Medical Aids

Survey: Medical aid customer satisfaction slides

The state of flux the private healthcare industry currently finds itself in is reflected in the declining scores in the 2018 South African Customer Satisfaction Index (The SA-csi) for Medical Schemes.

According to the report, the sector average dropped from 74.2 in 2017 to 72.7 in 2018. This is primarily due to two of the large brands included in this year’s benchmark showing declining scores. Bonitas’ score declined from 73.1 to 70.2 and Discovery Health also reported a decline from 74.8 to 73.1 over the year.

Medihelp was the only open scheme in this year’s benchmark to see an improved SA-csi score, continuing to reap the benefits of its turnaround strategy noted in 2017. It consistently improved from 70.7 in 2015 to 72.6 in 2017 and 75.1 in 2018 to lead the industry in customer satisfaction. It is noted that Momentum Health maintained its SA-csi score of 2017 – now on 72.0.

Overall, however, South Africans are increasingly frustrated by rising premiums and shrinking benefits, as well as a feeling of lower value for money in comparison to other financial service products.

“While the market’s dominant heavyweights remain strong competitors, pack leader Discovery seem to have shifted focus to other business offerings in its product suite, including the launch of its anticipated banking services and its long- and short-term insurance offerings. This has allowed its competitors to even out the playing field in the medical product suite by delivering simpler, traditional medical insurance that is seen to be less expensive and easier to understand,” says Professor Adré Schreuder, Consulta CEO.

Medical Schemes Amendment Bill

In June, Minister of Health Aaron Motsoaledi announced the NHI and Medical Schemes Amendment Bill, proposing sweeping changes to the running of medical schemes. These changes are aimed at benefitting a wider range of members and paving the way for the NHI financing system for all South African citizens, not just those who can afford medical aid products. Opponents of the plan point to various challenges to the viability of the NHI, should it be implemented.

There are also concerns that the changes announced will have a significant effect on increasing premiums for 2019 and medical aid schemes will have to deliver commensurate improvement in their service offerings to neutralise the potential negative impact in customer satisfaction levels.

“Over the years we have noted the impact of organisational changes, including restructures and changes in management on customer experience as the organisational focus and energy tend to shift towards internal developments rather than on customer delivery.

“Medihelp’s strategy to focus on leveraging the contributions and focused delivery from its strong leadership team, which is underpinned by targeting a niche audience and offering exactly what members want and understand, is working,” says Schreuder.

Now in its sixth year, the SA-csi for Medical Schemes offers impartial insights into South African medical aid schemes by measuring customers’ overall satisfaction out of 100. This satisfaction score is based on medical schemes exceeding or falling short of customer expectations and the respondents’ perception of the ideal service provider. The index also includes, among other measures, a customer expectations index, a perceived quality index and a perceived value index. The 2018 sample included 1,675 respondents who were randomly selected from five medical schemes to participate in the survey.

Increased premiums

“Medical premiums rose past inflation increasing on average by 9% this year, and are significantly higher than premium increases in short-term insurance and life insurance,” Schreuder says. “The cost of medical services continues to increase at a rapid rate as consumers are challenged with a supply-induced demand scenario, where medical schemes are forced to carry the cost of unnecessary treatments or admissions by doctors, which is ultimately passed on to members.”

The effect of this can best be seen in the perceived value index, where Medihelp and Momentum Health share the leadership position in 2018. For both brands this came from showing remarkable increases in the year. The Medihelp score from 70.9 to 73.6 in 2018 and Momentum Health increased its score from 70.5 to 72.3 over the same period. Although not to be compared with open schemes, GEMS, which is still behind the industry average of 69.4, scored 67.5 in this measure, which was a 3.9-point jump from its 2017 score of 63.6 marking notable improvements in this year’s survey. Bonitas fell from 70.7 to 68.3 and Discovery Health dropped from 72 to 69 in its perceived value score.

With more than 270 options available, choosing medical insurance products is even more confusing to customers. Many are left feeling frustrated when their claims aren’t covered and the general customer experience of medical schemes remains one of capped benefits and rising premiums.

To remain relevant in the face of NHI, private medical schemes need to assess the value they provide to customers, such as quality, affordability, transparency and ease of use, which should be integrated into their daily operations.

