THE HIDDEN COST OF EMPLOYEE ILL-HEALTH FOR SMES IN KENYA

For many small and medium-sized businesses, the conversation about employee healthcare starts with one question: How much will medical cover cost us?

It is a fair question. SMEs are balancing salaries, rent, taxes, suppliers and working capital, often with little room for additional costs. But there is another question worth asking: How much is employee ill-health already costing the business?

The answer goes far beyond hospital bills. Ill-health can show up in employees missing work, reduced productivity, colleagues taking on additional responsibilities, delayed customer service and managers having to reorganise work at short notice.

For a small business, these seemingly minor disruptions can add up quickly.

The cost you don’t always see

Absenteeism is the most obvious impact of employee illness. An employee becomes unwell and misses several working days.

Less visible is presenteeism, where an employee comes to work despite being unwell but cannot perform at their normal level. They may struggle to concentrate, work more slowly or make more mistakes.

Kenya’s investment case on non-communicable diseases gives an indication of how significant these indirect costs can be. It estimated that productivity losses associated with premature mortality, absenteeism and presenteeism accounted for 93 per cent of the economic burden of the diseases and conditions analysed.

The implication is important: the biggest economic cost of illness may not always be the medical bill. It may be the productivity lost around it.

This is particularly significant for SMEs. In a company employing 10 people, one person being absent temporarily removes 10 per cent of the workforce. If that employee manages key customers, operates specialised equipment or performs a critical function, the disruption can be even greater.

When a health problem becomes a business problem

Imagine an employee who has been feeling unwell but postpones seeking medical attention because treatment feels unaffordable or inconvenient.

They continue coming to work, but their productivity falls. Eventually, the condition worsens and requires more intensive treatment and several days away from work.

A personal health issue has now become a business issue.

A colleague has to cover their responsibilities. A customer request takes longer. A deadline moves. The owner or manager has to step in.

This becomes increasingly relevant as businesses manage employees living with chronic conditions such as hypertension and diabetes, where early diagnosis and ongoing management can make an important difference.

At the same time, the cost of healthcare continues to rise. Aon’s Global Medical Trend Rates Report projected Kenya’s medical trend rate at 13.5 per cent in 2026, putting further pressure on employers and households.

Simply spending more on healthcare is therefore unlikely to be the complete answer.

From employee benefit to business resilience

Perhaps it is time for SMEs to think differently about employee health.

Health protection should not only be viewed as an HR benefit. It should also be considered part of business continuity and resilience.

Medical insurance can provide important financial protection when an employee requires treatment, but employers should look beyond the insurance policy itself.

Can employees access primary healthcare easily? Are they encouraged to seek treatment early rather than waiting until a condition becomes serious? Are chronic conditions being identified and managed? Do employees understand their medical cover? Can the business structure the cost of health insurance in a way that works with its cash flow?

Prevention, early intervention, outpatient care, telemedicine and appropriate medical insurance can all contribute to keeping employees healthier and productive.

For insurers, the responsibility is changing too. Our role should not simply begin when a claim arrives and end when it is paid. As healthcare costs rise, insurers, healthcare providers and employers have a shared interest in helping people stay healthier for longer.

The number SMEs should calculate

Kenyan businesses routinely protect the assets that keep them operating. Vehicles are insured against accidents, premises against fire and equipment against damage.

The people who sell the products, serve the customers, operate the equipment and keep the business moving deserve the same strategic consideration.

This does not mean that every SME needs the most expensive employee medical cover available. It means businesses should consider the full economics of employee health when making the decision.

So perhaps the question should no longer simply be:

“How much will it cost to provide health insurance for my employees?”

There is another number worth calculating:

“How much is employee ill-health already costing my business?”

That cost may never appear as a single line on the balance sheet. But it can have a very real impact on productivity, continuity and growth.

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