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SUB CATEGORIES General  |  HIV |  Medical Schemes | 

Hi-tech healthcare...

12 May 2004 Angelo Coppola

Medical aid scheme premiums rise by nearly twice the rate of inflation. One of the significant cost drivers is the price of imported technology.

Medscheme CEO, Andre Meyer: “This new technology is wonderful innovation, and may hold life-transforming benefits for patients, but is it affordable by medical aids?  Is it reasonable for medical aids to only pay for cost-effective treatments?”

“For example, the cost of a PET (Positron Emission Tomography) Scanner ranges from €2 to 3 million, which costs R20m - R30m to import to South Africa.  The first such machine is on its way. 

“However, our calculations show that just to break even, 30 patients will have to be scanned per week, at R12,000 per scan.  What will be done to generate the expected 20 – 30% profit margin? 

How will premiums have to be increased to pay for something four times as expensive as the already exorbitant MRI scan?

Cardiologists are now finding more and more indications for the placement of an implantable cardiac defibrillator at a cost of R195,000 plus doctors and hospital costs, to prevent sudden cardiac death from dysrythmia. 

An even more significant issue is the use of the new “Berlin Heart” to keep end stage cardiac patients alive while awaiting a heart transplant.  A recent quote for the use of such technology was over R1 million, which is in addition to the cost of a heart transplant. 

This could raise the cost of heart transplantation to around R1.5 million.  This might be lifesaving to one member of a scheme and to the expense of all other members. 

“Is it cost efficient and fair we might want to ask, and how do we construct a benefit differential on such very expensive new technology?” says Meyer.

Cochlear implants are now successful in restoring hearing, and can see formerly deaf children being transferred to normal schools.  However, the cost of €30,000 in the first year translates to over R300,000 for one implant. 

“Are other medical aid members prepared to pay more to help subsidise this expense?”

On the medicine front, “biologicals” or “genetically-engineered products” for chronic conditions are drawing attention. 

For example, infliximab is now available as a treatment option for rheumatoid arthritis, yet one has to ask whether it is feasible for healthcare funders to support costs of >R100,000 per annum on a chronic basis for the benefit of individual patients? 

“This question is particularly pertinent where a disease has a high prevalence.”

While the Medicines Control Council (MCC) in SA approves all drugs released into the SA market, its role is only to assess medical efficacy and safety – not cost-effectiveness and affordability. 

Pharmaceutical manufacturers are known to spend millions on research, which may be good for medical science, but such research places pressure on the need for a financial return on investment.  The concerns of medical aid funders are that:

  1. regulatory authorities are known to be pressurized (there is indeed a trend of more products being pulled from the market or having serious warnings added to their package insert subsequent to registration);
  2. research is driven by those who stand to gain most (e.g. in the only trial done on the controversial and expensive product called drotrecogin, 9 out of 11 authors were employees, shareholders or consultants to the manufacturer);
  3. doctors generally want to do the best for their patients but are sometimes influenced in their interpretation of scientific evidence (towards seeing greater benefits and lesser side-effects than perhaps suggested by more critical appraisal of available evidence);

Meyer states that all such funding decisions are the difficult job of the elected trustees of medical aid schemes. 

"They are in the unenviable position of having to balance the demands for the best quality available, and the reality that this is unaffordable for most working people."

"This is why scientifically-defensible managed healthcare programmes are an essential tool for establishing fair and appropriate payment decisions,” he says.

Quick Polls

QUESTION

There are countless articles written about South Africa’s poor retirement outcomes. Which of the following would you single out as the biggest contributor to local savers not accumulating enough to buy an adequate and sustainable pension?

ANSWER

Lack of personal accountability
Poor participation in formal retirement funds
Reluctance to seek financial advice early on
SA’s high unemployment rate
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