“As the government takes steps to roll out healthcare financing for the entire population, the central issue it will have to address is ensuring that it operates to the same level currently delivered by the private health care industry, and customer experience will be the driving force behind this,” concludes Schreuder.

Explainer: how competitive is South Africa’s private healthcare sector

Why was a market inquiry set up?

The inquiry was set up because private healthcare and medical scheme cover is expensive in South Africa. Costs continue to rise and fewer people can afford it. People who have health insurance find that the scheme covers less care and they often have to pay out of pocket.

Also, the private healthcare sector consumes a large amount of the healthcare spend and resources despite the fact that it only serves a small portion of the population. The private healthcare market serves about 18% of the population who buy healthcare insurance sold by medical schemes. But the private market consumes about half of the total health spend every year.

What did you find about competition – or lack of – in the sector?

The first thing to realise is that this is a complicated market with lots of different players in it so there isn’t a straightforward easy answer. It’s complex.

The report talks about a funder market. What is this and what did you find?

By funders we mean the companies that purchase healthcare. This includes medical schemes, the administrators that schemes use and the managed care organisations that the schemes contract with. We found that competition doesn’t operate as it should on the funder side of the market.

Basically what schemes do is pool the money that members of schemes give in premiums each month. The point of health insurance is to enable money to be pooled so that the healthy can cross-subsidise the sick. Over time it evens out.

Health insurance is there to protect people from catastrophic expenditure. Members should want their scheme to be careful and wise with their money.

Is this not happening and if not why not?

We think this isn’t happening for a number of reasons. It’s not to do with schemes being bad. It’s about the way the market operates.

One of the reasons it’s hard to know if schemes are being wise is that consumers don’t have the information they need. There are about 270 different health care plans on offer from all the various medical aid schemes – each offers different cover and costs a different amount. It’s very difficult to compare them and work out which option offers the best bang for a person’s buck.

We have recommended that all schemes have to offer a basic package that offers the same care. Consumers could then compare like with like.

On top of this there are also regulatory problems (rules about how schemes work) where we recommend changes so that it’s easier for schemes to offer a single comparable package.

So one package is one solution. But how does a person know if the quality is good or bad?

In the private market there are no measures of quality that are shared with the public. Consumers don’t know if a hospital is good or bad. There is also no way to judge if care being provided by doctors and specialists is effective as there are no measures on whether or not people are better afterwards.

This can lead to more and more interventions – and a waste of money.

If data are pooled and lots of doctors and patients report about health outcomes, we can begin to know if having an extra test or some kind of intervention works. We make a recommendation about reporting on quality and outcomes.

You looked at hospitals – what did you find?

We found that is a very high level of concentration in the hospital sector. Three hospital groups dominate: Netcare, Mediclinic and Life. They have more than 80% of the hospital beds available and get 90% of all the admissions. This distorts and restricts competition.

We have made some recommendations around this. But one thing we think is essential is a supply side regulator that would, among other things, assist provinces in issuing licenses for hospitals. Some countries, like Germany, are very strict about the number of beds available in the hospital sector.

The report also talks about doctors, what did you find?

There are problems when it comes to the way doctors and specialists work. They work as individuals – not as a team. Team-based care is an internationally accepted standard because it provides better care and can be more cost effective. But our system doesn’t allow this easily.

Also doctors and specialists use a fee-for-service billing model. This means they bill patients for each service they perform during a consultation. Obviously people inclined to maximise their income they will do more so they earn more. There is no good mechanism to manage this.

This is a universal problem. Different countries have different ways of managing it. In Sweden, for example, almost all specialists are salaried and paid by the state. So they don’t have an incentive to do more to earn more.

There is a chapter supply induced demand. What’s that about?

Basically it means that when some additional care is offered (increased access), additional use of the service that would not have otherwise have happened takes place.

This has two consequences: wasteful expenditure and patients being over serviced.

*How does South Africa compare to other countries? *

When it comes to the private healthcare sector South Africa faces a problem of over-servicing and over supplying. Three examples illustrate this.

Firstly, hospital admission rates are extremely high. South Africa’s rate was higher than all but two of 17 other OECD countries we used as comparisons.

We also looked at seven different surgical procedures. In four, South Africa had the highest usage rates.

Lastly we looked at the number of people that get admitted to intensive care units. We found that South Africa had higher admission rates than eight other countries with comparable published data.

