Management of mutual health organizations in ... - Wiley Online Library

Tropical Medicine and International Health

doi:10.1111/j.1365-3156.2006.01621.x

volume 11 no 5 pp 654–659 may 2006

Management of mutual health organizations in Ghana R. Baltussen1,2, E. Bruce3, G. Rhodes4, S. A. Narh-Bana3 and I. Agyepong5 1 2 3 4 5

Institute for Medical Technology Assessment, Erasmus University Rotterdam, The Netherlands Department of Public Health, University Medical Centre Nijmegen, The Netherlands Ghana Health Service, Dangme West District Health Administration/Research Centre, Ghana Ecorys Consulting, Rotterdam, The Netherlands Ghana Health Services, Regional Health Administration, Greater Accra, Ghana

Summary

objective Mutual Health Organizations (MHO) emerged in Ghana in the mid-1990s. The organizational structure and financial management of private and public MHO hold important lessons for the development of national health insurance in Ghana, but there is little evidence to date on their features. This paper aims at filling this data gap, and at making recommendations to Ghanaian authorities on how to stimulate the success of MHO. methods Survey among 45 private and public MHO in Ghana in 2004–2005, asking questions on their structure, financial management and financial position. results Private MHO had more autonomy in setting premiums and benefit packages, and had higher community participation in meetings than public MHO. MHO in general had few measures in place to control moral hazard and reduce adverse selection, but more measures to control fraud and prevent cost escalation. The vast majority of schemes were managed by formally trained and paid staff. The financial results varied considerably. conclusions Ghanaian authorities regulate the newly established public MHO, but may do good by leaving them a certain level of autonomy in decision-making and secure community participation. The financial management of MHO is suboptimal, which indicates the need for technical assistance. keywords community-based health insurance, health financing, primary health care, Ghana

Introduction Mutual health organizations (MHO) in developing countries are increasingly being recognized as a promising domestic financing strategy in low-income countries (Commission on Macroeconomics and Health 2001; World Health Organization 2005). MHO have the potential to cover basic healthcare costs for members while avoiding the financial strain that is often associated with unexpected medical care. Since the mid 1990s, MHO have been introduced in a number of developing countries around the world, albeit on a small scale (Carrin et al. 2005). Within the context of the Ghana – Poverty Reduction Strategy (2003), the Ghanaian government recently implemented national health insurance in an effort to provide accessible, affordable, good quality healthcare to all Ghanaians. The National Health Insurance Act (NHIA 2004) was passed in 2003 (National Health 1 Insurance Act 650, 2003) followed by the National Health Insurance Regulations late 2004 (National Health Insurance Regulations 2004). The NHIA mandates that all 654

districts establish MHO funded by sales tax, formal sector worker contributions, and voluntary payments by informal sector workers. The government has defined a minimum benefit package of interventions that every MHO must cover, and has listed premium levels. Further standardization relates to, e.g., family registration, probation periods, and tariffs (NHI Regulations 2004). While there are several privately launched MHO in Ghana already, the attempt to integrate these schemes in larger district-based schemes and to establish national standards for these schemes is novel in Ghana, but also beyond. Ghana is one of the first African countries aiming to implement MHO nationwide. The success of MHO has been said to depend on various dimensions including the political will to establish schemes, the purchasing power of the community, and the (perceived) quality of care (Criel et al. 2004). In addition, success is said to depend on two dimensions that are related to the MHO themselves (Criel et al. 2004), and which are the focus of this paper. First, success of MHO is said to depend on building trust in the community to attract and keep clients, and would be

ª 2006 Blackwell Publishing Ltd


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R. Baltussen et al. Management of mutual health organizations in Ghana

