Cabinet has called on members of the public to engage the National Health Insurance (NHI) Bill, which is currently before Parliament.
The Bill was released earlier this month by Parliament, paving the way for public participation and engagement on it.
“Once it is passed into law, the Bill will give effect to universal access to healthcare to all citizens in our country, irrespective of their socio-economic background. This right is enshrined in the Constitution of the Republic of South Africa,” Minister in the Presidency, Jackson Mthembu said.
He was on Thursday briefing members of media on the outcomes of the Cabinet meeting that was held on Wednesday in Cape Town.
“Cabinet remains confident that the National Health Insurance will be implemented in a phased and responsible manner. An implementation plan will be developed and published once the bill is passed into law,” Mthembu said.
The bill was signed off by Health Minister Dr Zweli Mkhize and adopted by Cabinet in July.
Through the NHI, government seeks to fulfil its constitutional obligation to provide quality universal healthcare for all, as envisaged in Section 27 of the Constitution and the United Nations Sustainable Development Goals.
Under the NHI, South African citizens, permanent residents, refugees, inmates, designated foreign nationals and all children will receive primary healthcare.
Primary healthcare centres such as clinics or general practitioners will be the first point of access to healthcare. Access to healthcare services will be free at point of care.
The NHI aims to follow in the footsteps of countries such as Britain and Japan, which have also implemented their own equivalent.
Under the Bill, medical aid schemes will gradually be phased out until they, as the main source of primary healthcare, ultimately cease to exist.
Medical aids will thus only be able to provide what is called complimentary cover. Complimentary cover will provide services that are not listed under the NHI such as cosmetic surgeries.
Honesty is the best policy, even when it comes to filling out your medical aid application forms. The consequences of non-disclosure can be devastating, from the costly repayment of claims to having your membership terminated.
Non-disclosure in terms of medical aid means that the member has not disclosed all the medical information when applying for membership. Regardless of whether it was intentional or not, a medical scheme has risk management mechanisms in place for detecting non-closure and, if discovered, the member will be penalised in some form.
“In fact, non-disclosure falls under the general umbrella of Fraud, Waste and Abuse (FWA),” explains Lee Callakoppen, Principal Officer of Bonitas Medical Fund. ‘Fraud’, in the medical scheme industry, is collectively used to describe deception, false statements or false representation resulting in an undue benefit. Non-disclosure is considered fraud and is viewed so seriously by the Legislature that it provides for termination of membership and it declared such behaviour, when coupled with the submission of claims against a medical scheme, as a criminal offence.
‘Abuse’ is more likely to be unnecessary costs to the medical aid where the most cost-effective treatment was not followed or where the medical aid scheme was charged for procedures which were not necessary. While ‘waste’ refers to the overuse of healthcare services and incorrect billing.
The consequences of non-disclosure
“It is essential to fully disclose your medical health when taking out life insurance, disability insurance, income protection and of course medical aid”, says Callakoppen. “Every dishonest act has a price tag attached to it, so it’s best to just be honest. Even the smallest act of dishonesty, whether intentional or not, can have devastating consequences for patients, their families and their doctors. No matter how long ago the healthcare issue may occurred, or how insignificant you think it is, rather play it safe and disclose all the information you can.”
Even though your medical aid might pay out initially, they will soon discover whether there was non-disclosure involved, at which stage you will be required to pay back all the claims you received. Medical practitioners and facilities are also able to claim against you personally. It can amount to hundreds of thousands of rands.
What you need to disclose:
It’s essential to disclose ALL your medical health details in the application form including medical history, treatment and any medication you or your dependents are taking.
What will happen if you don’t disclose all medical information on the application form?
The medical scheme may end your membership immediately and/or reverse all claims they’ve paid.
If you disclose the condition the medical scheme provider may impose waiting periods. This is to ensure that the best interests of members already on the scheme are protected as required by the relevant legislation.
How do you avoid non-disclosure?