What will it take to break the current patterns?

We recommend that the regulatory regime needs to be improved. Regulators aren’t as sensitive to competition issues as they could be. South Africa has laws in place but they aren’t being fully used. Stewardship from the Department of Health has also been weak.

But we were also very aware that there is no quick fix. The market is incredibly complex. This means that several interrelated interventions are needed. Market failures will persist if the recommendations aren’t introduced as a package.

We also kept in mind that the country is trying to move towards a system of universal health coverage and we have been mindful not to undermine that vision.

What, in summary are your main recommendations?

  • The way in which schemes operate needs to change. This should include the way options are structured so that people can compare apples with apples. We hope that will improve accountability in the funder market.
  • More transparency: a system needs to be put in place that allows people to see what value they’re getting for what they’re paying for.
  • Greater competition, especially in the hospital sector is needed.

This article was originally published on The Conversation. Read the original article.

Why South Africa needs to discipline the private healthcare industry

If a service is provided by a company rather than government, this does not automatically mean a market is at work. The point is fairly obvious but has passed many in South Africa by.

Private provision of services is moving into the spotlight in South Africa as the government looks to make the health system more accessible to the poor. One aspect is the Health Market Inquiry, established by the Competition Commission and chaired by former Chief Justice Sandile Ngcobo. It recently released a provisional report recommending more regulation of private healthcare. It has invited comment on its ideas.

It is absolutely inevitable that whatever proposals it comes up with will be attacked as an assault on the free market in health care. This will ignore the reality – that there is no market in healthcare in South Africa, at least not one which works in the way in which markets are meant to work.

To get an obvious point out of the way first, markets work only for people who have enough money to take part. So it is true that a healthcare market in South Africa would exclude many people who cannot afford private care. But that is not the only problem with the private healthcare system – another is that even those who are able to join medical schemes do not get the benefits markets are meant to offer.

For markets to work as they are meant to, consumers must be able to make informed choices: they must have both a real right to choose and enough information to make that choice. But information and choice operate weakly in private healthcare and not at all in the private health insurance offered by medical aids.

This places the South African debate about healthcare in perspective. The Competition Commission and the health ministry are not trying to abolish the market, they are trying to make it work. The accurate debate is about whether they are doing it in the best possible way.

No real choice

It might be true that people who can afford private medical care can choose their general practitioner. But that is where it ends. If patients need specialised care or hospital treatment, they don’t choose the specialist or the place where they will be treated.

And so they have no way of ensuring that they get the best possible care. While popular wisdom in the suburbs often assumes that all private doctors and hospitals are good, inevitably some are a great deal better than others and some are no good at all. But consumers do not make an informed choice on where to go and who to go to, although this is a far more important decision than buying a kettle.

Informed choice of a medical aid scheme is just about non-existent. Most people belong to the scheme their employer chooses. If they are “lucky” enough to have a choice in theory, they do not have one in practice. Medical aids do not publicise what they do and the language they often use most people can’t understand and so there is no way to “shop around” in ways which would make an informed choice possible.

The situation is quite the same when people have joined schemes. Information on what is allowed and what is not may be understandable to doctors and pharmacists, but not to scheme members.

The supposed solution is the medical aid broker, who is meant to help consumers to choose and to deal with the scheme after they join. But the brokers are paid by the schemes and so it is no surprise that they are there to look after the scheme, not the consumer.

Brokers direct people to the schemes they are working for, not those which will best meet the needs of the consumer. Anyone who has a problem with a medical aid’s decision will soon find that the broker is a public relations officer, not a consumer representative. Their job is to justify the scheme’s decision, not to question it.

Pro-market moves

Given all this, the Health Market Inquiry’s proposal that healthcare providers and funders should be regulated is a pro-market move – it seeks to make informed choice more of a factor than it is now. There is room for debate on whether it is going about it in the best way. But to claim that it is an attack on markets ignores the way in which private healthcare operates.

Similarly, an amendment to the Medical Aid Schemes Bill which would abolish brokers is currently up for discussion. It, too, is not an attack on the market. Its likely effect would be to force brokers into the customer relations departments of the medical schemes, improving market information by ensuring that consumers know that they are dealing with people who work for the schemes, not for them.

