Factors Affecting Healthcare Utilization in Managed Healthcare Organisations – A Case Study of Pembe Flour Mills Medical Cover at Avenue Healthcare

Abstract

Managed Healthcare is a concept of healthcare delivery and financing where an enrolled population pays a fixed annual fee (capitation) to a medical provider for access to health services as needed. In healthcare financing, the moral hazard refers to the risk that individuals will be more likely to seek more health care services when costs are distributed evenly across the population covered within a particular insurance plan.

Access to healthcare in private hospitals in Kenya is out of reach for most Kenyans. The main reason for this is cost. Health insurance and Managed Healthcare organizations allow individuals, when healthy, to pay predictable amounts to cover unpredictable costs when sick. The moral hazard is one of the reasons for the high cost of medical covers.

Avenue Healthcare is a Managed Healthcare Organization and provides medical cover to employees of Pembe Flour Mills, a flour milling company. Since inception of the medical scheme for Pembe Flour Mills at Avenue Healthcare, renewal premiums have increased by over 200%. In the belief that Hidden Action Moral Hazard played a role in this increase in costs, Avenue Healthcare introduced a co-payment charge of Kshs. 30 for all visits to the clinic from May 2005. In view of these developments there was a need for data to establish healthcare utilization patterns before and after introduction of co-payment thereby aiding in policy development for Managed Healthcare organizations and insurance companies.