Offer medical scheme members choice and save money: NHN

‘Medical schemes could benefit if they had a pricing structure which would allowed their members to be rewarded for choosing lower cost providers,’ says Otto Wypkema, CEO of the National Hospital Network.

The National Hospital Network (NHN) is a group of private independent health facilities. The group has 74 members including hospitals, day clinics, psychiatric hospitals, ophthalmology clinics and sub-acute facilities.

‘Many argue that it is impossible to align the interests of medical scheme members, providers of medical services and medical schemes, because medical scheme members have no incentive to save costs,’ he said.

‘This line of reasoning has given rise to the design of complicated and increasingly limited benefit design. However, I do not know of any scheme which rewards members for choosing providers, including doctors, specialists and treatment facilities that offer the same quality of service but charge less.

‘Medical scheme design should use both incentives and fund rules to control costs,’ he said. ‘For example, schemes could introduce a sliding scale of co-payments, with the more cost effective providers offering the lowest contribution from members.

‘Of course we know that a sliding scale-based co-payment fee structure would only be used for non-prescribed minimum benefits, but such an option would open the way to greater patient involvement,’ said Wypkema.

He said that rewarding members for their choices would require hospitals and medical scheme administrators to be open about the prices charged for routine procedures.

‘It is traditionally argued that members face ‘an information asymmetry’ when dealing with the healthcare professions. In our experience, individuals who do not have medical cover, as well as those who require procedures not covered by medical schemes, such as plastic surgery, are remarkably adept at negotiating competitive rates,’ said Wypkema.