Again, to oppose this measure is not to defend the market – it is the opposite. To argue against it is to say that a market in which people know who they are dealing with and can make informed choices is not a good idea.

The tendency to assume that private provision means that there is a market even when there is not is not restricted to health care. For years, it was assumed in the mainstream that the market was delivering satellite television when there was only one supplier. Moving from services to goods, many beer drinkers no doubt toast the market as they choose between a range of labels produced by one company.

More generally, concentration in the formal economy means that most goods are produced by subsidiaries of a handful of companies – and sold in stores owned by only two or three firms. While competition between a couple of firms is technically a market, it is hardly one which offers strong benefits to consumers.

Making markets work

This has two implications for South Africa’s economic debate. The first is that not all proposals for regulating private economic activity are an attack on the market. A key feature of the country’s economy is that it is dominated by very few players and so markets often do not work as they should. A stronger government role could mean stronger, not weaker, markets.

The ConversationThe second is that, in these circumstances, the claim that markets must be left alone very often means that there is a need to leave existing private providers alone. This hides the reality that, in current circumstances, the challenge is not to protect private providers but to ensure that they really are subjected to the rules by which markets are meant to force them to play.

This article was originally published on The Conversation. Read the original article.

Bonitas announces best financial results in 35-year history

Bonitas Medical Fund (the Scheme) reported a solid surplus of R730.20 million for 2017, recouping the R16.9 million deficit from 2016. Gerhard van Emmenis, Principal Officer of Bonitas, says, “2017 was an exceptional year for us in terms of financial results. This was largely due to several key cost-saving strategies and initiatives implemented during the 2016-2017 period.”

This bolstered Bonitas reserves from R3.2 billion to R4 billion. “This surplus will be invested back into the Scheme and will allow us to offer our members access to healthcare of the highest quality.”

Van Emmenis says, “Medical schemes need to be proactive in curtailing costs. Even though healthcare inflation continues to outpace general inflation by about 5% (12.5% in 2017), we cannot simply say, ‘It’s not our fault or our problem.’ We need to constantly be looking for different methods to contain costs and offer our members maximum value for money.”

Quick overview:

“Although we took a multi-pronged approach to cost-saving, our main focus was on:

  • Hospital negotiations, which delivered savings of R242 million.
  • Fraud, waste and abuse (FWA) initiatives were also a significant focus and delivered recoveries of R31.2 million, with a potential preventative savings of R75 million.
  • Other cost-savings initiatives of R59 million (examples of this included the benefit adjustments).
  • A return on investments of 8.9% also contributed to the healthy fiscal outlook for Bonitas Medical Fund.

“The net healthcare results of R345.9 million and investment income of R394.3 million, underpin 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.”

Reserves increase

“From 3.2 billion in 2016, this has increased to R4 billion for 2017, which places us in a stronger, more robust financial position where we are confident of our ability to meet member claims.”

Public healthcare in South Africa continues to operate far below optimum levels

“The current public health systems’ ability to provide the foundation for an NHI in the near future is questionable. The reasons include lack of economic growth, increasing unemployment, a large gap between rich and poor and a stark contrast between first- and third-world elements. It therefore stands to reason that the public healthcare system cannot carry any more of the burden. While public health gets its house in order, it is essential that private medical aids keep private healthcare costs as low as possible to make it affordable for as many people in South Africa as possible.”

Hospital negotiations

During the 2016 financial year, the Scheme experienced an increase in the utilisation of healthcare services, particularly hospital admissions and related benefits. “We embarked on a hospital negotiations strategy at the end of 2016, which resulted in a savings of R242 million in 2017, without compromising members’ access to quality healthcare.

“We will continue to negotiate robustly with healthcare providers based on our size, to contain costs as far as possible, and negotiate the best possible rates for members,” says Van Emmenis.

Fraud, waste and abuse (FWA)

It is estimated that 15% of claims in the healthcare industry contain an element of FWA. For a scheme of Bonitas’ size, this translates to a loss of R190 million. “To address this, we implemented initiatives against FWA including hospital and pharmacy claim analytics. The result was the identification of FWA of R129 million, with R31.2 million recovered in 2017.”

The Scheme further benefitted from R75 million in potential savings. Five imprisonment sentences have been handed down by the judiciary – clearly indicating a zero tolerance approach to this white-collar crime.

