Category Healthcare
SUB CATEGORIES General  |  HIV |  Medical Schemes | 

New Pay-for-Performance healthcare model could stem rising hospital costs

18 May 2021 National HealthCare Group
Dr Mandla Moyo, Financial Director of the National HealthCare Group, the Health Foundation of South Africa

Dr Mandla Moyo, Financial Director of the National HealthCare Group, the Health Foundation of South Africa

Fee-for-service payment models no longer serving the best interest of South Africans

Medical scheme premiums continue to increase at a rate greater than inflation year on year, with access to quality healthcare becoming more limited to our population of almost 60 million. Of these people, only 8.94 million have private healthcare cover.

The greatest portion of these rising medical scheme costs continues to be made up of hospital fees, according to Dr Mandla Moyo. Dr Moyo is the Financial Director of the National HealthCare Group, the Health Foundation of South Africa, and is also an executive director at the Sports Science Institute of South Africa. His research concluded that the time has come to reassess the retrospective reimbursement model, which is no longer serving the best interests of South Africans, and to consider the options for a more forward-thinking approach.

“The Pay-for-Performance, or P4P model, is being used elsewhere in the world and could be applied with great effect in South Africa. In this model, financial incentives are given to healthcare providers for reaching pre-specified performance targets, based on the best possible healthcare outcomes for patients,” notes Dr Moyo.

“Payment is then made according to performance within the parameters of these targets, which avoids over-servicing at healthcare facilities and has the dual benefit of reducing costs while putting optimal patient care at the centre of all decision-making processes.”

In his recently completed doctoral dissertation on P4P, Dr Moyo conducted a qualitative exploratory multiple case study using 17 open-ended case interviews, examining the perceptions of seven SA medical schemes regarding P4P as a cost-control model. Every participant confirmed dissatisfaction with how current reimbursement models control hospital costs and outcomes.

Dr Moyo notes that medical schemes viewed P4P as potentially having better results in cost-control and quality outcomes. “While the model does have significant implementation barriers, the participants pointed to five broad patient-centric principles that could enable its viability, namely:

• Paying for measured outcomes;
• Paying specialists for co-ordination of care;
• Rewarding hospitals for excellence by directing patient volumes;
• Measuring patient-reported outcomes; and
• Assigning hospitals the role of being a supplier rather than a co-ordinator of care.

“Current payment models are an important part of the problem, but the broader industry is complex and there are multiple factors involved,” explains Dr Moyo. “In addition, the penalties and co-payments imposed by medical schemes result in significant out-of-pocket payments for members already struggling with rising premiums.”

The Council for Medical Schemes recently identified co-payments as an ‘undesirable practice’, with certain regulations tabled for discussion in coming months in order to curtail the negative impact for members. Dr Moyo suggests that these developments should be accompanied by a more holistic re-assessment of how health providers are paid.

“As specialists in low-cost healthcare, the National HealthCare Group does not make use of the DSP penalty model – neither in our managed healthcare service nor our medical scheme arm of the business – as we feel this is an out-dated approach, which puts the member at a greater distance from quality care.

“While provider incentives are an unquestionably valuable tool in the healthcare funding environment, it is the way in which patient outcomes are specified and how this relates to provider remuneration that is all important.

“As organisations responsible for enabling member access to quality healthcare we must seek to do business with those willing and able to provide care within a pre-specified framework that ensures good patient outcomes and reduces costs if we are to continue making inroads for all South Africans,” concludes Dr Moyo.

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