Health Care Co-ops in Uganda
Effectively Launching Micro Health Groups in African Villages
By George C Halvorson
Click one of the links below to read selected chapters from
Health Care Co-ops in Uganda
Effectively Launching Micro Health Groups in African Villages
Chapter Six
Paying the Providers
Chapter Twelve
The Hospital on Bushenyi Hill
Chapter Six
Paying the Providers
The HealthPartners team decided very early in the planning process that the only possible payment approach for care providers that had any chance of success was "prepayment." As noted in Chapter Five, that was the only approach that gave us a chance of reducing the administrative burden for the Ugandan health co-ops to manageable levels. It also was the best way, we believed, to align the financial incentives of the care providers with the health and care incentives of the co-op members. It was a key discussion, so it might be useful to look, in a little more detail, at why that particular mechanism was selected.
For starters, we knew from our experience in the United States that fully cooperating, carefully selected, participating providers of care were needed to make each local plan a success and we also knew that these providers would need to be paid.
That's pretty basic thinking. Health Plan 101. The delivery of care requires caregivers. The questions were -- How should the caregivers be involved? Who should they be? What role or roles should they play? In order to create care delivery mechanisms for our micro co-ops in Uganda, we needed to figure out how best to select, recruit, and then appropriately involve local caregivers in the plan operation. We ended up with prepayment as our preferred financial arrangement, but we didn't just look at prepayments as the only option. We considered other alternatives as well. Deciding on the best approach for Uganda caregiver selection and payment involved looking both at several United States models of caregiver involvement and -- of primary importance -- at the reality of health care delivery and provider availability in Uganda.
The approach we selected is not the usual approach in the United States. Health insurance in the United States has evolved over the past two decades into several different species of programs, plans, and provider payment mechanisms. Some health insurers in the United States actually own clinics and hire various care providers. That's a relatively rare model in our country. It's a very good model but it's far from the norm. At the other extreme, some health insurers have absolutely no relationship with caregivers, other than to receive claims forms and pay claims. That complete separation model is also now a relatively uncommon approach. Most plan/provider relationships in the United States fall between those extremes. Most payers in this country now choose to contract in some way with caregivers and most now create some form of caregiver networks for their customers to use. Those contracted networks generally have negotiated price discounts relative to provider fees as their key financial cash flow component. In our own co-op plan in Minnesota, we had a mixed model. We owned clinics and directly employed more than 600 physicians. So we were both a health insurer and a provider of care. We also contracted with nearly 10,000 more local physicians. Most of the contracted physicians in Minnesota were part of "prepaid" contracts rather than pure fee-for-service arrangements. So, we knew from direct experience how both the contracted and direct employment models work. (At Kaiser Permanente, we have eight regional health plans that contract exclusively with eight very large regional medical groups. The entire Kaiser Permanente entity, in total, owns 32 hospitals and employs more than 140,000 people including more than 15,000 physicians who own and lead the eight Permanente Medical Groups.) So, in both my old job and my present one, I have worked closely with and believe strongly in the models of care and financing that are much more tightly integrated between the health plan and the caregiver. But, we did not simply assume that was the only model that could work in Uganda.
As HealthPartners staff looking at African health care, we knew that our Ugandan model wouldn't initially generate enough cash for the local co-ops to actually build their own clinics, hire their own caregivers, or own their own hospitals. We also knew that we wouldn't have enough patient volume to create exclusive 'Kaiser Permanente-like' relationships with local physicians. We didn't have enough initial cash flow to actually recruit and hire physicians to take care of the co-op members. We concluded, therefore, that we needed to do deals with local caregivers deals that encouraged the local caregivers to provide the best care in the most efficient way with a focus on disease prevention wherever possible. Since directly hiring physicians was not going to be possible, we knew that the only way we would get good deals for our members would be to enter into some kind of positive, mutually beneficial, clearly spelled-out financial relationships and formal contracts with local doctors and hospitals that paid them enough money to create a win/win situation for the co-ops and the providers of care. The question was: what kinds of contracts? And what kind of deal?