Be honest and disclose all information. Don’t forget to read the questionnaire carefully and regardless of whether you think it’s important or not, or whether the medical condition was years previously, include it in your application. Callakoppen says, “Go into more detail than you think is necessary.”
“Most of our non-disclosures involve pregnancy,” says Callakoppen. “Some women find out they are pregnant and realise the cost implications, so try and join a medical aid without admitting they are pregnant. It is impossible to hide this from the medical aid and once it has been established a Condition Specific Waiting Period is applied.”
He warns that even though the medical aid might pay out initially, when they realise the error they will require re-payment. “This is why we urge members to plan ahead. If you are thinking of starting a family, join a medical aid beforehand to ensure the pregnancy and birth are covered.” Other general non-disclosures include conditions such as endometriosis, cervical dysplasia, tonsillitis, diabetes etc.
Callakoppen says, “it is just not worth it not to disclose all previous conditions and illnesses.”
“If you are uncertain whether a condition or treatment is relevant, rather err on the side of caution and provide too much information,” advises Callakoppen. “Or phone your broker or the call centre to ensure that your information provided at application cannot be disputed at a later stage.”
The National Health Insurance (NHI) philosophy is not complex, nor unusual. Its premise is the separation of the suppliers of healthcare services from the role of purchasing access to care. In line with international best practice (and similar to the reform plan for Eskom), it asserts that purchasing should be done by a competent agency equipped to enter into value based care (VBC) contracts with suppliers. It is a best practice solution to the current dysfunction, and scaremongering reactions are either poorly informed about the options or defending their role and profits. Instead, we need a constructive debate about how to achieve success.
Dr Brian Ruff, co-founder of PPO Serve
No case mix data
At present, the public sector is funded by a supply driven budget determined by existing facilities and staff, not population need. Funds are guaranteed regardless of production, service, and outcomes. There is no case mix data about how sick patients in the system are, or where, and how they are treated. Managers do not know about the relative productivity of their own systems, and governance arrangements are working in the dark. Under the NHI, public services will be subject to market competition for contracts and be required to improve their productivity and service delivery, or face losing their contracts.
VBC contracts are also largely absent in the private sector, which is still funded by fee for service, paid to isolated and competing individual clinicians. This leads to fragmented services with big gaps and duplications in care. There is no financial support for the integrated team model, which is a feature of all high-performing healthcare systems. Fee-for-service has clinicians seeing low patient volumes and delivering high-cost care of variable quality. Productivity simply isn’t a concern.
Rampant over servicing
It is tragic that, despite the Medical Schemes Act of 2000 obliging medical schemes to do active purchasing for their members, they have failed to do so. Rather, they have interpreted their role to be securing low prices from providers per service. They have ignored rampant over-servicing from the oversupply of doctors, specialists, and hospital beds relative to scheme members in the country. This lost opportunity is well described in the Health Market Inquiry (HMI) provisional report, which shows how schemes failed their members by not commissioning and supporting new care delivery models. Only the shareholders of the administrators are happy.
In contrast, the separate purchaser role put forward by the NHI is the proper model for healthcare systems. Under it, providers – whether public, private or ‘not for profit’ – compete for local contracts, to deliver primary healthcare (PHC) and hospital services, based on how well they deliver value. This competition will be a major wake-up call for both sectors and ultimately serve South Africans better.
Of course, the NHI needs to appoint a competent team to design robust and fair, strategic contracts. These VBC contracts must use case mix sensitive payment models that support the use of all available resources and assign funding according to local need and the delivery of value. Accountability for producing the best outcomes, at the lowest cost, will sit with the providers – while financial risk is carried by the funder.
Shift to primary healthcare
The NHI Bill will drive a major shift towards developing a strong system of community PHC, reducing the hospital-based care that is compromising the efficiency of both sectors. VBC contracts will support multidisciplinary teamwork, a far more patient-centred and more effective model.
