one would think that expanding employment for medical professionals is consistent with the interests of the union. My hunch is that this opposition may be informed by the common tactic of public sector unions to avoid any comparisons of productivity among workers because the new facility would make this data readily available.

The criticism that the KNH have received for their idea is based, in part, on ignorance, malice from entrenched unions and real fear that the government now has low credibility in handling complex negotiations. The risk of corruption is real but the other claims based on ideological purity and separation between public and private access to medicine is junk reasoning that should be abandoned. Kenya needs more private hospitals.

Kwame Owino is the chief executive officer of the Institute of Economic Affairs (IEA-Kenya), a public policy think tank based in Nairobi.

Twitter: @IEAKwame