Again, we had some United States models to think about. We didn't want to bring an unworkable fee-based approach to Uganda just because it was popular in the United States. As noted earlier, in most cases in the United States, where provider net works exist, the contracted caregivers simply charge discounted fees to the plans they deal with. In that case, the plans are the primary "insurers" and they pay "claims" to the care providers for all care that is delivered. In a number of other American situations where there are contracts between the health plans and the providers of care, the caregivers themselves are "prepaid" or "capitated" receiving a fixed amount of money each month for every patient that selects them as caregivers. The prepaid providers agree to provide all needed care in exchange for that prepayment, or "capitation." In that capitated model, the caregivers share in the risk for the cost and efficiency levels of care because the payment mechanism is a fixed, pre-negotiated monthly fee (or capitation) paid per member rather than a separate fee paid for each individual care encounter by each member.
Those options and several other blends of those two approaches needed to be considered as we tried to figure out a model that would work in Kasizi, Bushenga, and greater Kampala.
In putting together our initial plan, we felt four main structural questions had to be resolved. Choices had to be made in several key areas.
"Pre-" or "Post-" Paid Doctors?
The first choice dealt with the issue of "prepayment" versus "post-payment" of providers. As noted earlier, this was a fundamental difference in approach. It has huge ramifications for how any health plan is managed and administered. Both prepaid and post-paid models are used in the United States. In a post-payment approach, providers provide care to a patient and then after the fact send a bill to the insurer for each incident of care. The insurer then carefully examines each bill to see if the service is covered by the patient's insurance benefit package. If it is covered, the insurer writes a check to the caregiver for whatever fee level the provider is entitled to receive. Usually, those fee levels have been negotiated in advance between the health plan and the caregiver.
That "fee-for-service" model is how most health care is insured in the United States. It has the advantage of paying providers exactly for whatever care is received by each patient.
Post-Payment
Post-payment or fee-for-service medicine has two major and obvious disadvantages if you want to incent better care or save administrative dollars. Those disadvantages can, in fact, be crippling if you want to reduce administrative costs to a dime a month. A primary disadvantage of that fee-for-service payment model is that it financially incents the caregivers to deliver excess and unnecessary units of care in order to make more money. Multiple American studies have verified beyond any doubt that the problem of inappropriate, sometimes wasteful, fee-incentivized care exists. Fee-for-service providers are not paid for "curing" the patient or for preventing disease or for reducing the complications of a disease. They are simply paid for procedures done for each patient. Outcomes are irrelevant in the payment process. Providers of care in that fee-for-service model make money by doing volumes of procedures not by improving health. We wanted a model in Uganda that required the providers to deliver all necessary care, but did not create perverse and unaffordable financial incentives to do unnecessary care. We also wanted a model where the provider made money by keeping people healthy, rather than making a profit only when the patients are sick. Those are very different types of incentives.
The second problem an even bigger one in Uganda when we were trying to design a health plan that could be administered for 10 cents a month is that post-payment care models with fee-for-service payments always involve a ton of administration. The administration costs are huge. They involve a lot of paper work a huge amount of paperwork. Think again about what I noted in the last chapter about all of the paperwork that needs to be done. In a fee-for-service system, each new incident of care generates a new claim. Each claim generates separate paperwork. Claims have to be mailed from provider to insurer. Each claim has to be examined by someone to see if the benefit is covered. Each approved claim results in a check. Someone has to write all of those checks. They need to be mailed. Each rejected claim results in at least two rejection letters one to the patient and one to the caregiver. The paperwork and administrative processes inherently involved in post-paid fee-for-service care are staggering going well beyond anything a dime could handle. That's how most American health care insurance is handled, and that's the primary reason why American health care administrative costs are the highest in the world.
In this country in prepaid plans like HealthPartners and Kaiser Permanente a huge portion of that paperwork has been eliminated. HealthPartners now pre-pays for most care and then receives more than 90 percent of all claims electronically. We set up that electronic claims input process so we wouldn't have to handle all of that expensive paper every time care is delivered. That paperless system saves both care providers and the plan a lot of administrative money. At Kaiser Permanente, we have always had a very low cost, paperless system. At this point, we are also installing a computerized automated medical record system that will directly feed the insurance system work flow with no paper and no hands touching the information again, cutting administrative costs significantly. Those processes are all electronically supported. The electronic infrastructure needed to achieve either of those approaches obviously didn't exist in Uganda in any site we had visited, however. So, we created one based on prepayment.