The challenge for all stakeholders is how best to transition to this model. Our debates should centre how to create a transition that is compelling and safe for those clinicians and hospitals that embrace the accountability model. We need realistic milestones and a strategy that poses no threat to their income.
Performance in South Africa’s two tier health system – the public and the private – has been worsening for some time. Politicians have attempted to attribute the decline in the public sector to a myriad of ills, none of their making. These include migrants; insufficient funds; insufficient staff; medical schemes; lawyers suing them for medical negligence; the existence of two tiers and even the middle class.
South Africa has a skewed healthcare system with an under-funded public sector and an expensive private sector. Shutterstock
However, the real reasons place the blame firmly at their door. They are also largely responsible for the problems in the private sector.
In the face of these manifest failures, and to address the weaknesses in South Africa’s universal health coverage framework, the government has proposed an overtly political way forward – the National Health Insurance Fund (NHI).
Through this proposal the framers seek to collapse both the public and private systems into a single organisation. The proposers have done little more than outline enabling legislation for a new state-owned enterprise. It remains a mystery as to what this proposal has to do with the system-wide crises in the public sector, or the market failures in the private sector.
Public healthcare failures
Institutionalised patronage within provincial and national government has destroyed the capabilities of public health organisations – both national and provincial.
The country’s health ombudsman has also stated that the public health system is in a state of crisis. And the duditor general last year bluntly pointed out the country’s health services are in crisis.
This view is widely shared by civil society groups working in the health sector.
Evidence of the crisis can be seen in the mounting contingent liabilities for medico legal claims due to admitted medical negligence. These are now adding up to more than a third of the national health budget and growing.
A close look at the cases points to major failures in the system. For example, the bulk of claims are related to cerebral palsy cases. This is because sub-standard maternity services are being provided to mothers in the public health services. This has led to avoidable brain damage to children at birth.
These failures are matched by maternal mortality ratios at public facilities. The numbers are staggering, and place South Africa as an outlier for a country of its level of development. In 2017 the maternal mortality ratio in South Africa’s public sector was 135 deaths for every 100,000 live births in comparison to a benchmark for peer countries of around 42.
The cerebral palsy cases as well as the maternal deaths are indicative of institutionalised mismanagement resulting from system-wide governance failures.
The picture isn’t universally bad. Public health services have been maintained in the Western Cape where irregular expenditure is much lower than in the country’s other eight provinces. The Western Cape’s lower maternal mortality ratio and almost non-existent medico legal cases are also testament to a much more efficiently run system which includes stronger governance regimes.
Private sector failures
South Africa has very high private healthcare costs, putting it out of reach for most people in the country.
The high costs have been a major point of contention for decades. In a bid to address the issue the country’s Competition Commission launched a health market inquiry five years ago. Its report, released earlier this year, highlighted a number of major market failures. These included a lack of transparency in the way health policies are sold, as well as a lack of competition between private health care providers.
The former minister of health sought to blame the failures of the public health sector on the high costs of the private sector. But no evidence has been marshalled to demonstrate how this could rationally occur.
As the inquiry pointed out, market failures have resulted in higher costs for medical schemes members. And it blames the government for these market failures, pointing out that they can only be addressed by coherent and well governed government regulation.
The question is whether the government will listen to the health market inquiry.
Universal healthcare
The planned NHI in South Africa has no equivalent in any setting in the world. It’s deeply flawed on a number of fronts.
Firstly, in other countries systems of universal health coverage seek to cover people and groups who have inadequate healthcare coverage. But the public scheme South Africa is proposing goes much further than this. It’s designed to include people who already have cover through their own private contributions.
Secondly, it’s unaffordable. The proposal envisages raising tax revenue upward of 3% of gross domestic product to cover medical scheme members through a public scheme. This would be equivalent to a 31% increase in personal income tax or a 63% increase in corporate taxes.
