Diverse healthcare across African countries
The sub-Saharan Africa healthcare market is expected to reach $35 billion by 2016 on the back of a growing middle class and an improved economic outlook. However, as more investors look to Africa to boost their portfolio returns, the healthcare sector is likely to see more activity and capital injections. RISKAFRICA decided to investigate the costs of healthcare across four different African countries and found that this is not as simple as it sounds.
According to the World Health Organisation, South Africa is among the few countries in Africa with a relatively high per capita healthcare spending level. In fact, it has the highest per capita healthcare spending level on the continent, although this largely benefits those members of the population that belong to medical schemes. Allianz Worldwide Care, a specialist provider of international health insurance products, says the standard of healthcare in South Africa is considered to be the best on the African continent, with good facilities for emergency cases and a strong private health sector.
Health economist, Dr Okore Okorafor of Mediclinic, says comparing healthcare costs across countries is a complex exercise. Okorafor points out that there are several variables that have to be considered, which could increase or decrease the cost of a procedure in each country. These include:
Patient characteristics such as age, gender, the presence of co-morbidities, and the level of complexity. These characteristics impact on the amount of resources (theatre time, hospital days, equipment, medicines, nursing time) that are consumed. This is why most comparisons are done across countries in which health cases are categorised according to diagnosis-related groups, as this allows for narrow definitions of patient characteristics.
In the South African case, doctors are not employed by private hospitals, so this cost should be considered when making a comparison with a situation where the doctors’ bill is included in the hospital bill.
Differences in cost accounting methods, especially how overheads are worked into the price of a procedure needs to be considered.
Differences in the tax environment. In South Africa, private hospitals services are not VAT exempt, and the VAT rate is 14 per cent. In other countries, VAT could be at a different level and/or their hospital services could be fully or partially VAT exempt. This will have an impact on the resulting procedure prices.
The relative cost of inputs such as human resources could also vary significantly due to their availability. For example, the shortage of doctors and nurses in South Africa, relative to the demand for their services has the effect of driving up their salaries/fees. The government is well aware of the critical shortage of human resources for health and has initiated various strategies to address the problem – such as training medical students in Cuba, expanding the capacity of South African medical schools and the planned reopening of many nursing colleges. This may not be an issue in comparative countries, which means that their unit doctor/nursing costs could be lower and this is not as a result of efficiencies.
In addition, factors such as currency exchange rate differentials could impact on the relative cost of importing equipment and medicines.
Availability and relative cost of infrastructure that is required in providing hospital services such as electricity and water need to be considered too.
The level of technology used in the procedure should also be considered. In some cases, newer technology is more expensive, but has better health outcomes. The effect of improved health outcomes is not considered in comparisons of prices. “For example, valve replacement using a less invasive procedure such as the TAVI (Transcatheter Aortic Valve Implantation) is more expensive than open-heart surgery, but the TAVI in general has better outcomes. In addition, it can be performed on patients (especially much older patients) whose survival of open heart surgery is low.
The extent of regulation of medicine prices in the various countries should also be considered as this will impact on the resulting prices of the procedures. appear to be more popular according to data held by MSO. A laparoscopic appendectomy means that the surgeon makes three tiny cuts as opposed to one large one and then works by watching a video via a tiny camera inserted through one of the cuts. This is considered less invasive than an open procedure.
If you want to save money, you can have your appendix taken out in Ghana at a cost of $230. The next option is Kenya, where an open appendectomy will cost you $390.
In Namibia, the average cost is NAD19 000 for an open appendectomy and NAD29 000 for a laparoscopic procedure.
South Africa comes in at the most expensive with the average cost of an open appendectomy working out to an average of R22 000 ($2377) while a laparoscopic appendectomy works out to an average of R32 000 ($3457).
In order to try and make a rudimentary comparison, RISKSA chose to look at the cost of an appendectomy (removing your appendix) in South Africa, Namibia, Ghana and Kenya. Medical Services Organisation (MSO), a company which provides risk management and disease management services to beneficiaries throughout Africa was able to help supply the average cost of an appendectomy procedure in the relevant countries.
Ghana appears to offer the cheapest procedure; however, both Ghana and Kenya only offer an open procedure appendectomy. In Namibia and South Africa, laparoscopic appendectomies
Dr Glenn Staples, a director at MSO, says Africa is a wide continent and healthcare costs can be significantly cheaper in other countries. “Some countries are cheaper than South Africa, some are on par and for example, in the case of Angola, healthcare costs are more expensive than in South Africa,” he says. Staples says looking at the continent, health costs in Nigeria could be considered “generally” expensive but still worked out to be cheaper than South Africa.
“What you have to take into account is that South Africans pay a premium for what is undoubtedly a better quality of healthcare,” he says.