The decision was not actually very difficult. A traditional insurance claims-based, fee-for-service system would obviously have had huge cost disadvantages for Ugandans particularly if we wanted to administer the plan for a dime a month.
The third problem of fee-for-service-based care compared to a "prepaid" capitated system was, if anything, even more important: incentives to improve health and prevent disease. A prepaid provider has a very direct, clearly understood incentive to improve patient health to help prevent malaria, avoid dysentery, and avoid parasitic infection. A physician who is prepaid has a financial incentive to help all patients get mosquito nets for people's beds to help them avoid malaria, for example. A fee-for-service, post-paid physician has no way of being directly or indirectly paid for those kinds of pro-active programs and services and that level of preventive health thinking. We desperately needed that level of pro-active, disease-prevention thinking in Uganda, so a capitated model that created physician incentives for improving population health obviously made the most sense.
Those facts of economic life brought us quickly to "prepayment" as a way of paying the doctors and hospitals.
Prepayment
Prepayment, done well, is not a complicated approach. It can be elegantly simple, in fact.
How does it work?
In a prepayment model, the provider is paid a flat sum of money each month in advance for each member of the plan. In exchange for the monthly prepayment amount, the provider in a pure prepayment model simply provides all of the care outlined in the member's contract. No claims are filed. No paper is generated. Only one check is written one per month and that single check covers many people all co-op members who have enrolled and selected that particular caregiver.
That process eliminates a lot of forms, processes, and huge volumes of claims checks. It eliminates individual claims as well as the need to do individual claims adjudication. The providers still need to keep a record of all care delivered, but that record can be electronically kept by the provider and simply examined periodically and retrospectively by the plan as a report, rather than processed piece-by-piece as a stack of claims.
If we wanted to keep administrative costs to a dime, prepayment was obviously the only way to go. The challenge, of course, was to persuade Ugandan providers of care who had always been paid on an after-the-fact fee-for-service basis that a lump sum monthly prepayment for each patient was also a very good way to get paid. The challenge was also to help prepaid caregivers increase their emphasis on disease prevention rather than just disease treatment. As you will see, that process was well received by Ugandan physicians.
The good news about working through the negotiated payment levels was that we knew from talking to various rural Ugandan caregivers that 25 to 40 percent of their current patients actually don't pay their bills at all under the old non-insurance, patient direct pay fee-for-service model. High numbers of patients were non-payers bad debt in American terms. Many paid only part of the bill. So, our negotiating strategy with physicians and hospitals was to persuade the Ugandan caregivers to accept "prepayment" from the co-ops by telling them, "Getting dependable monthly prepayment from 100 percent of your co-op patients is far better than getting partial and sporadic post-payment from roughly half of the people you already care for."
As we had hoped, that argument turned out to be very effective with every caregiver with whom we met. That's not surprising. It was just common sense. These are very smart people. And, very practical people. The rural Ugandan doctors each knew from years of experience how difficult it was to collect money from most of their patients. This new approach eliminated bad debt for all patients who joined the co-op. It created a dependable monthly cash flow. For the patients, it completely eliminated the whole onerous fee-for-service billing process. It also as a side benefit eliminated those awkward and often unpleasant situations where a debtor patient seeing the doctor come into the village market or local church felt a need to duck out the back way, to avoid an embarrassing moment. That sort of financially strained doctor/patient relationship doesn't generally lead to particularly effective follow-up care.
Most usefully, for the caregivers, prepayment gave them a steady, dependable stream of cash. Once they began caring for members of the local co-op health plan, the caregivers knew that they would receive the prepayment amount on a fixed date every month. For many Ugandan health care providers, that capitation was the only regular local source of cash they had ever had.
As we had hoped, that new approach actually did help local providers economically. That new and dependable cash flow let some caregivers expand their facilities and practices depending on the steady prepayment cash flow from the co-op to service the resulting debt.