Thirdly, the legislation and supporting policy framework is short of any meaningful content. There have been no institutional or financial feasibility studies done. This is despite the fact that the NHI has been on the policy agenda for the past 10 years.
Fourthly, the department of health has shown that it’s incapable of coping with the current health system. It would therefore clearly not be able to take on something as complex as what’s envisaged.
Fifthly, the only analysis on the proposed NHI is from a failed set of pilot projects. The government’s own evaluations of these pilots provide no evidence for the proposed framework.
And lastly, a particularly fatal aspect of the proposed NHI is that it fails to address a model that’s allowed patronage to flourish and that has served South Africa so poorly. At the heart of the problem is the fact that the proposed new Fund would give the Minister of Health full discretion over all senior appointments. He would also be able to ensure political control over procurement of R450 billion in services and the accreditation of all public and private health establishments.
The only conclusion that can be drawn from this state of affairs is that the NHI proposals are yet another symptom of the health crisis. Only a failing health department could generate a proposal like this and take it seriously – let alone expect everyone else to join them in their fantasy.
So, what should happen?
The reforms required to put South Africa’s health system on a better footing have been glaringly obvious for some time.
The public health system can only be turned around by a combination of governance reforms and decentralisation. This requires the implementation of supervisory structures, such as boards for hospitals, district authorities and statutory councils that are insulated from political appointments and interference. Politicians should be entirely separated from the operational aspects of health service delivery.
For its part, the private sector requires the implementation of the health market inquiry recommendations. Some of these include setting up a pricing regulator to manage annual price negotiations for hospitals and doctors and the establishment of an information regulator to bring quality of care information on private and public health services to the surface.
What South Africans don’t need is another five years of pretence that this team can create a brand new health system out of the ashes of the two existing systems. Unfortunately all we can be certain of are the ashes.
Waste, fraud and abuse across the healthcare spectrum are contributing the high cost of healthcare, and ultimately patients are paying with their lives.
Image source: Getty/Gallo
“The overuse of care causes physical and psychological harm to patients. We need a new paradigm in medicine. We must do better by doing less,” Louisine Alpern, co-founder of Medical Reviews International (MedRev) said at the Board of Healthcare Funders of Southern Africa (BHF) conference in Cape Town this week.
Her company has developed a clinical governance platform, which helps medical schemes save money and cut medical overuse through peer review process that evaluates whether the treatments doctors order for their patients were necessary.
When MedRev first gets involved at a scheme, the number of claims that are rejected is sky high. But once doctors realise their work is under scrutiny, they start to submit fewer and fewer claims to medical schemes, Alpern said.
She cited the example of a Swedish scheme, where three-quarters of spinal procedures and half of knee, hip and shoulder surgeries that were claimed were found to be unnecessary.
The reviews are conducted by independent specialists, who weigh the claims against evidence-based best practice, and then provide the treating doctor with a full clinical report that includes advice on how to streamline their treatments.
“But we wanted to be sure the doctors are getting consistent advice,” she said. Therefore the specialists’ advice is monitored, and the amount they are paid for their expertise is not linked to how many claims they deny.
The review process also needs to be ongoing, Alpern said. “When we stopped reviewing in Sweden, the number of claims jumped right up again.”
What SA does
Dr Hleli Nhlapo chairman of the Board of Healthcare Funders of Southern Africa (BHF) Healthcare Forensic Management Unit (HFMU) agrees with Alpern on doing better with less.
“In fact, there was a news report on a country where the doctors went on industrial action and the mortality rate actually dropped,” he said.
The HFMU’s objective is to facilitating a unified approach to combating fraud, waste and abuse in the healthcare industry. It is an information and resource sharing group comprising the majority of medical schemes, administrators, management and administration entities and some insurers.
Members share information on fraud, over billing and over servicing in order to minimise fraud across the industry and to protect medical schemes from healthcare providers and medical scheme members who shift their wrongdoings from one medical scheme to another once “caught out”.
