Twenty-eight per cent of Kenyans delay or forego healthcare due to inability to pay for healthcare when needed. One million Kenyans are pushed into poverty each year due to out-of-pocket health payments. People’s ability to cope with health shocks has been worsened by COVID-19 as their incomes have dwindled. Most households do not have insurance. The National Health Insurance Fund (NHIF) has made some difference. Yet only 26% of the population has access to it.
In late 2019, FSD Kenya and PharmAccess started to explore if there is an opportunity for creating value for households through the provision of a finance solution which would enable them to pay for healthcare at the point of need. The preliminary research study sought to understand how low-middle income segments deal with health shocks when they occur. We learnt that despite the proliferation of digital lending in Kenya, there are few specific digital healthcare finance products. Kenyans mainly use informal finance, which includes shylocks, family and friends, to pay their health bills. Another insight from this research was that households usually save but they have many competing priorities. Therefore, they do not want to have their savings locked up for healthcare because it is hard to tell which of these competing needs will manifest first.
Following this research, we partnered with Spindle Design, a design-driven advisory firm which uses the human-centred design (HCD)approach, to develop a Minimal Viable Product (MVP) for a digital health finance solution that would allow the target households to pay for their medical bills. HCD is a way of thinking and designing products that places the target customers and key stakeholders at the centre of the design and implementation process. This problem-solving approach helps to understand evolving behaviours, preferences, and pain points that focus product design efforts in the right places in the right ways. This iterative process took about seven weeks of ideation and rapid prototyping with potential users.
The HCD research yielded insights which allowed us to create, test and iteratively refine the prototypes. The process included Contextual interviews which entailed interviewing, observing, and carefully documenting attitudes and behaviours of potential users, to understand the drivers and barriers to health credit uptake, use, and growth. Participatory concept design sessions which involved co-design, prototype creation and testing of user needs, expectations, and ideas on digital credit. Key stakeholder interviews with people who have in-depth and expert knowledge of the health ecosystem and a good understanding of the potential opportunities or pitfalls also formed part of the process.
From the research, we learnt that community-based healthcare facilities play a crucial role in financing of healthcare. Usually, they have an existing relationship with their patients and provide services based on trust on credit to those unable to pay their bills. While getting paid for their services is important, collecting outstanding debts diverts their attention from their core business. The credit to patients coupled with delayed NHIF refunds regularly creates liquidity challenges which affects their operations. The healthcare facilities would thus be keen to partner with a financing provider as this would improve their liquidity and relieve them of the burden of debt collection.
“We sometimes prescribe dosage in bits based on the amount of money our patients can raise. It becomes bad for the patient and costly to keep going back and forth.” – Wacuka, doctor.
We also learnt that the target households are aware about digital loans and appreciate the privacy and dignity they can provide in their ability to meet healthcare financing needs. However, low-income customer segments, especially those in rural areas, are hesitant to borrow from lenders they do not know. This is because they have heard stories of harsh debt collection mechanisms such as harassment and loss of household assets. Successful provision of digital credit would thus need to be delivered through familiar channels and touchpoints which they trust. The lack of familiarity and the distrust of new digital products among low-income user segments would also require education and effective communication to the target customers. The literacy levels, especially among the low-income users, is low. Like in use of other digital products, the target customers are likely to turn to trusted community touchpoints such as the health facilities for information and support. Clear communication on product terms and the real cost of the loan to the users would build the needed trust.
“Where is your office? I need to know who is behind the product and they need to come here and teach us about it before I can take a loan. There are many thieves on the phone.” – Linda
The rural target customers interviewed during the research mainly rely on agriculture. They would thus be reluctant to take short-term loans which are typical of digital lenders because these do not align to their cash flows. As a result of inconsistent and irregular income patterns, households struggle to make regular repayments for loans. In addition, patients typically access care from several facilities. One may go to a doctor for consultation, the laboratory for diagnosis and the pharmacy for medication. These could be in different facilities and the services are billed at different times. The right healthcare finance product needs to be flexible and repayable over a reasonable period. Convenience in accessing the product would be a crucial determinant.
“When I visit the hospital, they send me for different things which means I go from one clinic to another. If I do not have the money, I stop and come back another day. If you can help me with the money, I can use it and repay.” – Salome
Two ideas for digital loan propositions have emerged from this research. One is a revolving line of credit for financing out of pocket health payments. The second is a loan for NHIF premium financing. FSD Kenya and PharmAccess will further develop these two potential solutions – in small experimental steps based on lean design principles – to get to MVP stage.
Wanza Mbole Namboya is Senior Advisor for Economic inclusion at FSD Kenya. Twitter: @FSDKe
Sophie van der Wansem is Product Development Manager at PharmAccess.
Babette van der Kloet is Behavioural Insights Manager at PharmAccess. Twitter: @PharmAccessKE
Alice Machichi is Senior Programme Manager M-TIBA, PharmAccess. Twitter: @PharmAccessKE