Preventative 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 Scheme bolstered its Managed Care initiatives in 2017, with the introduction of the Diabetes Management Programme.

The success of the diabetes programme is underpinned by the Scheme’s ability to identify potential diabetic patients and enrol them on the programme as well as actively manage them through support, testing and education. The Scheme and its partners have worked tirelessly to improve actively managed diabetes patients by 31% between May and December 2017.

The way forward

“In 2018, we will carry out a secondary initiative to identify hospitals on our networks that are not cost-effective and work towards improving their efficiency,” says Van Emmenis. “We have introduced a Managed Care programme focussed on mental health and will explore other options to introduce alternative reimbursement models for procedures such as knee and hip surgery.

“During the year ahead we will seek to identify other opportunities to grow Bonitas and retain our existing membership base. This will include the possibility of amalgamations as well as developing new distribution models and channels.

“Connecting with our customers remains a key focus area as we seek to improve our digital capabilities to improve our members’ experience and communicate effectively to keep them informed and engaged. We will use the best technology available to make things simpler and more efficient.

“Attracting younger and healthier members is vital to ensuring the sustainability of the Scheme. To assist in this regard, we introduced BonFit in 2016 as well as several benefits to appeal to younger individuals and families in 2017.

“As rising healthcare costs continue to be a prohibitive factor in making quality healthcare affordable, we will continue finding innovative and sustainable ways of reducing expenditure,” concluded Van Emmenis.

Topline points of interest:

  • A solid surplus of R730.20 million for 2017, recouping the R16.9 million deficit from 2016.
  • 8.6% increase in claims in 2016.
  • Net healthcare results of R345.9 million and investment income of R394.3 million.
  • Robust reserves of R4 billion.
  • 44.9% of all claims were for hospital admissions and 11.7% for specialists – these were the two highest cost-drivers.
  • Savings from fraud, waste and abuse (FWA) amounted to R31.2 with a potential savings of R75 million.
  • A savings of R242 million for 2017 from strategic negotiating strategy.
  • 348,0088 principal members and 753,514 beneficiaries.

Will HMI insights get lost in the rush to finalise healthcare laws?

Has the almost simultaneous release of the National Health Insurance (NHI) Bill, the Medical Schemes Amendment Bill and the provisional findings of the Health Market Inquiry (HMI) created an information overload, where some of the insights from the inquiry could be lost in the noise?

“There is significant risk that the regulatory environment being created through the legislative amendment process currently underway could conflict with the lessons learned in the course of the HMI’s work, which will only be fully apparent on the release of its final report,” says Mark Arnold, principal officer of Resolution Health Medical Scheme.

A considerable amount of time, resources and expertise have been invested in the HMI, but with the final report due for release in November, however, there is a risk that the full benefit of these insights could be lost due to the timing of these inter-related developments, as the period for submissions on Medical Schemes Amendment Bill and the National Health Insurance Bill close in September, he says.

“As it stands, the HMI findings might be considered when fine tuning the proposed amendments to medical schemes law. However, far greater value could be added if the final HMI findings and recommendations are embraced and incorporated as the foundation for the amendments in the creation of a fresh approach to healthcare for the country.

“Closing the submission period on the Medical Schemes Amendment Bill, which specifically deals with the private healthcare sector, before the HMI’s final report is available is analogous to putting the horse before the cart.

“Such an approach squanders the opportunity to strengthen legislation with the full benefit of wisdom garnered during the lengthy and expensive inquiry and the best chance we have of making informed decisions that will shape the future of healthcare in South Africa for all.”

Significant political pressure

Acknowledging that there is significant political pressure for legislative certainty that will pave the way for the full implementation of the NHI Arnold notes that a better integrated process would be more likely to achieve a successful and sustainable new healthcare paradigm in the long run.

“If we are to overcome the challenges facing private healthcare – some of which also threaten to derail the goals of universal health coverage – we need to develop a balanced and well-informed piece of legislation, and this is a process that should not be rushed,” he adds.

Survey: Medical aid members have more choice

In the battle for a slice of the private healthcare market, there has been significant growth in the number of medical schemes performing well across all sections of the medical aid spectrum. Whilst this means that members get more choice, it also makes the landscape increasingly complex.

The GTC 2018 Medical Aid Survey (MAS) analyses and rates medical aid schemes according to a standardised comparison and ranks the choices available to members.