“Every member has access to what is loaded on the portal,” Nhlapo said.
The HFMU is a convergence of big data and statistics, clinical acumen and risk management,” Chris Adams, director of Verirad, said.
His firm verifies radiology and pathology claims for medical schemes, and part of the problem, he said, is that healthcare practitioners operate in siloes, rather than as a coordinated team.
In one instance, he said the lack of communication between doctors forced a 64-year-old diabetic patient to undergo the same blood tests twice in the space of three days. In another, a 59-year-old woman was sent for the same blood tests by her general practitioner, physician, and surgeon during her three-week hospital stay.
“We need to communicate with each other. We’re losing money, and harming patients,” Adams said.
The real value of blockchain extends far beyond cryptocurrency. Its applications are being explored as a means to reduce or even eliminate fraud, waste and abuse in healthcare.
Image source: Getty/Gallo
“Blockchain is a database or ledger that maintains a continuously growing list of records or transactions,” said Dr Ntuthuko Bhengu, panel member of the Health Market Inquiry and commissioner: SA National Planning Commission at the Board of Healthcare Funders of Southern Africa (BHF) conference in Cape Town.
Blockchain has five distinctive characteristics:
A group of servers or nodes maintain the entries (known as blocks) so that no central authority is required to approve transactions
DistributedIn a permissioned blockchain only appointed nodes are given the authority to validate blocks of transactions and only participants in the network can create smart contracts or transact on the network.
PermissionedThe database is an immutable and irreversible record. Posts to the ledger cannot be revised or tampered with, not even by the administrators of the database.
SecureThe distributed nature of the network requires computer servers to reach a consensus, which allows for transactions to occur between unknown parties.
TrustedThe software is written so that conflicting or double transactions are not written in the data set and transactions occur automatically.
Automated
Categories of blockchain use
There are six categories of blockchain use case, which address two major needs:
Static registry
Distributed database for storing reference date. For example: Land registry; patents; food safety & origins
Identity
Distributed database with identity-related information and particular cases of static registry treated as a separate group of use cases due to extensive set of indentity-specific use cases. For example: Identity fraud; civil registry & identity records; voting.
Smart contracts
Set of conditions recorded on the blockchain, triggering automated, self-executing actions when these predefined conditions are met. For example: Insurance claim payouts; cash equity trading; new music releases.
Recordkeeping: Storage of static information
Dynamic registry
Dynamic distributed database that updates as assets are exchanged on a digital platform. For example: Fractional investing; drug supply chain.
Payments infrastructure
Dynamic distributed database that updates as cash or cryptocurrency payment are made among participants. For example: Cross border peer-to-peer payments; insurance claim.OtherUse case comprising several of the previous groups and standalone use case not fitting into any of the previous groups. For example: Initial coin offering; blockchain as a service.
Transactions: Registry of tradeable information
Key use cases in healthcare
Bhengu said that when it comes to healthcare, 20 use cases in four key areas have been identified, namely patient consent and health data exchange, payments and claims, drug supply chain provenance and traceability and rethinking clinical trial management.
“The Council for Medical Schemes would have access to every transaction between medical schemes, their members and practitioners. Blockchain has the potential to eliminate financial fraud.
“If authorities are serious about tackling this scourge, they need to invest massively in technology, particularly blockchain. The key considerations include how fast or slow government and regulators adopt the technology. The value chain will have to be rearranged, but this won’t happen overnight.”
In addition, the South African industry needs to be truly committed to eradicating fraud including the medical schemes, administrators, practitioners and health establishments.
Finally, he said healthcare is no longer local. “Google has three companies working on healthcare technology, each with the budget equal to the economy of a small country.”
Is achieving universal health coverage by 2030 a reality or a distant dream? This is the question healthcare specialist at International Finance Corporation, Charles Dalton attempted to answer at the 20th annual Board of Healthcare Funders of Southern Africa (BHF) conference.