strongly related to its organizational structure, i.e. community participation, local ownership and autonomy in decision-making (Atim 1999; Arhinful 2003; Carrin et al. 2005). Community participation and local ownership has been found to be important to give members a sense of responsibility towards the scheme, which may also decrease abuse (Arhinful 2003). Autonomy in setting premiums and defining benefit packages is important to adapt to local circumstances to avoid MHO running into deficits e.g. incurred by increased utilization patterns – and are not able to balance these out by adapting benefits and/ or premiums (Atim 1999). However, little is known on the organizational structure of MHO in Ghana at present. Secondly, the capability to financially manage MHO remains one of the biggest challenges facing MHO in Ghana. Most schemes to date have been relatively small in terms of the number of members and are said to lack adequate financial management (Atim 1999; Atim et al. 2001; Aikins 2003) but details are lacking. This paper aims at filling in this knowledge gap and provides an overview of the organizational structure and financial management of 45 operational MHO in Ghana, through a nation-wide survey. The analysis distinguishes between private schemes (defined as being initiated exclusively by the community), and public schemes (defined as being initiated exclusively by the government, and mainly in the context of the recent NHIA)1. The rationale is that private schemes have been relatively successful in running their business since mid 1990s, and may hold important lessons for the further regulation of public schemes. The analysis results in a set of recommendations to Ghanaian authorities on how to stimulate the success of MHO as expanding business in Ghana, and successfully establish the national health insurance. Methods A total of 78 existing and emerging MHO were identified by consulting two inventories of MHO in Ghana made in the years 2002/2003 (Aikins 2003; Danida 2003) and the MHO registry at the National Health Insurance Council as of November 2004. Of this whole set, two MHO could not be contacted and were excluded from the study. Subsequently, MHO that were non-functioning (i.e. were 1 With one exception, all public schemes are initiated in the context of the National Health Act (National Health Insurance Act 650 2003), and thus reflect its regulatory framework. In addition to private and public schemes, the paper also has a category of ‘other schemes’ that represent those initiated jointly by community and government, or by non-governmental organizations


registering members) were excluded. This led to the exclusion of 31, nearly all public, schemes that were still in the process of being established. As a result, 45 MHO were included in the survey. Its managers were interviewed in the period November 2004–February 2005. The questionnaire indicators were divided in three groups. The first group of indicators relates to the organizational structure of the MHO and refers to formal ownership and community participation (i.e. whether the community participates in meetings more than once per year). Other indicators relates to the autonomy of the MHO in relation to the provider (i.e. whether these are formally independent entities), and in setting premiums and/or benefit packages. The second set of indicators relates to the financial management of schemes, and the mechanisms they have in place to manage risks. Moral hazard is the tendency of the insured person to behave in a way as to use the services more intensively than if s/he was not insured. Co-payments may reduce moral hazard. Adverse selection is the tendency of those who are at greater risk of falling ill to subscribe to the scheme in greater numbers than those who are less at risk. Possible approaches to combat adverse selection are the use of probation periods, family registration, and limited acceptance of people with chronic illnesses. Fraud and abuse refers to individuals who would want to enjoy the benefits of the scheme without bearing the price involved. The use of a membership card with photograph may be an effective means to limit this practice. Furthermore, cost control refers to the need for an insurance scheme to manage expenses within revenues. MHO may manage costs in any number of ways but included in the survey were means to limit the scope of services (by exclusion of chronic illness, requiring referral letters, the enforcement of essential drug list for refund), by reimbursement limitations (e.g. ceiling on cost of hospitalization), and/or by negotiating lower tariffs for members. Some more general indicators relate to the capacity of managers to financially run the schemes: whether they have received formal training, and whether paid staff is involved in the day-to-day running of the scheme. A third set of indicators relates to the financial position of the schemes. The use of actuarial methods to set premiums and define benefits package can be considered as an indicator of structured attempts to achieve financial sustainability. The existence of reinsurance may guarantee financial sustainability in times of excess expenses. The evolution of healthcare expenses per member indicates whether, other things being equal, the scheme is able to hold down costs whole maintaining or even improving the service. The scheme’s financial stability, measured by the ratio of reserves to monthly expenditure, should normally 655


