- Wages for healthcare professionals are a reflection of this complex interplay.
- Across Kenya, these wages have not consistently risen in accordance with increased demand.
The intricate balance of supply, demand and wages plays a pivotal role in any sector, but none more so than in healthcare, where human well-being hangs in the balance. In Kenya, recent events have brought these issues into sharp focus, challenging the traditional economic principles that govern labour markets.
This week’s article seeks to explore the connection between supply and demand for healthcare professionals, their wages and the phenomenon of market failure, especially in light of the recent doctors' strike and the trends in healthcare spending.
The healthcare labour market is a unique intersection of economic forces. The supply of healthcare professionals is determined by several factors, including the rigorous training required, licensure and credentialing barriers and personal choices of individuals pursuing healthcare careers. Demand is shaped by demographic changes, such as an aging population, advancements in medical technology and evolving healthcare needs.
Normally, a higher demand and lower supply would lead to increased wages. However, in Kenya's healthcare system, this straightforward economic relationship is complicated by additional layers such as government policy, the strategic importance of healthcare and international funding for public health initiatives.
Wages for healthcare professionals are a reflection of this complex interplay. Across Kenya, these wages have not consistently risen in accordance with increased demand. Public sector wages, in particular, are often constrained by budgetary limits and do not rise as one would expect given the low supply of professionals.
The recent NHIF expenditure data offers a window into this dynamic, showcasing a significant shift in resources towards private facilities, which tend to offer more competitive remuneration packages than their public counterparts. Furthermore, Kenya’s adherence to the Abuja Declaration, which stipulates the commitment to allocate at least 15 per cent of its annual budget to health, remains a target yet to be met, impacting the financial flexibility to increase public sector healthcare wages.
Market failure is an economic situation where the allocation of goods and services by a market is not efficient. In the case of Kenya's healthcare system, several factors contribute to this inefficiency. There is an information asymmetry where patients lack comprehensive medical knowledge, externalities affecting public health outcomes, and a non-competitive market structure that hampers the public sector's ability to compete on wages with the private sector.
This reality is evidenced by the NHIF expenditure trends, which have shown an increasing preference for private healthcare facilities over time. This not only points to a disparity in service utilisation but also implies a disparity in the wages between the public and private sectors. As the private sector and I might add foreign markets such as the US, UK and Australia attract more healthcare workers with higher wages, the public sector struggles to retain and recruit talent. In an already tight labor market, this exacerbates the shortage of healthcare professionals and puts upward pressure on public sector wages.
Image: NICHOLAS OKUMU
The complexities of Kenya's healthcare labour market demand multifaceted and targeted solutions. Loan forgiveness or repayment programmes for those committing to public service can provide incentives for professionals to enter and remain in the public sector. Financial bonuses or enhanced pay for work in underserved areas can redistribute talent more equitably.
International organisations and donors play a crucial role in this arena, not just as financiers but also as strategic partners in building sustainable healthcare systems. Their support could be pivotal in developing and maintaining public sector capabilities, including competitive wages for healthcare workers.
To meet its commitments under the Abuja Declaration, Kenya must reevaluate its healthcare financing and work towards allocating the targeted 15 per cent of its GDP to health. This increased investment could support wage increases and ensure a more robust healthcare system.
The shift towards private facilities and foreign migration also raises ethical concerns. Policies must ensure that they do not inadvertently deepen health inequities or create a reliance on international aid. The focus should be on fostering a self-sufficient, equitable healthcare system.
The one solution however that will not work is attempting to reduce the wages of healthcare workers in the public sector. This will only serve one purpose, that is to hasten the migration of healthcare workers away from the public sector. The end result of that can never be good as the attainment of the government’s cherished goal of Universal Health Coverage cannot be attained by a fully privatised health system.
The doctors' strike in Kenya is a manifestation of the pressures within the healthcare sector, driven by an inherent shortage of professionals and a trend towards private healthcare utilisation. Public healthcare wages are at a crossroads; reducing them is not an option when faced with an already low supply of healthcare workers.
Solutions must be both innovative and ethical, ensuring that public healthcare remains a viable option and continues to serve the Kenyan population effectively. The pledge to the Abuja Declaration is not merely a fiscal target but a reflection of the value placed on health as a societal pillar, demanding concerted effort and resources to honour this commitment.
The engagement of international organisations and donors should be aligned with the long-term goals of self-sufficiency, capacity building and sustainable development in the Kenyan healthcare system.
Orthopaedic surgeon and a 2024 Global Surgery Advocacy Fellow