Charles Dalton
The minimum ideal of UHC is that no individual or family should suffer financial hardship because of accessing good-quality medical assistance. “But one size does not fit all,” he said.
Dalton explained some of the facets to consider, these include:
Country nuances and culture
Creating health systems rather than operating in the siloes that currently exist
The private and public sector must start trusting each other and working together
Align to current and future demand
Develop a system that is proactive and preventative rather than reactive and curative
Funding will, of course, influence the shape of the model
Quality and outcomes matter
Dalton said he cannot overemphasise the importance of data in achieving UHC. “The problem is that data sits in siloes and is not being shared. Many governments collect data, but don’t know how to use it.”
Data is essential in analysing the drivers of demand, he said. For example, there has been a shift from communicable disease to non-communicable disease (NCDs).” In 1990, communicable disease dominated in sub-Saharan Africa, but by 2040, NCDs will have taken over, as a result of increased life expectancy.”
What funding is enough?
“South Africa is OK, thanks to a strong private funding model, and there is free access to the public sector. But when it comes to quality South Africa scores badly thanks to inefficiencies in the system,” Dalton said.
What about quality?
“Does more money equal better quality?” Dalton asked. He looked at how different country’s approach improving affordable access, especially as the fee-for-service model is a thing of the past.
“In Colombia, the healthcare system is coordinated by independent administrators. The challenge has been that they have been a little bit too generous with benefits, but that is being fixed.
“Indonesia has just implemented a national health insurance (NHI) system. They got everyone registered between 2014 and 2019, but are still facing some challenges. The private sector offers different tiers on the hotel end.
“Thailand has had NHI since 2000. One of the challenges here is that NCDs are hitting the supply side. The private sector caters for the very high end of the market,” Dalton said.
Sustainable approach
He listed the key elements necessary for a sustainable NHI.
Stewardship of a system requires strong policy
Rules and regulations may have to be flexible enough to change as technology evolves
Funding and finance includes looking at what models are needed now and in the future. “If you go the claims-based route, the private sector already has the systems.”
Public/private collaboration is critical because “big donor organisation are asking for a clear role for the private sector
Data is necessary for managing risk
Quality outcomes must be a priority
Think differently about staffing. “Embrace the concept of nurse practitioners. There is still a lot of protectionism evident about defining different roles.”
Technology enhances the function of healthcare professionals, and does not replace them.
“I hope the public and private sector can come together and play on their respective strengths and work on their weaknesses. Ending on a positive note, South Africa is much further down the road to UHC than other countries,” he concluded.
National Health Insurance (NHI) is not merely a consumption expenditure, but a social investment that is a basis for sustainable and inclusive growth, the recently appointed Minister of Health, Zweli Mkhize told delegates at the Board of Healthcare Funders of Southern African (BHF) conference in Cape Town.
Minister of Health, Zweli Mkhize
“Inclusive growth will be achieved through a healthy workforce and thus will contribute to poverty reduction, job creation as employment creators are assured of a healthy workforce. Job creation will increase the tax-base of the country and this will result in fiscal sustainability,” he said.
Cabinet recently approved the NHI Bill for tabling in Parliament for public consultation, and the National Department of Health will in the interim be reorganised to support the implementation of NHI. In addition, the NHI Implementation Unit will be established while the legislative processes are underway. This unit will form the embryo of the NHI Fund.
NHI will also require that a digital health information platform that will support the operations of the NHI Fund is established. The Health Patient Registration System will form the backbone of an electronic health patient record on this digital platform.
“We are building the capacity of managers to implement NHI with the support of our international partners. Over 30 managers will leave within the next four weeks to get exposure and learn about NHI in different countries whilst we continue with other initiatives aimed at preparing for NHI implementation,” Mkhize explained.
The role of the private sector
“We view collaboration between the public and private sector role players as crucial, guided by conditions in our country. This is in line with the commitment that we made during the Joint Session of Ministers of Health and Finance during the G20 Summit.