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20 18 Number of schemes

16 14 12 10 8 6 4 2 0 1995

1996

1997

1998

1999 2000 Years

Private schemes

2001

2002

Public schemes

Other

be such that the reserves are able to cover approximately 3- to 6-months expenditure to provide reasonable cover for unexpectedly high expenses, e.g. during an epidemic (Atim 1999). The operating balance is the ratio of income to expenditure and should normally be one or more, if not the scheme subscription fee may need to be raised. Finally, there are no fixed norms but administration costs above 10% of total annual expenditure might be considered excessive. Results The development of MHO in Ghana shows a rapid expansion (Figure 1). Of the 45 MHO included in our survey in 2004, only two and eight were functional in 1995 and 2002 respectively. Especially public schemes have emerged rapidly, and this is obviously related to the establishment of national health insurance. The study found that several of the schemes studied are so young that they have not yet begun to administer and thus have no historical data to report. Those schemes that reported enrolment had on average 7700 members in 2004. Yet, all schemes were in a position to provide information on their structure, and their financial management techniques (Table 1). All schemes were formally owned by their members. Private schemes had more autonomy in setting premiums and benefit packages, and had a higher community participation in meetings than public schemes. Private and public schemes had few measures in place to control moral hazard and reduce adverse selection. Most schemes had membership cards with photographs to control fraud and abuse. For cost control, the majority of schemes required referral letters to refund invoices, negotiated tariffs with providers and only reimbursed drugs from the essential 656

2003

2004

Figure 1 Development of public and private Mutual Health Organizations (MHO) 1995–2004 (the category ‘Other schemes’ include those jointly initiated by both community and government, or those initiated by non-governmental organizations).

drug list, but a minority had a maximum refundable sum for services. Most schemes were managed by paid staff administrators with formal training, but more so in public than in private schemes. Very few public schemes and slightly more private schemes use actuarial methods to set premiums and define the benefit package. A minority of all schemes has a form of reinsurance, and this was more often the case in public than in private schemes. Financial performance indicators varied widely between schemes (Table 1) and the expenses per member increased over the period 1995–2003 (Figure 2). Discussion All MHO are formally owned by its members, but private MHO had higher levels of autonomy in decision-making and community participation than public MHO. As mentioned earlier, autonomy in decision-making and community participation have been found to be important dimensions to the success of MHO (Atim 1999, Arhinful 2 2003), and Ghanaian authorities may do good to reflect this in the implementation of MHO nationwide. Hence, a few recommendations can be formulated. First, Ghanaian authorities now standardize the organizational structure and financial management of MHO. While a certain level of standardization may help MHO to adhere to basic principles of health insurance and can in that sense be useful, MHO should retain enough autonomy to adapt to local circumstances. Setting bandwidths on, e.g., premiums and benefits in which schemes can operate would remove much of the rigidity but maintain its purpose. MHO are responsible for their financial sustainability but this may be hard to achieve without given them authority in decision-making. Secondly, MHO have emerged as social networks based on an implicit or



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Table 1 Mutual Health Organizations (MHO) structure and financial management indicators Nature of scheme* Indicators

Definition

Private scheme, % (n ¼ 16)

Public scheme, % (n ¼ 19)

Other, % (n ¼ 10)

Organizational structure Ownership

Members have ownership of scheme 100 100 100 MHO is independent of provider 100 95 100 MHO can set premiums 69 42 70 MHO can define benefit package 69 37 80 Community participation Community participates more than 81 58 80 once per year in meetings Financial management Moral hazard Use of co-payment to reduce moral hazard 25 21 10 Adverse selection Existence of probation periods 75 95 90 Family registration required and enforced 19 16 20 Limited acceptance of chronic diseases 31 47 40 Fraud and abuse Use of membership card with photo 94 95 90 Cost control Require referral letters to refund 88 90 70 patient’ hospital invoices Enforcement of essential drugs 81 84 60 list for reimbursement Use of a maximum refundable sum for services 38 16 40 Negotiating lower tariffs for members 69 74 90 Capacity of The administrator has received formal training 81 90 50 management staff Paid staff is involved in the day-to-day 75 95 90 administration of the scheme Financial position Use of actuarial methods when 31 5 10 setting premiums and benefits Presence of reinsurance 6 37 10 Financial stability (2003) 5.7 (1.5–58.8)à 6.0 (0.7–48.6)à 8.0§ Operating balance (2003)– 1.2 (1.0–7.9)à 1.0 (0.4–1.6)à 1.0 (0.7–1.2)à Ratio of administration cost to 0.7 (0.2–1.0)à 0.9 (0.1–1.0)à 0.5§ expenditure (2003)** NA, not available. *Private schemes are initiated by the community, public schemes by governmental organizations. ‘Other schemes’ represent those initiated jointly by community and government, or by non-governmental organizations. Measured by the ratio of reserves to monthly expenditure. àMedian (range). §Only a single observation included. –Measured by the ratio of income to expenditure. **Values decrease considerably when only MHO would be included that were functional since 2002.

