Hygeia brings a combination of health insurance and care to Nigerians | Photo © Hygeia
Out-of-pocket spending on healthcare, whether for treating catastrophic injuries or for managing chronic conditions, too often pushes people into poverty, World Health Organization studies consistently show. In Nigeria, Africa’s most populous nation with close to 190 million people, more than 70 percent of healthcare spending is out-of-pocket. While well-off Nigerians can afford to pay for quality care at the time of service—often traveling abroad for high-end treatments—most Nigerians cannot afford this.
Hygeia, an IFC client, seeks to address the problem by bringing integrated healthcare—a combination of insurance and care often seen in developed countries—to Nigeria. Hygeia encompasses two entities: Hygeia Health Management Organization (HMO) which mitigates health-related financial risks of its insured members, and Lagoon Hospitals, a network of six facilities.
A mere 4 percent of Nigerians have health insurance. Obinnia Abajue, Chief Executive Officer of Hygeia HMO, says there are two main reasons for this unusually low uptake. “Firstly, many people are not educated about our services, of how they can mitigate financial risks by having health insurance.” Abajue adds that “there is also a bit of a cultural aversion to having health insurance. Some Nigerians are led to believe that health insurance is like gambling and is morally questionable. But this mentality is starting to change, especially among young people.”
IFC first invested in Hygeia in 2009. Our most recent investment of $12 million, made in 2016, was part of a larger $67 million equity infusion that IFC syndicated and led to upgrade and expand the Lagoon hospital facilities. At the time the investment was made, it was the single largest in a healthcare company in Sub-Saharan Africa outside of South Africa.
"Some Nigerians are led to believe that health insurance is like gambling and is morally questionable. But this mentality is starting to change, especially among young people."
Rajeev Bhandari, CEO of Lagoon says: “Our goal is to expand our footprint across Lagos and eventually across Nigeria, where there is a strong, growing demand for private healthcare.” Nigeria has seen enormous population growth in the past half century, increasing from 38 million in 1950 to 186 million in 2016, according to the UN’s World Population Prospects database.
Lagoon has a built a reputation based on innovation and excellence. It was the first private hospital in Nigeria to successfully perform open-heart surgery and the first to launch fully electronic medical records. In 2011 Lagoon became the first hospital group in Sub-Saharan Africa to gain Joint Commission International accreditation. Bhandari says: “Our overarching mission is to provide healthcare at affordable rates, of high quality standards to Nigerians so that they can avail those services here rather than having to go abroad.” Numerous accolades it has won are testament to fulfilling that mission, such as the National Healthcare Excellence Award (NHEA)’s 2017 Best Private Healthcare Provider of The Year.
As for Hygeia HMO, in 2017 it was awarded Africa’s Best Rated HMO by the African Development Magazine. CEO Abajue says: “The Lagoon hospitals serve as a key reference site. We can test new processes and procedures there and see what works best.” It is also important, he says, “to build a health services network that extends beyond our own institutions. We have 300,000 customers and they come from all parts of the country.” With their membership, those insured with Hygeia HMO get access to 1,060 private healthcare providers and 1,800 public providers. Being part of a larger network can lower costs through economy of scale and better bargaining power in negotiating purchases.
"Our overarching mission is to provide healthcare at affordable rates, of high quality standards to Nigerians so that they can avail those services here rather than having to go abroad."
The few Nigerians who have health insurance typically get it through their employer. The health insurance market for individuals, which has not yet taken off, is a major potential growth area, says Abajue. A challenge with building a retail health insurance market, he said, is that collecting health insurance premiums from individuals can be risky given the limited access to credit in Nigeria. “It can be difficult to verify people’s identity and to find someone who doesn’t want to be found. That is a real problem if someone defaults on their payment,” he says.
With 96 percent of Nigerians having no health insurance, there is room for innovation and growth. Given the scale of the challenge faced, it will inevitably require a strong role both for the public and private sector. Some state governments in Nigeria are starting to make health insurance mandatory. Abajue says of this move: “I think it is a good idea and they are doing it at the right level of government [Nigeria is a federal country]. But it is early days. So far, it is more a political commitment.” The government and the private sector should forge partnerships, especially to cater to the more vulnerable parts of the population, he says.
For Nigeria to develop a sustainable health insurance sector it will be necessary, across the board, to increase the number of quality hospitals and clinics who deliver the care. This is why IFC in 2017 also made a $8.5 million equity investment in a project promoted by insurance company AXA Mansard (the Nigerian subsidiary of AXA) to develop a hospital and two clinics in Lagos. Because if Nigeria’s health market to reach its full potential—and that potential is huge— all health-related subsectors must be developed. IFC intends to be on hand providing long-term support for such efforts.
For more information: www.ifc.org/health
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Published in February 2018