“As an example of this convergence, we envisage greater collaboration between the public and private sectors to revamp our ailing public health infrastructure. We intend to revitalise our infrastructure over a period of 5-7 years and this will be undertaken concurrently as we implement NHI. This will require that we employ creative strategies on financing mechanisms and alternative models of delivering the health infrastructure to ensure that we meet these timelines,” he said.
“Practitioners and providers in the private sector will benefit from improved referral systems, increased pool of empowered users, reduced costs for goods required to provide services, and predictable payment mechanisms.
“The requirement of accreditation will ensure that multi-disciplinary health teams are introduced resulting in the reduction of the workload and more time to dedicate to the patients served,” Mkhize said.
Reimbursement
Alternative reimbursement strategies such as capitation for services delivered at primary healthcare level and diagnosis-related groupers for in-hospital services presents a strong incentive for cost-containment and managing quality and will contribute to the sustainability of healthcare financing.
Regulatory reforms that are envisaged for the private sector
The role of medical schemes will change as NHI will cover the entire population, the minister said. Medical schemes will be required to provide top-up, complementary cover for services not covered under NHI.
“Amendments to the Medical Schemes Act through the Medical Schemes Amendment Bill (MSAB) focus on improving the efficiency in regulating the private medical scheme industry. The comments received after the publication of the Draft Bill in 2018 are still under review.
“The outcomes of the Health Market Inquiry (HMI) into Private Health Sector Costs are also being considered and once these have been finalised, they will assesssed to ensure that they are supporting NHI implementation,” Mkhize said.
“In an age of radical transparency, your internal culture is your brand. Time to take action!” proclaims the headline from Trendwatching.com.
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The all-revealing glass box
“Once, your internal corporate culture was just that: internal. But now that a business is a glass box, there’s no such thing as an ‘internal’ culture.” Trendwatching.com
Leon Ayo, CEO of Odgers Berndtson in sub-Saharan Africa, recently shared on Bizcommunity that “Today’s brands are under more scrutiny than ever before as the rise of radical transparency has catalysed an irreversible move from an inscrutable black box to an all-revealing glass box model.”
The UK’s University of Law states “In the current age of transparency a positive internal culture of business is vital for growth and positive public image.”
How to showcase internal culture
According to Trendwatching.com in a culture-first approach, examining and improving internal culture and then telling the world via brand stories is the winning strategy to ensuring internal culture and processes become brand assets.
Global consultancy Refinerylab.com adds, “For a company used to competing in the market strictly on price or features, with little internal focus or cohesion, the idea that internal culture and processes are highly visible will be a very new one. But it will be a worthwhile process and add tremendous value if done correctly.”
“Fortune 500 companies lose roughly “$31.5 billion a year by failing to share knowledge,” Pamela Babcock SHRM.org.
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Lee R. Callakoppen, Principal Officer of Bonitas Medical Fund
Bonitas Medical Fund (the Scheme) reported its financial results for 2018 announcing bolstered reserves from R4.0bn in 2017 to R4.13bn in 2018, despite difficult trading conditions. As at 31 December 2018, the Scheme had 330,993 Principal members with a total of 710,206 beneficiaries.
“The surplus achieved in 2018 will be invested back into the Scheme and contribute towards offering our members access to affordable healthcare of the highest quality,” says Lee Callakoppen, Principal Officer of Bonitas. “Last year our financial results were the best in our history and, even though we could not duplicate this, we are satisfied with the 2018 financials, especially given our stagnant economy and other negative fiscal influences.”
Callakoppen, who took over as Principal Officer in April, says the Scheme has been, and remains, proactive in a number of strategic areas to continue to curtail costs. “Some factors are beyond our control such as high healthcare inflation, the recession and increased claims, especially for lifestyle related diseases. But we can’t sit back and blame everything on outside influences; we need to constantly be looking for innovative methods to reduce costs while continuing to offer our members maximum value for money. And we believe we are achieving our mandate and getting this balance right.”
