How Economic Realities Place Private Healthcare Practice on the Precipice

As Nigeria confronts an all time high inflation rate of 33.95 per cent with increased cost of goods and services, access of healthcare has become luxury for many. Esther Oluku writes that the Guild of Medical Directors convened its 30th National Annual General Meeting to discuss the impact of cost in financing private healthcare practice and emerging threats as private institutions struggle to stay afloat

What triggered the convergence of the Heads of States and Governments of the to African Union (formerly Organisation of African Unity) at Abuja, Nigeria in April 2001 was the need to come up with strategies to mitigate the spread of HIV/AIDS, Tuberculosis and other infectious diseases which was wiping away millions of Africans at the beginning of the century.

The eight-page document arrived at at the end of that two day conference produced 40 articles, 18 of which were submissions while 22 were recommendations. The submissions aimed to establish that the AU had a knowledge of the situation at hand while the recommendations sought to proffer steps towards addressing these healthcare challenges.

Two items of the 40 articles stand out outlined under article 15 and 26 of the agreement which made the assertion that “containing and reversing the

HIV/AIDS epidemic, tuberculosis and other infectious diseases should 

constitute our top priority for the first quarter of the 21st Century” and that Africa “PLEDGE to set a target of allocating at least 15% of our annual budget to the improvement of the health sector” respectively. 

Five years to the end of the first quarter of the century, the COVID-19 pandemic struck the world exposing a lack of preparedness of the healthcare systems of many developing countries. In Nigeria, medical supplies like drugs, vaccines, ventilators, nose masks and other essentials were in limited supply necessitating emergency production to mitigate the spread of the Corona virus.

While the COVID-19 pandemic has come and gone, the world has changed irrevocably leaving timeless lessons on the critical role that healthcare plays in the economic fortunes of nations. Countries around the world are taking proactive steps to amplify research in medicine and healthcare and foster strategic collaborations to tackle healthcare emergencies in the coming years 

Hence, the need to rethink and prioritise research and strengthen collaboration on safe, affordable and accessible healthcare remains at the front burner of national and international discourse.

Nigeria’s Health Budget 2024

For Nigeria, the Ministry of Health and Social Welfare has not been able to meet the target budgetary allocation of 15 per cent reached at the Abuja Declaration of 2001. The N1.336trillion allocated to the Ministry of Health and Social Welfare represent about 4.6 per cent of the national budget of N28.78trillion.

A further breakdown of the budget reveal that of the 126 agencies, departments and institutions to share the N1.336trillion, 18 per cent would be utilised by the Ministry while the remaining 82 per cent of the budget would be distributed at an average of 0.649 per cent among the 125 remaining departments, agencies and institutions under the Ministry.

Also, aside salaries, overhead costs and statutory expenditure of the Ministry which account for N8.475billion, N233.656 billion is to be spent on 414 capital projects to be carried out by the Ministry. 

Expert Submission on 15 per cent Budget Allocation for Health Sector

Experts at the United Nations have argued that while the need to prioritise the healthcare sector cannot be jettisoned, allocation of 15 per cent of the nation budget of African countries may not be feasible as a result of low Gross Domestic Products (GDP) and low tax generated revenue.

They suggested that while the resources of African countries are lean and may not be able to make the AU target, efficient deployment of resources would strengthen health institutions with the requisite infrastructure needed to drive progress.

Rather than focus on the target, they insisted that African “health ministries should advocate for adequate resourcing, with strong and clear arguments to invest in health as a productive sector that builds human capital, reduces poverty and inequity, safeguards health security from pandemics, improves workforce productivity and provides employment.

They added that a reduction in “spending on ineffective or inequitable public programmes, such as fuel subsidies that disproportionally benefit the well-off, can be repurposed to increase government revenue, and possibly, increase allocations for health and social sectors.”