explicit recognition of solidarity, have built trust and hence managed to attract and retain clients (Arhinful 2003). It remains to be seen whether the population has equal confidence in public MHO, given their sceptism regarding public health services in general (Streefland 2005). In this respect, Ghanaian authorities may do well to link public MHO to local solidarity networks where possible, or at least involve the community in its establishment. This need for MHO to be locally flexible and responsive seems especially relevant in the early stages of its development: if MHO are eventually to become more effective insurers, there is a need to go to scale and to collaborate, or even


merge, with other schemes as was the case in Europe in the first half of the twentieth century (Criel & Van Dormael 1999). Both public and private MHO make only limited use of risk management techniques and have highly variable financial positions. This indicates the need for better risk management and cost containment techniques, and possibly technical assistance. The issue of viable management is essential to sustainable MHOs. The study faced some limitations. First, 31 schemes were excluded from analysis because they were non-functioning, i.e. not registering members. While the exclusion of such a 657


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9000

Expenditure per member

8000 7000 6000 5000 4000 3000 2000 1000 0 95

96

97

98

99

2000

2001

Years

large number of schemes may seem to hamper the representativeness of the study results for the country as a whole, their inclusion would not have led to further insights on the organizational structure and financial management of MHO in Ghana. Nearly all these schemes were public schemes in their infancies, with their only course of action registration with the Ghanaian authorities. Secondly, under the 2003 Insurance Act, MHO should provide annual audited accounts to the National Health Insurance Council. Until the law fully comes into force however, financial data from the schemes, including that provided to the survey, should be treated with some caution. In conclusion, Ghanaian authorities regulate the newly established public MHO, but may do good to leave them enough autonomy in decision-making and secure community participation. In addition, the financial management of MHO is suboptimal, which indicates the need for technical assistance. References Aikins M (2003) Emerging Community Health Insurance Schemes/Mutual Health Organisations in Ghana. Achievements and Challenges. Danida, Acrra. Arhinful DK (2003) The Solidarity of Self-interest: Social and Cultural Feasibility of Rural Health Insurance in Ghana. African Studies Centre publishers, Leiden. ISBN: 90.5448.055.6. Atim C (1999) Social movement and health insurance: a critical evaluation of voluntary, non-profit insurance schemes with case studies from Ghana and Cameroon. Social Science and Medicine 48, 881–896.

2002

2003

Figure 2 Evolution of expenditure (in Cedis 2005) per member from 1995 to 2003 (all MHO; official exchange rate in 2005 was approximately 9000 Cedis per US$1).

Atim C, Grey S, Apoya P, Anie SJ & Aikins M (2001) A Survey of Health Financing Schemes in Ghana. Partners for Health 3 Reform, Maryland, USA. Carrin G, Waelkens MP & Criel B (2005) Community-based health insurance in developing countries: a study of its contribution to the performance of health financing systems. Tropical Medicine and International Health 10, 799–811. Commission on Macroeconomics and Health (2001) Macroeconomics and Health: Investing in Health for Economic Development. Report of the Commission on Macroeconomics and Health. World Health Organization, Geneva. Criel B & Van Dormael M (1999) Mutual health organizations in Africa and social health insurance systems: will European history repeat itself? Tropical Medicine and International Health 4, 155–159. Criel B, Atim C, Basaza R, Blaise P & Pia M (2004) Community health insurance (CHI) in sub-Saharan Africa: researching the context. Tropical Medicine & International Health 9, 1041. Danida (2003) A Survey of Mutual Health Insurance Schemes in the Southern Sector in Ghana. Danida, Acrra. National Health Insurance Act 650 (2003). Government Printer Assembly Press, Accra. National Health Insurance Regulations (2004). Government Printer Assembly Press, Accra. Arrangement of Regulations. Legislative Instrument 1809 (2004). Government Printer Assembly Press, Accra. Streefland P (2005) Public health care under pressure in subSaharan Africa. Health Policy 71, 375–382. Ghana – Poverty Reduction Strategy Paper (2003). World Bank, Washington. World Health Organization (2005) 58th World Health Assembly, 2005. Social Health Insurance: Sustainable Health Financing, Universal Coverage and Social Health Insurance. Resolution A58/20. World Health Organization, Geneva.