So how did the local Ugandan physicians and hospitals respond? They liked the new co-op health plans. They strongly encouraged local people to join the co-op plans once they were set up. Provider support was real and effective. Again, there are interesting and informative parallels in the United States. Strong provider support was actually the main reason that the original Blue Cross and Blue Shield plans were set up in the United States. They were created by doctors and hospitals to create a prepayment revenue source to help those doctors and hospitals stay solvent and avoid patient debt in the Great Depression. The original Blue Plans would never have succeeded without that direct provider support. "Service Benefits" or "Procedure Fees"?
The second major financial issue to resolve was whether to assign a fixed fee value to each provider service or to use a "service benefit" approach to figure out what was covered. What does that mean? In a "service benefit" model, the plan and provider agree to cover a defined list of services for a population of patients in exchange for a fixed, pre-negotiated aggregate amount of money rather than assigning a cash value to each service and then charging separately for each service.
In a service benefit model, the agreement is to provide all of the services that a member might need from the pre-negotiated set of defined services. One of the best features of a "service benefit" approach is that the provider doesn't need to go through the administrative work of assigning a price to each individual procedure or incident of care. It's a simple model to administer.
So, in Uganda, we decided to just use a pure service benefit approach stating for example, that "maternity care is a prepaid covered service," rather than "we will pay or credit 15,000 Ugandan shillings to each provider for each normal delivery."
Again, the record keeping is much simpler and cleaner without the pre-negotiated fee assignments and without any risk share follow-up. That's how we started the plan. It's a smart and good model. Unfortunately, we later found ourselves forced into the fee-based scorecard business to some degree. Malaria epidemics, for example, caused some caregivers to deliver twice as much care in some years as paid for by the "capitation." As we will discuss later, we ended up with some risk-sharing features that required the providers to do more record keeping. Other parties foreign governments who liked the program offered a form of catastrophic cost reinsurance to our plans. More on that topic later. But initially, to keep matters simple, we wanted to use pure service benefits in both our member contracts and provider contracts. Where that can be done, it's a better, cleaner, easier approach to administer.
One major advantage that generally results from combining prepayment with general service agreements is that that approach to prepayment encourages much higher levels of provider flexibility and creativity relative to care. Whenever fee schedules exist in the world, they always tend to make care delivery more rigid. Why? Because care is very much limited to the fee schedule list of acceptable services. Those fee lists also inherently dictate care priorities sometimes in pervasive ways. Preventive care generally isn't well rewarded by American fee schedules; so, in our country, extensive and systematic prevention tends not to be done. Innovative approaches to preventive care are less likely to happen.
HealthPartners had benefited greatly by being a prepaid plan in the United States. That payment system allows for a much more flexible, patient-focused use of resources. So, when HealthPartners had a patient with congestive heart failure (CHF) for example, care for that patient wasn't limited to the strictly defined set of services found on a Medicare fee schedule. Medicare has always used a fairly rigid outline of acceptable medical procedures for its fee-for-service payment program. But, HealthPartners was prepaid by Medicare on a monthly basis for each patient to provide the care that each patient needed. So, HealthPartners used that flexibility and long ago created a whole new approach to team-based care for patients with CHF that involved dedicated nurses, group meetings, telephone consults, and even special electronic scales that we put in the homes of some patients with CHF. The scales actually call HealthPartners to warn the doctors and nurses if the patient has an alarming weight gain that could indicate a CHF crisis might be starting.
As a result of that total program, HealthPartners' caregiver teams cut those terrifying, painful, life-threatening, and extremely expensive CHF crises by more than 80 percent for our members. That's an incredible improvement in the quality of life for those patients. If we had been simply stuck with the list of services authorized by a pure traditional Medicare insurance post-payment fee-for-service model, and if the care had to be delivered only under the more rigid Medicare fee-based procedure list and rules, that wonderful, patient-focused, life-saving program would not exist. It did not exist for Medicare's non-HMO patients when we invented that approach for CHF care. The Medicare fee list did not pay for group meetings, nurse-level care coordination, phone follow-ups, or electronic, telephone-linked scales. Five times as many patients with CHF in the Minnesota plan would go through the hellish experience of drowning in their own fluids if HealthPartners wasn't committed to the flexibility given to plan physicians by prepayment and service benefits. Far too many non-HMO Medicare patients, even today in most of the country, are five times more likely to go through that horrible experience. That whole CHF program was widely publicized, and now has many clones in other parts of the country. Medicare now endorses most of the needed services. But, the new treatment approach only evolved because care systems like HealthPartners and Kaiser Permanente were prepaid and therefore able to innovate in care delivery beyond the limitations of a fee list.
