Expensive but world class
More focus on ageing profile needed
OF THE R16,1BN medical schemes paid for hospital services in the 2005-2006 financial years, private hospitals received R15,9bn – an increase of 3,9%, according the latest annual report of the Council for Medical Schemes (CMS). While the industry is still awaiting the council’s report on its investigation last year into private hospital costs, Kurt Worrall-Clare, CEO of the Hospital Association of South Africa (Hasa), examines the private hospital industry and the challenges facing it.
DESPITE BEING a developing country, South Africa has similar problems to those of developed countries, and in the years ahead, the private healthcare sector will increasingly be criticised for universal reasons often beyond its control, such as medical inflation and an ageing population.
The medical insurance industry, healthcare per se and perhaps also the economy as a whole, are not paying enough attention to South Africans’ ageing profile.
The CMS has disputed this on the basis that the average age of medical scheme members hasn’t changed much in recent years and has calculated that it stands at 32, based on the total age divided by the total number of medical scheme beneficiaries.
However, this calculation is flawed and should rather be based on the number of beneficiaries who access healthcare, hence Hasa has used hospital utilisation figures to determine who accesses healthcare and the reasons for it.
Hasa’s study shows there has been a significant increase in utilisation among older members, as well as the very young. These figures will be compared with ICD10 codes to determine the number of cardiac and
other interventions in SA’s private hospital sector.
Hopefully it will be possible to project this in terms of the economy as a whole to see if there are some endemic disease profiles. Already there is some evidence of that in lifestyle diseases such as obesity, diabetes and muscular-skeletal surgery, which is a direct result of trauma-related incidents. That there are 144 000 new cars on SA’s roads every year inevitably has a ripple effect on the private healthcare industry.
Hasa also challenges the CMS in terms of its (cost) projections for the private hospital sector. A mistake, in Hasa’s opinion, is that the CMS tends to concentrate on the medically insured population.
But private hospitals do not service only medically insured patients, and the projections and calculations must take into account the significant number of additional patients outside the traditionally medically insured population who have an effect on private hospitals.
Private hospitals, for example, have a constitutional mandate to provide emergency medical treatment to everyone. It is estimated that last year private hospitals paid more than R100m in fees that could not be recovered from these patients. It stands to reason that this would also have a ripple effect in terms of the cost status of any business, and private hospitals are no exception.
At the same time, and on the positive side for the economy, an increasing number of foreign patients are entering SA, not for cosmetic surgery, but for quality specialist medical interventions such as those rendered by Sunninghill Hospital’s specialist paediatric cardiac unit.
The challenge is to market South Africa more aggressively abroad as a prime health destination, particularly at a time when two of the country’s private hospital groups are actively acquiring facilities overseas. (Netcare’s purchase of 47 hospitals in the UK and surrounding areas has positioned an SA company as a global player and as the second-largest hospital network outside the US, while Medi-Clinic’s venture into Dubai has also helped to position SA in terms of international healthcare standards. In addition, Life also continues to have strong ties with the UK government.
Stricter conditions should be applied to funds donated to institutions for bursary purposes, and finances should be strategically managed. If there is no suitable candidate available, it should not go into a general bursary fund but one restricted to health and to disciplines that are going to be in short supply.
Manpower shortages will remain a serious challenge for the private and public sectors. In the light of the severe shortage of healthcare professionals, the State should also seriously reconsider legislative restrictions and be more flexible in terms of education by allowing the private hospital sector to offer its facilities and run private academies established for this purpose. It certainly has sufficient resources and skills. While meeting the needs of the industry, the economy as a whole could also benefit significantly.
The gender bias towards certain healthcare careers should also come under scrutiny. Everyone, including parents, is to blame for making jobs such as nursing genderspecific, thereby excluding it as an option for boys although it is a global qualification with lucrative advancement prospects. At the same time, the profile of nurses is also ageing, which means they are closer to retirement. Again, legislative restrictions need to be revisited regarding private sector training facilities.
It is also necessary to find a more expedient way to register qualifications: The time frames in use in the system cannot be allowed to continue. They need to be shorter, quicker and more responsive to actual needs.
Regarding cost containment, the private hospital industry should also put additional pressure on suppliers to cut costs. And it should also educate the public about some of the endemic realities. For example, if there is a shortage of specialised personnel and there is competition with dollars and pounds in terms of salary, it is likely that salary increases will have to be above CPI to retain skills. This means private hospitals need to maintain a fine balance between managing their costs and being realistic about these needs. Few people, when it comes to paying their hospital bills, realise this.
A fine balance between costs and needs. Kurt Worrall-Clare