When analysed purely in terms of premiums – the survey’s micro ranking – Fedhealth emerged as the medical aid which held the most top positions across all the classifications. Discovery was ranked in first place for the survey’s macro rankings, which analyses a medical aid’s overall ‘health’ and longevity in terms of factors such as its solvency level, membership growth, net healthcare result and member satisfaction. When combining both the GTC micro and macro rankings, Discovery claimed the highest number of top positions among all categories – for the second consecutive year since the survey’s release eight years ago.

More innovative

“While the overall results appear to tell a similar story to last year, it is encouraging – when drilling down into the details – to see such a variety of participants offering options across all sub-sections of the medical aid spectrum, meaning consumers can confidently access more schemes and plans offering private healthcare, and so decrease the burden on the government. In the past, the larger and more established companies tended to dominate the majority of the categories,” says Jill Larkan, head: healthcare consulting at GTC.

Larkan ascribes this to companies becoming more innovative in their offerings in an attempt to differentiate themselves. “We always welcome more competition among schemes, as it indicates a growing market and more variety for members with changing healthcare needs. However, this does add more complexity to a healthcare arena that is already difficult to navigate for the majority of members.”

“What is worrisome is that many of the plans attempt to attract members concerned with the high cost of healthcare, by offering ‘manageable premiums’, perceived to be of good value, which in fact have far fewer benefits than their more ‘traditional’ counterparts. It is now more important than ever for members not only to look at price – which remains the most important consideration for many members under ever increasing financial strain – whilst also considering which benefits they are forfeiting for their lower premium,” she says.

This year’s survey includes a comparison of average annual salary increases over 10 years – according to the 21st Century The South African Trends Report 2017 – against average annual medical aid premium increases since 2006.

“Over this period, medical aid premiums increased by 104.87% cumulatively, while salaries increased by 80.20%, which clearly demonstrates the pressure that consumers have been under in trying to keep up with healthcare costs,” says Larkan.


The MAS analyses plans based on a number of classifications, namely entry level, hospital, saver and comprehensive plans. Some of the entry level plans are salary-based and only cover prescribed minimum benefits (PMBs) whilst others restrict hospitalisation to state facilities.

“These entry level plans are a good option for members who are new to the private healthcare market and are happy to have a combination of a primary healthcare and hospital plan. Those members who expect slightly more comprehensive coverage but limit themselves to the cheaper plans, as a means to minimising cost, will be disappointed when they find out that they are not covered for a number of procedures they might have expected. In healthcare, the mantra ‘you get what you pay for’ could not be more apt.”

The Council for Medical Schemes (CMS) reported to Parliament earlier this year that complaints from medical aid members have increased by 29% from 1,017 to 4,536 during 2017-18, compared to the previous year. This was largely attributed to a lack of understanding of the cover provided by their medical aids.

“This is in line with our experience: one of the biggest reasons for members’ unhappiness about a selected scheme is not knowing what their plan pays for. As there is no standardisation in the medical aid industry, it is very complicated for members to analyse medical aids, without the help of experienced professionals,” she says.

This year’s survey reviewed 21 open schemes and one closed scheme (Profmed) covering 22 plans divided into five categories, eight subcategories and three micro categories. Many of these were further split between network and non-network schemes, whilst some of them go on to reflect day-to-day spending levels. The full range of plans have been graded according to GTC’s ‘likelihood of support’ and offers a simplified method of comparing options and cost for members.


Larkan explains that, in addition to factoring in complaints received from members on social media sites such as– as an indication of members’ satisfaction with their medical aids – this year’s macro grading also took into account the compliments that schemes received, as well as the Hello Peter Index.

Bonitas moved up seven places in the macro rankings as a result of Liberty’s members being amalgamated into the Bonitas scheme. “This greatly enhanced the number of members on the scheme, which carries the highest weighting in the GTC macro rankings. The long-term effect of this amalgamation on measures such as net healthcare results will remain to be seen in the next year, when the claiming patterns of the new members are experienced in the Bonitas scheme.”

Larkan is also encouraged by the number of schemes that are giving due consideration to maternity benefits. “There are generally good benefits for young families, which means they can cover many items – including ante natal classes, maternity scans and consultations – out of the general risk carried by the scheme, without having to dip into their savings accounts.”