So, knowing first hand how that whole prepaid, service benefit process works, we also strongly favored prepayment in Uganda. We didn't want a rigid fee schedule that limited local provider flexibility. We wanted the Ugandan doctors to have both an incentive to prevent disease, and the ability to be flexible in determining the most efficient ways of delivering care. As you will see, it worked just as we had hoped. Ugandan caregivers became very prevention-focused and creative in their use of resources. (Likewise, at Kaiser Permanente, we may well have won more awards than anyone in America for the effectiveness of our disease management programs and preventive care. The flexibility given to the caregiver by the prepayment method is a key to our success.)
Prepayment works.
The model we chose for Uganda was an approach that involved very close partnerships with local caregivers physicians and hospitals who were prepaid to avoid the hassle and administrative waste involved in claims processing, and who were incented to provide both best care and preventive care to their patients.
Ugandan caregivers loved that model for reasons discussed in the next chapter.
Chapter Twelve
The Hospital on Bushenyi Hill
On the top of a Buhweju District mountain, 35 kilometers from the nearest electricity, 45 kilometers from what used to be the nearest care, and several thousand feet over the moist and fertile local flat land, members of a two-year-old tea-leaf-based health care cooperative have actually built a tiny hospital and clinic. I visited the site just before I left HealthPartners. The local tea farmers had hand-carried both sand and water up the mountainside to build the hospital. They baked thousands of red bricks and then used those bricks to assemble a five-room building with a tin roof. That building now contains two maternity beds, five acute care beds, a tiny delivery room, one wire bassinet, and a table and chair in an exam room that also serves as a laboratory for doing malaria tests. The new care site has no electricity and no running water. The only lighting comes in through open windows. Flashlights are used after dark. The beds have clean, flat surfaces, but no mattresses or blankets.
But, the site does have a physician and a nurse. And clean water. It takes care of people who really need care. It exists only because of the tea growers' co-op.
The Bushenyi Medical Center (BMC) a private hospital and clinic 45 kilometers away has contracted with the tea co-op to provide a doctor and nurse every day for that clinic. They agreed to provide that care on top of Bushenyi Hill because the co-op members who live on the steep hillsides surrounding the clinic have each agreed to set aside a portion of their tea harvest each month to pre-pay BMC for that care. Care arrived on that remote mountaintop only because the new co-op gave people a way to pay for that care.
A hospital with bare bunks for beds, no electricity, and hand-carried water may not seem like much to Americans. But, before that Bushenyi Hill Clinic existed, every person in the area who needed significant levels of care had to be carried down the mountain on wicker stretchers. As I noted earlier, those stretchers doubled as local hearses sometimes on the same trip. The road is steep, rock strewn and very slippery in the rain. Uganda has two rainy seasons each year. Carrying a stretcher down that steep mountain on a wet day is not a journey for the faint of heart, or for people who need care quickly.
Now babies are delivered, minor surgery is performed, malaria is treated, and broken limbs are repaired on the mountaintop.
Also, now that the Bushenyi Hill Co-Op Hospital and Clinic is in place, the people who are in the most dire straits have a new and more convenient access to the Bushenyi Hospital 45 kilometers away. The co-op has also created the area's first real "ambulance" service. Taxicabs do the work. The health plan members who built the clinic building have collectively pooled part of the money they earn from selling their tea leaves to purchase a small solar-powered two-way radio. That radio lets the doctor on the hill call down to the main clinic to have a local taxicab come up the narrow, deeply rutted and sharply winding road to pick up the most severely ill patients. The co-op now pays for that otherwise totally unaffordable taxi ride for seriously ill co-op members. It's part of the co-op benefit package.