Deployment of Nigeria’s Health Budget Allocation 

According to the budget, the Ministry is expected to carry out 414 capital projects asides other projects to be carried out by departments, agencies and health institutions under it. Of the 414 projects to be carried out by the Federal Ministry of Health and Social Welfare, 19 are a carry-over from the previous year while 395 are new. 

As at June 30, 2024, the Federal Ministry of Health and Social Welfare was yet to carry out up to 25 per cent of it’s total projects for the year.

In two separate statements, the minister of Health and Social Welfare, Minister of Health and Social Welfare, Mr. Muhammed Ali Pate, reeled out the ministry’s achievements since the begining of the fiscal year howbeit more remains to be done in terms of human capacity building, technological integration in healthcare, implementation and monitoring of projects and provision of healthcare equipment and facilities amongst others.

Achieving Universal Health Coverage in Nigeria

A cursory look at the 2024 health budget shows that almost no emphasis has been paid to the private sector in terms of leveraging collaboration to ensure a strengthened healthcare system across the country. Collaboration would not only make for uniform healthcare development but help to achieve the wider goal of a Universal Health Coverage (UHC).

The World Health Organisation (WHO) states that to achieve UHC, public an private sector players in the healthcare space must leverage on partnerships to drive optimum healthcare for the world’s teeming population.

According to a report by WHO, in “some 

countries, an estimated 70% of the population seek health care from the private sector. Yet issues related to the private health sector have not been addressed properly by many 

ministries of health. 

“In most low-and middle-income countries…, the perceived 

quality of care in the public sector is poor, and accessibility and affordability to comprehensive health services is a challenge. Moreover, private sector health care providers have no, or minimal role in developing national health policies.”

This lack of synergy between the private and public healthcare practitioners according to WHO is engineered by “lack of trust between the public and private sectors, and lack of, or poor regulatory mechanisms that can bring public and private sector health care providers together. However, there is evidence across the world that the private health sector can contribute effectively in all three dimensions of 

universal health coverage.”

The Guild of Medical Directors

Founded in 1990, the Guild of Medical Directors is a coalition of private medical hospital owners formed for the purpose of entrenching best practices in healthcare at par with global standard with the long-term vision of achieving UHC.

Since it’s registration 34 years ago, the guild meet each year (since the fourth year after it’s registration) to discuss challenges bedeviling the healthcare sector and possible solutions to address them.

From its early years, the guild has raised discourse bordering on pertinent health sector issues. From professionalism and competence to the subject of brain drain which started in the early 2000s up to topical issues arising from the COVID-19 pandemic of 2020.

As cost of healthcare widens, the need to sustain excellence in healthcare has become led a challenge. Hence, this year’s to National Annual General Meeting was themed “Sustaining Excellence in a VUCA (Volatile, Uncertain, Complex and Ambiguous) World.


President, Guild of Medical Directors, Dr. Abiodun Kuti, stated that increase in the operational cost of private medical facilities has led to the complete closure of eight medical facilities in Maiduguri with many private institutions considering a merger to stay afloat.

According to him, the cost of drugs, injectable, hospital equipments and other medical consumables have increased.

He added that considering the essentiality of power to the healthcare sector, some private healthcare institutions spend up to N25 million on power generation alone making it difficult to break even.

He opined therefore that while the option of a merger by private hospitals would improve efficiency, reduce costs and sustaining excellence, government should implement friendlier policies for healthcare institutions. These he suggested include; subsidies for power and medical equipment and reduction in hospital taxes.

On his part, the National Publicity Secretary for the Association, Dr. Ngozi Onyia, noted that the need to entrench best practice in healthcare needs to be  such that healthcare institutions whether private or government should be run as a private entity such that the sector can generate enough resources to run on its own. 

On his part the Lagos state Chairman of the Guild, Dr. Omoniyi Fegberu, underscored the need for developing the industry through finance. He empasized the for government to broaden the insurance net to accommodate more people and the need for the health sector to have a bank that would attend to the funding needs of health institutions.

A National Health Insurance Scheme (NHIS), Fagberu argued, would improve the average Nigerian’s healthcare experience.

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