Five insurance firms are fed up with Nakasero hospital. Jubilee Insurance, UAP, Liberty Life/Blue, Sanlam SanCare, and ICEA are the firms that are, literally, sick and tired of the health facility.
Among their complaints are the high fees for drugs, the numerous tests that the hospital carries out - some of which they say are not needed - and the high consultation charges. These insurance officials wonder whether the Panadol served at Nakasero is special and different from your usual paracetamol.
Nakasero hospital begs to disagree. First, they argue, the hospital is private - simply put, it has the right to charge what it wants, and no patient goes there at gunpoint. The hospital also says it was established to fill a gap in Uganda's medical service industry. They are right about this.
Short of drugs and medical personnel, Uganda's public hospitals are ailing, so much so that getting medical attention would require you paying a bribe in some. At Nakasero, things are different. Patients that are admitted at the hospital are offered a standby nurse. The hospital also has public relations officials who are required to make routine checks on patients to see whether they have been well-attended to.
All these services are lacking in public hospitals. So, how come there has been a breakdown in relationship between some insurance firms and Nakasero hospital? Has Nakasero changed all of a sudden, which has forced the insurance firms to cut ties with it? Apparently, yes.
One of the untold stories is that Nakasero hospital is planning an insurance scheme of its own, something that might cut out the insurance firms. This, according to word on the grapevine, has rubbed the insurance firms the wrong way. Discussions between the insurance firms and Nakasero hospital have been going on for a while, with the Insurance Regulatory Authority also in the thick of the talks.
One of the strongest arguments that the insurance firms have made is that Nakasero hospital abruptly increased its fees. The firms are right to feel aggrieved. Any price increase in the middle of a running insurance policy hurts the insurance firm because the insurance firms had not anticipated such an increase while charging its clients.
This means that when Nakasero increases its fees, the insurance firm will have to pass on this price increase to its client. That would be difficult because few clients, if any, would wish to top up on their insurance right in the middle of a running policy. However, should Nakasero bear the brunt of an increase in the costs of doing business all in the name of not hurting some insurance firms' feelings?
These are rather difficult issues to resolve but they offer an interesting insight about market forces, and the greedy world of capitalists. On the face of it, there is one question at the centre of the Nakasero issue - regulation. Nakasero hospital is seeking maximum profit by charging what it feels is due to it, and is doing this legally.
The insurance firms want to make as much money as they can, but they need their clients to avoid Nakasero hospital or else their coffers would run dry.
This dilemma leads to the ultimate question: should there be some sort of regulation for these market forces, or in this particular case - is there a need for a regulatory body to control the charges at Nakasero hospital? Or should the invisible hand of competition simply deal with this?
Economists are divided over this question.
For Uganda's case, however, where competition is still weak, there is a need for some regulation over the practice of private hospitals, and this should stretch to their prices. Only then will Ugandans spend enough on medical treatment, and save the rest for other enterprising ventures.
Away from the economic arguments, something good should come out of the fight between Nakasero hospital and the insurance firms other than bruised egos: there is a need for policy that governs the relationship between hospitals and insurance firms.
There is probably need for a stabilisation clause, where the terms and conditions are binding for all parties. This clause should ensure that there should not be any change that affects the business of the other party.
But then again, how should insurance firms move on from here? What should happen to their clients who prefer Nakasero hospital?
For now, some of their special clients are allowed to go to Nakasero hospital, but they will have to pay money and claim it later from the insurance firm.
That is a risky path that these insurance firms are treading on. There is enough history that points to insurance firms that have run into financial trouble for employing such a strategy. The insurance firms should pray that history does not repeat itself.
The author is the business editor at The Observer.