Women having difficult labor were the first patients to use that service. The local taxis are small, dirty and definitely not new, but they are a massive improvement over an open wicker stretcher and a 12-hour carry. Particularly, as I noted, in the rainy season.
"Rain Harvest" Water Tank
That particular tea-funded health care co-op has also installed a "rain harvest" water tank and gutter system to take advantage of the rainy seasons and collect clean water off the tin roof of the clinic. Until that tank was built, any water brought to the clinic or to the tea growers' small homes on the mountainside had to be hand-carried, usually in bright yellow 20 gallon plastic jugs. The new, co-op-funded "rain harvest" process saves a lot of carrying. Fresh water is also an obvious asset for patient care. Uganda is blessed with ample rain. The new rainwater-harvesting system uses metal gutters placed at the edge of the all metal clinic roof to divert rain water into a large storage tank. That relatively clean source of water helps treat patients in the clinic.
Similar rain harvest tanks will soon be built in several local co-op members' homes, with the goal of reducing the parasite infections and dysentery that come all too often from the nearby highly polluted small river that is otherwise the primary source of water for the tea growers and their families.
The co-op is encouraging the development of those water harvest tanks as part of the disease prevention agenda for the health plan and is helping to fund the construction.
Before the tea co-op existed, there was absolutely no disease prevention agenda on Bushenyi Hill. Now there is a carefully thought-out plan that is already making real improvements in local health.
Preventing Disease Is a Top Priority
The number one health care problem in Uganda is malaria. It kills far more Ugandans than HIV/AIDS. Over 90 percent of Ugandans have had malaria at least once.
Malaria in Uganda is spread almost exclusively by a night-flying mosquito. These mosquitoes are particularly plentiful in the rainy season. In the two rainy seasons each year, mosquitoes thrive in the puddles that form. Malaria epidemics often follow. The disease weakens most Ugandans and kills many thousands with children most vulnerable to dying. Children who are already anemic from other common, local parasites are at the very highest risk.
Now, because the health care co-op is in place, if you look into the houses of many co-op members on top of that mountain, you will also see large, rectangular fine-meshed mosquito nets suspended over many of the beds. The nets are permanently impregnated with a chemical that kills mosquitoes. (The chemical used on the nets is a natural extract from the chrysanthemum flower.) Because homes in rural Uganda have no screens or glass in the windows, these nets create the only place that the community members can go to avoid the mosquitoes.
Initial data indicates that the new nets have cut the incidence of malaria in that co-op by more than half.
So, at the top of the Bushenyi Mountain, because a small health care co-op was formed, there is now a tiny hospital, a miniscule clinic, a medical transportation service, a malaria prevention program, and better access to safe water. It's totally self-governed and totally self-financed. There is no charity care on the top of that hill.
The local tea farmers own the care site as a co-op. Those same farmers "own" and lead the local mini health plan. Those farmers, as a group, make the key decisions about their benefits, their care sites, their premium levels, and their care.
Life is better for entire families because the co-op exists on the top of that hill.
No portion of that care system except for the warmth, caring, and personal skills of the wonderful medical and nursing staff would meet minimum standards of care anywhere in the United States. But those standards are not relevant on the top of that mountain. The whole effort has to be seen in the perspective of local reality. In Bushenyi, that care site is a blessing and a miracle. More than 100 people walked up to 15 kilometers one way mostly uphill for the grand opening. Singers, dancers, drummers, and local politicians made the opening day a memorable and festive occasion.
A key part of the celebration was the sense by the community that they were helping themselves because the co-op that was the foundation for the new and improved care was not a charity, but a local organization that the co-op members governed and owned.
Putting the first piece of roofing on for the
new hospital.
A Guide Book, Not a Rule Book
This book was written to help people think about setting up similar cooperatives and micro health plans in places other than Uganda. It was intended to be both a story about an idea and a guidebook a partial implementation manual of sorts. My goal was to describe some of the underlying principals used to run the plans, along with some of the specific tools needed to get similar health plans started.