The big numbers: Although we took a multi-pronged approach to cost-saving, here are some top line achievements:
Reserves increased from R4bn to R4.13bn. We are in a robust financial position and are confident of our ability to meet member claims.
Hospital negotiations delivered savings of R290m.
Fraud, Waste and Abuse (FWA) initiatives delivered recoveries of R43.3m.
R153m saved from positive change in claiming behaviour – making a total of R174m realised.
Additional cost-saving initiatives of R59m (examples of this included the benefit adjustments).
An investment return of R197.4m.
A 25.2% solvency ratio, up from up from 24.5% in 2017.
A surplus of R164.8m.
However, there was an 8.9% increase in claims, 44.9% of all claims were for hospital admissions and 11.7% for specialists – these remain the two highest cost-drivers.
Callakoppen says, “The net healthcare results demonstrate the Scheme’s ability to implement strategies in order to remain resilient during difficult financial periods. This, not only to help limit contribution increases, but also deliver on our mandate of making healthcare affordable for all South Africans.”
Membership – The impact of a poor economic climate “It is not becoming any easier,” he says. “Stagnant economic growth impacts the affordability of medical aid for members, resulting in the transfer to less expensive options, limited entry of new members and increased job losses reduce membership numbers. For this reason we implemented a number of strategies to retain and attract new members.
“And although there was no membership growth during 2018, between January and May this year, we have already attracted 30,189 new principal members as a direct result of two new plans introduced. But, more importantly, the new member profile is around 10 years younger than the average age of the Scheme which is crucial for sustainability.”
Cost containment strategies 1. Hospital negotiations During the 2018 financial year, the Scheme experienced an increase in the utilisation of healthcare services, especially in terms of mental health admissions and oncology – which is a high cost driver. However Bonitas continues to negotiate robustly with hospitals in order to obtain the best possible rates. The savings, due to these negotiations, was R290m last year and R242m in 2017, which is a combined total of R532m over a two year period.
2. Fraud, waste and abuse (FWA) Around 15% of claims in the healthcare industry contain an element of FWA. For a Scheme the size of Bonitas, this translates to a loss of R190m. During 2018, FWA amounted to R106.2m and was made up as follows:
Facilities – R16.5m
Pharmacies – R15.7m
Medical professionals – R74m
The upside is that our fight against FWA is showing good returns.
There have been seven convictions of healthcare practitioners.
28 ongoing criminal cases involving false claims.
54 active cases reported to the Professional Council of South Africa (HPCSA).
762 hotline reports on FWA.
R297m quantified in fraud since 2016.
R84m recovered to date, R43.3m of that during 2018.
Total savings of R174m realised.
3. Managed Care initiatives There is an increased prevalence of lifestyle diseases such as diabetes, hypertension and cardiovascular disease as well as HIV/AIDS, cancer, chronic medicine management, back and neck pain, hip and knee replacements and mental illness. The old adage that ‘prevention is better than cure’ cannot be more apt than in the healthcare industry.
For this reason Bonitas has a number of programmes aimed at predicting and preventing conditions before they become chronic and managing them in the most clinically appropriate way.
The road ahead “There a number of issues facing South Africans: Governance failures at SOEs which limits the growth prospects and therefore prosperity in South Africa; uncertainty about NHI; the recession; taxation; healthcare inflation and the general high cost of living. However we have solid plans in place to help reduce the burden on our members, these include a renewed focus on prevention and our Managed Care programme, connecting with our customers digitally, expanding our distribution channels and adding value through negotiated discounts on GAP, Life, funeral and disability cover as well as income protection.
“As the second-largest open medical scheme we have a huge responsibility to find more affordable ways of providing quality healthcare We are pleased that our strategy is providing us with solid financial stability to continue our innovation in terms of our offering going forward,” concluded Callakoppen.
