The private healthcare industry is projected to grow steadily in the next eight years, driven by rising incomes and demand for services.

Research by global consulting firm McKinsey says the growth provides opportunities for investment in health care of up to Sh1.6 trillion by 2016.

Similar prospects are forecast for the region and Africa, backing the recent trend where Kenyan and South African health management organisations have started expansion in selected markets.

McKinsey forecasts that investments in the sector in Sub-Saharan Africa alone will reach at least Sh700 billion over the next decade. Already, two of Kenya's health management organizations (HMOs) have announced additional investments in their regional health care infrastructure.

Earlier this month, health care management organisation Resolution Health announced that it had embarked on implementation of its expansion plan with the launch of a subsidiary in Tanzania. The company also plans to open a branch in Uganda in the next 12 months.

Its competitor AAR Health Services also intends to inject Sh350 million to help improve services in Tanzania in the next five years and expand into other towns including Arusha and Mwanza.

The Kenyan-based company is already operating in Uganda and Rwanda where it also intends to increase its investments in future. In Kenya, Nigeria, Ethiopia and Uganda, about 40 per cent of the people in the lowest economic level receive healthcare from private providers.

Private healthcare is often preferred option because public service deliveries, though cheaper, suffer from limited resources and corruption. Private healthcare industry has also increasingly become the main driver of innovation in healthcare with countries not conducive to the private sector showing poorer health indicators.

"Private healthcare is key to improving health in Africa (despite) challenges like failure to increase access, limited resources, poor regulation and weak economies," said Dr Amit Thakker, the managing director of Amini Management, the health services management company.

According to McKinsey, sub-Sahara Africa's health care expenditures will more than double by 2016 to $35 billion (Sh2.2 trillion). The private sector will get 60 per cent of this amount or up top 75 per cent in countries receptive of the private sector.

To meet this demand, at least Sh1.6 trillion in total incremental investment is required by 2016 to finance physical assets such as hospitals and clinics and drug distribution centers Discovery Health managing director Douglas Machuki says massive investments in health care infrastructure is needed for expanding access, especially to the rual and low income groups.

Financing for more private sector beds in Kenya through Hospitals, nursing homes, rehabilitation centres, day care centres, chronic centres, drug and alcohol centres and cancer centres are other urgent needs.

"We need more private sector in-patient facilities in Kenya which offer quality services at an affordable price," said Dr Thakker.

Innovations will be needed to finance these areas as banks have shown reluctance to lend to social sectors like education and health. Low enrolment into schemes has also eroded opportunities for risk pooling and realisation of economies of scale in the sector.

Currently there are only 400,000 members in the private sector insurance plan and only 1.8 million members in the compulsory government National Health Insurance Fund (NHIF). Majority of Kenyans finance health needs from the pocket.