Financial Mail - - FEATURE -

Dis­cov­ery’s share­hold­ers have ev­ery rea­son to smile. The stock is up 27% over the past year, on a spec­tac­u­lar 62% run in 2017, as the in­surance group’s myr­iad new busi­ness ven­tures here and abroad bear fruit.

Like­wise, its Vi­tal­ity-ob­sessed cus­tomers have en­joyed count­less smooth­ies, cof­fees and, for the re­ally com­mit­ted, Ap­ple watches on the house. Staff, mean­while, get to work in Dis­cov­ery’s brand spank­ing new Sand­ton head­quar­ters, which re­port­edly cost R3bn to build.

Yet for all its wow fac­tors — and Adrian Gore’s Dis­cov­ery is un­de­ni­ably im­pres­sive — the sec­tor from which it de­rived more than a third of its profit in 2017, health care, is fun­da­men­tally bro­ken.

And doc­tors, per­haps Dis­cov­ery’s only dis­sat­is­fied stake­holder group­ing, are grow­ing in­creas­ingly frustrated with the cor­po­rati­sa­tion of pri­vate health care.

Large med­i­cal aid ad­min­is­tra­tors and pri­vate hos­pi­tal groups wield “un­due in­flu­ence” on pri­vate health-care prac­ti­tion­ers, says Chris

Archer, a gy­nae­col­o­gist and CEO of the South African Pri­vate Prac­ti­tion­ers Fo­rum (Sappf), which rep­re­sents spe­cial­ists in pri­vate prac­tice.

It’s not dif­fi­cult to see why: Dis­cov­ery Health, the ad­min­is­tra­tor for the med­i­cal scheme of the same name, man­ages more than 3m lives across open and closed med­i­cal schemes. It col­lected R5.5bn in fees last year for do­ing this.

Med­scheme is even larger, manag­ing 3.6m lives, across med­i­cal schemes such as Boni­tas and Fed­health, as well as nu­mer­ous closed schemes.

Large ad­min­is­tra­tors un­sur­pris­ingly keep a tight rein on the purse strings of the not­for-profit med­i­cal schemes they man­age.

Sappf is just one of dozens of or­gan­i­sa­tions rep­re­sent­ing the rights of health-care prac­ti­tion­ers on is­sues that have cropped up over the past two decades.

They aim to re­dress this seem­ingly un­equal balance of power.

At the heart of the con­flict be­tween health-care pro­fes­sion­als and med­i­cal aids ap­pears to be a bro­ken and out-dated pric­ing model, which does not take into ac­count the true cost of med­i­cal care and leads to bad be­hav­iour from both sides.

The rea­sons for the struc­ture of the cur­rent model are com­plex, lengthy and his­tor­i­cal. Briefly, de­part­ment of health-com­mis­sioned cost stud­ies un­der­taken in 2006/2007 did not yield the out­comes the de­part­ment had been bank­ing on.

The de­part­ment, says Archer, thought these stud­ies would force prices down. In­stead, they showed that doc­tors were un­der­re­mu­ner­ated. “The de­part­ment re­fused to ac­cept the re­sults.”

A 2010 court rul­ing found in favour of health-care pro­fes­sion­als on the le­gal­ity of the so-called “ref­er­ence price list” (RPL) of 2007-2009, a guide against which med­i­cal schemes can de­ter­mine ben­e­fit lev­els.

Cou­ple this with a com­pe­ti­tion com­mis­sion-im­posed ban on ne­go­ti­a­tions be­tween doc­tor group­ings and med­i­cal aids to set tar­iffs, and what you have left is a sit­u­a­tion in which med­i­cal aids rely on a 2006 ver­sion of the RPL, with in­fla­tion­ary ad­just­ments.

This, says Archer, is the “root cause of all the is­sues”. “What is needed is a non­bind­ing, guide­line tar­iff based on in­put costs,” he says.

The cur­rent fee-for-ser­vice model, which con­tains very lit­tle ev­i­dence-based cost­ing, leaves doc­tors feel­ing un­der­re­mu­ner­ated and med­i­cal schemes sus­pi­cious that poorly paid pro­fes­sion­als are over­selling their ser­vices (some are).

Med­scheme CEO An­thony Ped­er­sen says the ad­min­is­tra­tor re­cov­ered more than R108m for its med­i­cal schemes from providers who “ac­knowl­edged that the claim they sub­mit­ted was not valid”. A fur­ther R300m was re­cov­ered through “foren­sic in­ter­ven­tions”, says Ped­er­sen.

In some cases, fraud was ob­vi­ous: one doc­tor billed for pa­tients who had al­ready died, while an­other claimed to have worked 214 hours in a sin­gle day.

But what ex­actly con­sti­tutes “waste­ful ex­pen­di­ture” is, at least in some in­stances, a mat­ter of per­spec­tive.

“Doc­tors make clin­i­cal de­ci­sions. They are not ac­tively keep­ing track of fi­nan­cial con­se­quences. When treat­ing a pa­tient they do what­ever is best for the pa­tient. They are not think­ing, ‘I’ve al­ready sent five pa­tients to hos­pi­tal this month, if I ad­mit an­other one it will push me over the na­tional av­er­age’,” says Henru Krüger, chief op­er­at­ing of­fi­cer at the Al­liance of SA In­de­pen­dent Prac­ti­tion­ers

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