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Time for a new medical aid model

01 October 2008 Bafana Nkosi, Bonitas Medical Fund

It may be time for the healthcare industry to shift from a passive level of managed healthcare to active involvement and engagement through initiatives employed elsewhere in the world, such as Health Management Organisations.

According to recent reports, medical aid scheme members in South Africa are paying the highest non-healthcare costs in the world. Apparently, these costs consume up to between 14 and 15 percent of medical aids’ R60-billion of annual expenditure.

According to Bafana Nkosi, Principal Executive Officer at Bonitas Medical Fund, there is no conclusive evidence or research to attest to these assumptions, yet these statements are quickly taken as gospel, despite the fact that these figures are based on mass generalisations across the spectrum of medical aid providers in the country.

Panic reports misleading

“What is usually omitted from panic reports such as this, is the fact that South Africans spend eight or nine percent of the GDP on healthcare and, while this is higher than other developing countries, when compared to the US, where consumers spend between 14 and 15 percent of their GDP on healthcare expenses, we’re actually doing rather well,” he says.

International solutions

“Countries like the US have addressed non-healthcare costs with the introduction of managed healthcare interventions. These interventions vary from passive to active involvement and engagement like Health Management Organisations (HMO). Health Management Organisations are healthcare organisations that own hospitals and employ doctors in order to keep control of costs.

Passive local approach

In South Africa we are largely on a passive level of managed healthcare. We implement managed healthcare programmes which are largely outsourced to third parties. We have introduced limited capitation models and have alternative re-imbursement models with hospitals and other providers.

Capitation contracts allow patients to select their primary healthcare providers who monitor the patients’ access to medical services, says Nkosi. These capitated providers are paid a fixed fee per month based on the number of members in their books, irrespective of the number of times they have seen the patient.

Whilst this might discourage over-servicing, it might on the other hand result in under-servicing, with patients complicating and ending up in hospital, defeating the objectives of these arrangements.

There are, however measures that are taken to ensure that doctors do not under- service. There are peer review mechanisms and other downstream costs like hospitalisation, associated with the doctor.

Who will lead?

“The time might be ripe for South Africa to progress on the managed healthcare intervention ladder by introducing fully fledged MHO’s,” says Nkosi. “I see this being started by two or by three medical aids joining forces and acquiring a number of hospitals.”

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