Starting a co-op health plan or micro health "scheme" as our Ugandan friends sometimes term it offers some obvious immediate challenges. Issues need to be addressed and resolved. There are actuarial issues, administrative issues, training and marketing issues, cash flow challenges, care delivery challenges, and major communications and continuity problems. Current funding for health care in the areas served by the co-ops is almost always overwhelmingly inadequate. The local care system is slender, fragile, heroic, and overworked.
Total health care spending in Uganda averages about $12 per person per year. There is one doctor for every 18,450 patients. There is no government health plan although the government does try very hard to set up its own hospitals and medical groups in various areas of the country. Technically, the government is responsible for everyone's health care. Budget constraints make that obligation pretty much impossible to achieve.
Uganda is not a place where either standard European health financing models or typical American health financing approaches have much chance of success at this point in Ugandan history. The co-op approach is designed to fit into that harsh, but clear, economic reality to create what leverage can be built around local people who want better health care. Local heroes have made local co-ops possible.
Offsetting the immense problems involved in setting up these little health care co-ops is an immense, compelling, and totally understandable desire by many Ugandans to provide affordable health care to their children, families, and community.
Also offsetting these problems is an obvious desire by the heroic and overworked Ugandan caregivers hospitals and physicians to make care accessible and affordable for their patients.
Into that setting, the HealthPartners staff brought many decades of experience with just about every variation of American insurance and prepaid systems. That experience was coupled with a strong commitment to the concept and practice of cooperative health care organizations, buying groups, and risk-sharing plans. Some parts of these several decades of United States-based comparative health experience have, we believe, proved to be both relevant and useful to local communities in Uganga.
Premium For Pennies
If you measure by American dollars, the insurance coverage that has been created in Uganda by the new health care cooperatives is a miraculous value. Premiums run 12,000-20,000 shillings for a family of four for three months. Each additional family member usually costs about 2,500 shillings. The exchange rate, at the time we started the plan, was roughly 1,700 shillings for one United States dollar. So our initial health care coverage cost less than 50 cents a month for each person. By contrast, coverage in the United States often now runs more than $200 a month per person.
That's an amazing cost difference. It's interesting to break it down into comparable terms. American health plan premiums are now roughly 27 cents per person per hour. Uganda health plan premiums, when I last personally worked with the plans, were only 49 cents per person per month. The contrasts are stunning. And, a bit humbling.
In the United States, of course, health plans have to buy care at American prices. A routine day in a United States hospital can easily cost $4,000. Many United States hospitals now charge $5,000 to $10,000 for a day of care. A few charge $20,000 a day and more. By comparison, a private room at Ishaka Hospital in southern Uganda costs 5,000 shillings a day, or about $3. The care delivered in the United States for $4,000 a day is, of course, very different from the hospital care in Uganda that costs $3 a day. But the $3 a day hospital care has saved a lot of lives. It's a pretty good deal when the alternative is a dirty mat on the muddy ground and no caregivers in sight.
Medical care cost differences are almost equally extreme, and also amazing. A Ugandan doctor working in a government hospital will be paid roughly $500 a month. A United States doctor right out of medical school and residency program will be paid $120,000$360,000 per year, depending on specialty. So, it's possible to buy medical care in Uganda for a lot less money. Premium in both the United States and Uganda is simply based on the cost of care. In the United States or Uganda, plans compute premium by adding up the costs of care and dividing by the total number of members. In Uganda, the care costs a lot less. So, a health plan in Uganda can charge a lot less for coverage.
What HealthPartners has done in a few rural areas of one African country may or may not have wider application in some other part of the world. Each local setting has its own unique characteristics that may or may not lend itself to approaches similar to the ones described in this book. This book does not offer this model of co-op-based micro health units as a cookie cutter for international care. I only offer the story as an example of what seems to work in this particular place at this point in time.
It is my hope, however, that some of what we've learned in Uganda might prove to be useful to you as a reader in some other comparable setting.
What Have We Learned?
So what have we learned in setting up tiny health care co-ops in the heart of equatorial Africa?
We learned that people everywhere want health care for their kids and are willing to work both hard and cooperatively to make that happen.
We learned that caregivers in those kinds of impoverished areas can be really good partners in creating community-based health care programs.