Sama takes issue with Competition Commission findings

The South African Medical Association (Sama) believes that the Competition Commission Health Market Inquiry (HMI) provisional report is faulty in its findings, particularly that doctors increase demand for unnecessary services.

In a statement, the association says that in light of the fact that the investigation took almost four years to complete and runs to hundreds of pages, it is, on first review, somewhat disappointed in the overall analysis of the private healthcare sector.

Doctor-induced moral hazard

Sama is particularly concerned about the allegations that doctors increase demand of unnecessary services, including increased admissions to hospitals, says chairperson, Dr Mzukisi Grootboom.

“The HMI reached this conclusion after analysing claims data. We are of the considered view that the methods used by the HMI were not robust enough to conclude that many admissions are unexplained and thus constitute a doctor-induced moral hazard,” he says.

In 2017, the Medical Research Council presented to Parliament the top 10 diseases that kill South Africans. These included HIV and Aids, cerebrovascular disease, lower respiratory tract infections, ischaemic heart disease, tuberculosis, diabetes mellitus, hypertension, interpersonal violence, other trauma-related injuries, liver disease and diarrhoeal illnesses. In 2015, Statistics South Africa reported cancer to be the fifth cause of death in the country.

“Typically the private sector uses the Prescribed Minimum Benefit Chronic Conditions List (PMB CDL list) to define chronic conditions. The list only includes three of the conditions which kill South Africans. The HMI can therefore not conclude that there are unexplained admission after adjusting only for chronic diseases and age. Sama believes the increase in admission can be explained by high prevalence of injuries, acute infections, cerebrovascular accidents, cancer, tuberculosis, and substance abuse, amongst other factors,” says Grootboom.

Disregard of mental health

Dr Grootboom says it is also concerning that the HMI assumed all psychiatry and paediatric admissions are discretionary. This is patently wrong.

“This cannot be true given the recent developments in mental health. If psychiatry admissions are really discretionary, we would not have witnessed the development of the Life Esidemeni crisis. No doctor will choose to admit a mental health patient if an option for community-based care exists. In a country where high causes of mortality rates in children include lower respiratory tract infection and diarrhoea, assuming that all paediatric admissions are discretionary is quite flawed,” Grootboom notes.

The HMI analysed the proportion of discretionary admissions in 10 specialities. He says it is astounding that all cardiology and cardiothoracic admissions appear to have been considered discretionary against the backdrop of ischaemic heart disease being responsible for a significant proportion of deaths in the country.

He notes that almost all of urology and orthopaedics admissions were also considered discretionary.

“Treatment of hip fracture with arthroplasty or early prostate cancer is not discretionary; these are the standards of care,” he says.

In addition Grootboom notes that black men in South Africa are more likely to suffer aggressive forms of malignancies or cancer and that a watch and wait strategy is therefore clinically not appropriate in our setting.

Further to the report’s findings that unpaid claims should be construed as unnecessary care, Grootboom says schemes typically do not fund clinically appropriate care if they judge it is not a prescribed minimum benefit and not covered by plan type.

“Unfortunately, the allegations of doctor-induced demand can erode the patient-doctor trust. As a profession we will continue doing our level best to care for and save the lives of all South Africans. We will also further engage with the HMI after a complete analysis of this lengthy document.”

You’re paying more for less when it comes to medical aid. Here’s why

What are your chances of ending up in a hospital? Higher than you’d think if you are a medical aid member in a large city – and the reason reveals some never-before-seen truths about the country’s private healthcare sector.

A lack of competition within the private healthcare market is fuelling an epidemic of overtreatment — and mystery medical bills — in South Africa, the Competition Commission revealed on Thursday.

Supply-induced demand

As part of a four-year investigation into private healthcare costs, the Competition Commission looked at hospital admission rates among patients treated in nine specialised areas of medicine. People who had insurance and lived near more hospitals were more likely to be admitted than people with similar conditions that lived farther away from lots of empty beds, the statutory body found.

This correlation also held true when the body looked at intensive care unit (ICU) admissions.

It’s a phenomenon known in healthcare as “supply-induced demand” or the premise that the more supply you have of beds, doctors, medicine, the more people use them regardless of whether they need them or not.

But too much of anything can be a bad thing, including medicine — especially when it comes to your medical aid premiums.