Corresponding Author Dr Rob Baltussen, Institute for Medical Technology Assessment, Erasmus MC Rotterdam, PO Box 1738, 3000DR Rotterdam, The Netherlands. Tel.: +31 10 4082821; Fax: +31 10 4089081; E-mail: [email protected]

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Gestion des organisations de mutuelle de la sante´ au Ghana objectif Les organisations priveés de mutuelle de la sante´ sont apparues au Ghana vers mi-1990. La façon dont de leur structure organisationnelle et financie`re est ge´reé pourrait contribuer au succe`s ou a` l’ećhec de l’assurance nationale de la sante´ au Ghana. Toutefois, a` l’heure actuelle, il y a peu de donneés sur leurs caracte´ristiques. Cet article a pour but de combler cette lacune et de formuler des recommandations pour les autorite´s ghaneénnes sur la façon de stimuler le succe`s des organisations de mutuelle de la sante´. me´thodes Enqueˆte reáliseé sur 45 organisations priveés et publiques de mutuelle de la sante´ au Ghana entre 2004 et 2005, en posant des questions sur leur structure, leur gestion et leur situation financie`re. re´sultats Les organisations priveés de mutuelle de la sante´ avaient plus d’autonomie pour la creátion de volets sur les primes et les beńe´fices et avaient une participation communautaire plus e´leveé que les organisations publiques de mutuelle de la sante´. En geńe´ral, les organisations de mutuelle de la sante´ avaient peu de mesures en place pour le controˆle des risques moraux et pour la re´duction de la se´lection de´favorable. Mais, elles disposaient de plus de mesures pour le controˆle de la fraude et pour la pre´vention de l’escalade des de´penses. La grande majorite´ des sche´mas e´taient ge´re´s par un personnel forme´ et paye´. Les re´sultats financiers variaient conside´rablement. conclusions Les autorite´s ghaneénnes controˆlent les nouvelles organisations publiques de mutuelle de la sante´ mais pourraient mieux faire en leur laissant une certaine autonomie dans la prise de dećision et en assurant la participation communautaire. La gestion financie`re des organisations de mutuelle de sante´ est sous optimale, ce qui re´ve`le le besoin d’une assistance technique. mots cle´s assurance maladie baseé sur la communaute´, financement de la sante´, soin de sante´ primaire, Ghana

Manejo de las Mutuas Me´dicas en Ghana objetivo Las mutuas me´dicas (MM) privadas aparecieron en Ghana a mediados de los anõs 90. Su estructura organizativa y su manejo financiero podrıá influir en el e´xito o el fracaso del seguro nacional de salud de Ghana. Sin embargo, hasta la fecha, hay pocos datos sobre sus caracterı´sticas. Este artıćulo busca llenar este vacıó y hacer las recomendaciones pertinentes a las autoridades de Ghana sobre como estimular el e´xito de las MM. me´todos Encuesta realizada entre el 2004 y 2005 a 45 MM pu´blicas y privadas de Ghana, con preguntas sobre su estructura, manejo y posicioń financiera. resultados Las MM privadas tenıán mayor autonomıá en el establecimiento de las primas y los paquetes de beneficios, ası´ como una mayor participacioń en reuniones comunitarias que las MM pu´blicas. Las MM en general, tenıán establecidas pocas medidas para el control del riesgo moral y para reducir la seleccioń adversa, pero si ma´s medidas para controlar el fraude y prevenir la escalacioń de precios. La mayorıá de los esquemas eran manejados por empleados formalmente entrenados y asalariados. Los resultados financieros variaban considerablemente. conclusiones Las autoridades de Ghana regulan las MM pu´blicas recientemente establecidas, pero harıán bien dańdoles un cierto nivel de autonomıá en la toma de decisiones, y asegurando la participacioń de la comunidad. El manejo financiero de las MM no es adecuado, lo cual indica la necesidad de asistencia tećnica. palabras clave seguro de salud basado en la comunidad, financiamiento sanitario, atencioń primaria, Ghana


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