An Empirical Analysis of Demand-Supply Mismatches in Private Healthcare Facilities in Nairobi County

Abstract

Universal health coverage (UHC) is an integral part of the United Nations’ sustainable development goals. The private sector plays a prominent role in achieving UHC, being the primary source of essential medicines for many people. However, many private healthcare facilities in low- and middle-income countries (LMICs) have insufficient stocks of essential medicines. At the same time, we find that these same facilities carry excessive quantities of certain drugs, leading to losses due to obsolescence. This suggests poor inventory control. To propose potential remedies, it is key to fully understand the underlying causes. In semi- structured interviews with facility managers from private healthcare facilities in Nairobi we asked them about their 1) inventory control systems, 2) inventory control skills, 3) time/human resource constraints, 4) budget constraints, 5) motivations for inventory control, and 6) suppliers. Our results show that the problems are strongly driven by resource limitations (budget and time/human resources), managerial issues (relating to skills and systems), and market mechanisms that limit overage and underage costs. Unavailability at the supplier level, and motivations for inventory control, are only minor issues. We argue that these key causes are strongly interlinked and stem from deeper issues in the market and regulatory environment. Our results challenge several prevalent beliefs about medicine supply chains in LMICs and lead to hypotheses that require further testing. We also discuss how such testing could improve our understanding of inventory management in private healthcare facilities and aid progress in achieving UHC.