The commission analysed hospital claims and found that almost a third of claim costs couldn’t be explained by factors such as a patient’s age or disease. These mysterious costs were being passed onto consumers in the form of increased premiums, the commission argues.

The unchecked rise of overtreatment is just one of the ways private healthcare isn’t working for South African consumers, the commission found. The report was released as part of the country’s first inquiry into the private healthcare market.

The body also argued that although South Africans are paying more for private healthcare than ever before — via nearly 300 medical aid benefit plans —they are getting less for their money. This is partly because the plethora of options makes it impossible for consumers to compare value for money.

Little market pressure

Meanwhile, with a few companies dominating sectors, including administrators, medical aid schemes and hospital groups, there’s little market pressure for companies to curtail unnecessary costs, explains the commission in its report.

“All schemes have failed to manage supply-induced demand adequately. We would expect medical schemes to force their administrators to actively manage this in the interest of protecting scheme members’ health and the financial sustainability of the scheme,” the commission writes.

“The widespread inability to manage supply-induced demand suggests a lack of effective competition in the market for administration.”

Private hospital groups

Discovery Health and Medscheme have cornered about 76% of the medical administration market based on contributions. Discovery Health Medical Scheme dominates 55% of the public medical scheme market. When it comes to hospitals, the big three — Netcare, Mediclinic and Life Healthcare — own 83% of private hospitals beds nationally.

“Competition [among medical aids] is simply not as rigorous as it should be and appears to be almost non-existent,” said inquiry chair and former Chief Justice Sandile Ngcobo.

Hospital groups compete to attract healthcare workers, particularly specialists — dynamics that may be fuelling the over-treatment of South Africa, the report says.

“There is an alignment of interests between facility and practitioner where both stand to benefit from higher treatment volumes and intensity.”

The uninformed patient, the report states, “assumes that these arrangements are always to his/her advantage and is not concerned with the longer term financial impact on medical scheme cover.”

Standardised medical aid benefits

Health Minister Aaron Motsoaledi initially approached the commission to investigate high private healthcare costs soon after taking office in 2009. He has viewed the commission’s work as crucial to helping make private healthcare cheaper and eventually allowing the government to purchase affordable services from the private sector as part of the National Health Insurance.

“Let me start by thanking you because, as the department of health, you have given us more than what we asked for,” said Motsoaledi, speaking at the report’s release.

Among the commission’s recommendations is the creation of a basic medical aid benefit option standardised among all schemes to help consumers better navigate benefits as well as the increased use of cost-effective measures such creating specialist groups to treat patients as a team. This concept is already being explored by companies including Discovery Health and healthcare management firm PPO Serve, which argue it could bring down costs but also improve patient care.

The commission will accept public comment on the report before releasing its final document in November.

Health Market Inquiry calls for transparency by medical aid schemes

A report by the Health Market Inquiry (HMI) looking into the private healthcare industry has recommended that there be increased transparency and improved competition.

The HMI released its provisional report on Thursday after hearing evidence from a number of stakeholders in the past three years.

The inquiry, which is chaired by the ex-Chief Justice, Sandile Ngcobo, was set up to look into the costs of healthcare and the operations of medical schemes.

“Overall we recommend changes to the way scheme options are structured to increase comparability between schemes and increase competition in that market.

“A system to increase transparency on health outcomes to allow for value purchasing.

“A set of interventions to improve competition in the market through a supply side regulator,” the report reads.

Cabinet has welcomed the release today of the interim report by the competition market inquiry (CMI) into the private healthcare industry.

Reviewing prescribed minimum benefits

In addition, the HMI proposed that the prescribed minimum benefits (PMBs) package, which will be included in the base benefit package, must be reviewed and updated at least every three years.

This is consistent with existing legislation and in line with current initiatives by the CMI to review the PMBs.

“This caution is required as the base cover is yet to be defined. To facilitate scheme members’ understanding of PMBs, including what they are entitled to and when additional out-of-pocket payments may arise.

“During the pre-authorisation process, members should explicitly be told whether their choice of service provider or treatment course has additional cost implications and what alternatives are available,” the report states.

The provisional report will be open for public comments for a period of two months.

The final report will be submitted to the minister of economic development, by the end of 2018, and will be tabled in parliament.