We learned that prevention really does work, and that caregivers who are prepaid can do very creative, patient-focused things to help patients avoid malaria, avoid dysentery, and avoid the complications of problem pregnancies.
We learned that local people, given the right tools, can set up self-perpetuating prepayment programs with local providers of care in ways that work for both the provider and the patient.
We learned that care providers everywhere share an inconsistency of practice patterns that aren't always optimal for patient care. (See Epidemic of Care and Strong Medicine for a United States perspective on that issue.)
We learned that many parts of the American insurance underwriting and benefit design tools and concepts can be transformed in useful ways for decision making by small health care co-ops whose leaders are sometimes illiterate and whose members are almost all breathtakingly poor.
What are we still debating about this approach?
We're not entirely sure about the "no charity" rule. It's hard to hold ourselves to that standard. We very much wanted the local health plans to be self-sustaining not subsidized in any way by charity money. It seems to work. But, it's a very painful rule to maintain. It probably does have a real impact on how well providers deal with prepayment but it's a really hard rule to follow, when we have resources and those resources are so badly needed in Uganda.
We're also not sure about the role of reinsurance to help with the occasional epidemic, and its cost impact on prepaid caregivers. Some form of reinsurance probably makes sense but having the reinsurance kick-in at 120 percent of total cost obviously creates a major physician incentive to spend more than 20 percent beyond capitation adding costs as quickly as possible to get to the richer pot of money. A disease-specific reinsurance approach probably makes the most sense with malaria as the key disease to be reinsured.
We're not sure about the best way to continuously support the continuing formation of the micro health co-ops. They can be self-sustaining, once started, but they do take expertise and skill to be initially organized and set up properly. They don't just happen.
Brazil and Chile
I spent some time in both Brazil and Chile looking at the variations of local health plans in those countries. Both were fascinating. The Chilean model didn't seem as directly applicable, but some portions of the Brazilian model looked a lot like the provider-instigated and owned health plans we helped start in Uganda. More than 1,000 small, prepaid health plans have sprung up in various Brazilian towns, villages, and communities all built by local care providers on the basis of locally available care. As near as I could tell from talking to local caregivers and government officials, none of the Brazilian mini-plans had a consumer co-op base. The government of Brazil was wrestling with the issue of how to regulate those plans. It seemed to me that excessive regulation by the Brazilian government could potentially drive more than a few of those small but thriving local plans into extinction.
It wasn't at all clear whether various local populations in Brazil would be better off without their small local plan. Some policy leaders argued that the gap that was left would be filled nicely by much larger and better capitalized national and multi-national insurers. That may be true. I doubt it, however, because the local mini-plans were set up to be very much local niche products and the large national plans didn't seem to have the potential to reach out to each and every niche.
I could be wrong. It was a fascinating learning experience to spend time looking at these plans.
I've also talked to people from India about some micro plans that have been forming there. Again, not co-op plans as such. The micro credit groups of Bangladesh, however, seem to come from that particular market context, and the health plans they are trying to create might be fairly similar to the Ugandan micro credit centralized health plans.
So, I can't speak with any comfort about the existence of the pure consumer co-op model in any setting other than Uganda. But, there do seem to be some similar local prepaid approaches evolving from various micro credit groups in a number of settings.
If that's true, that may well be enough to create a workable co-op model that could have some relevance in other developing country settings.
Urban United States
Interestingly, it's not impossible to imagine some relevancy for that cooperation model in some of the inner cities of the United States. Building very local, consumer-run health care co-ops might well turn out to be a viable program for certain United States urban settings. If those very local plans were supported with some workable external infrastructure, they could well serve as a mechanism for very local health care reform. The idea is worth exploring. It would require some very progressive legislation to permit local models to form. It could be very interesting to have some of the same underwriting and coverage discussions in urban America that we had in rural Uganda.
In The End
Overall, the Uganda effort has been a success. People are receiving care. The model works.
It's not entirely clear whether or not that co-op model would work anywhere else but it's worth thinking about. The little hospital on the top of the mountain is an amazing testament to what local people can do given the right opportunities.
I hope this book was useful. Be well.
