Private healthcare

Mediscapes markets SA healthcare on Net

Public healthcare facilities may be facing a cash crunch, but Mediscapes, an internet-based company in Hout Bay, has taken a gap by marketing South Africa's private healthcare and medical facilities as a global destination. Peter Ordway, director of Mediscapes, said as far as he knew his was the only large-scale internet-based business of its kind that was able to offer a comparable service, mainly because South Africa's private healthcare facilities offered care that was often of a higher standard than that available in developed countries. The company has signed up 45 doctors and medical personnel, and offers a broad spectrum of medical treatments. The most popular are cosmetic surgery and dentistry. Clients include foreigners who wish to combine a holiday with treatment, those looking to escape long waiting lists for medical procedures in their own countries and those seeking better medical care than is available in their own countries. In New York, the leading orthopedic surgeon commended the work the doctors had done in this country after seeing the x-rays. The surgery would have cost $25 000 in New York, but was far less in South Africa. Ordway said the biggest challenge facing his company was the availability of flights. (Source: Edward West, Business Report, 5 February 2003)

Many lack healthcare

In a country renowned for the world's first successful heart transplant, there are still many people who do not have access to the most basic of healthcare services. This was said by health expert Neels Barendrecht, who spoke in Johannesburg yesterday about the future of the private healthcare industry. Barendrecht, the chief executive officer of Mx Health, South Africa's third-largest outsourcing healthcare administrator, said there were currently only 7,5 million beneficiaries of private healthcare. He said the fact that the healthcare funding market had become increasingly competitive and discerning had not helped industry outreach because healthcare cover had become one of the greatest cost burdens for the consumer. Barendrecht also said that with the contribution rates of most medical aid schemes having doubled over the past three years, members had had to make do with cheaper healthcare plans.Others were forced out of the private healthcare system altogether. On the other hand, he said he was also concerned about an increasing number of medical schemes that continued to show poor results and minimal reserve growth. Barendrecht said there was a growing demand for highly versatile healthcare produces and sophisticated healthcare information technology. There was also a need for financially sound healthcare administrators to offer well-structured and realistically priced products across the board. If healthcare risk management was implemented effectively, the health and general well being of the medical scheme member would be assured and more citizens of the country could enjoy the benefit of healthcare funding through sound risk pools. (Source: Sowetan, 11 October 2002)

Doctor finds the soul of health in all its forms

Sibosiso Mhlambi believes that each hospital has a soul, and one can sense it by walking the corridors. Having spent much of his life in hospitals, Mhlambi now has a healthcare consultancy, Mhlambi & Associates. He started it last year after walking away from two-and-a-half years of real achievement at KwaZulu-Natal's biggest hospital, King Edward VIII in Durban, where he was chief medical superintendent. He went from a job where he ran a 1 400-bed hospital with 3 600 staff and a budget of R401 million to running a one-person business from home. The company has two divisions, one focusing on business opportunities and the other on consultancy work. At present he is project manager in a consortium comprised of management company PricewaterhouseCoopers, the University of Natal Medical School and the KwaZulu-Natal Progressive Primary Healthcare Network. The consortium is developing structures to improve primary healthcare services in the eThekweni municipality, which includes researching the potential role of the private sector in primary healthcare delivery. This involves drawing up a database of private healthcare practitioners, including those in the complementary medical fields of acupuncture and traditional healing. This ground-breaking research will be able to map public and private facilities in the metro region via global positioning networks and indicate the areas where there is the greatest need. A recent contract giving him a national profile is as a hospital strategy and organisational development consultant to the Gauteng department of health. The brief includes working with staff of the Ga-Rankuwa Academic Hospital, the Tambo Memorial Hospital and the Heidelberg Hospital. He spends three days a week in Gauteng. Mhlambi also does consultancy work for Afrox Healthcare, looking at possible public-private partnerships. Other work includes investigating the feasibility of building a private hospital in Ulundi. In the business opportunities division Mhlambi is finalising a deal with a multinational supplier of surgical sundries to become its distribution agent in KwaZulu-Natal. He is also involved in negotiations for a black empowerment group to buy into an existing private hospital group. Private healthcare is increasingly out of reach for ordinary people, and in his view there is a niche for an affordable but high-quality hospital group. Mhlambi says leaving King Edward VIII without the security of another job was difficult and there have been times when he has doubted himself. But he found he has the skill to motivate and mentor people. His advice to potential entrepreneurs is to choose carefully the industry they want to operate in and know it well. It helps to have a track record. They must also find a good mentor and believe in themselves. He agrees with the view that South Africa is particularly prone to paralysis by analysis and that the worst thing a manager can do is to do nothing. People must be allowed to learn from their mistakes. (Deon Delport: Business Report, 8 September 2002)

Healthcare bill can be cut almost R30bn

The country's annual healthcare bill of R85bn could be slashed by nearly R30bn if all unnecessary costs including medical aid fraud and over-servicing of patients were eliminated. R1 out of every R3 that goes to healthcare in SA is spent unnecessarily and goes to cover the costs of fraud, kickbacks to service providers, over-servicing of patients and other expenses. Medical aid fraud itself costs more than R1bn a year says Medscheme. Both SA's private healthcare sector- spending of about R40bn a year, and the public healthcare sector, spend R45bn are responsible for this. Medscheme says the solution lies largely in incentivising doctors to cut costs. Only 9% of SA's healthcare spend goes to doctors, but they control about 70% of the market, as they prescribe medicines and decide when patients need to be admitted to hospital. Some doctors over-service patients by admitting them to hospital for longer than necessary, or sending them for more tests than are warranted. With this in mind, the administrator is offering to pay doctors a higher consultation fee in exchange practitioners reducing the average cost spent per consultation. However, by rewarding doctors for reducing this cost per encounter, medical schemes run the risk of doctors going to the other extreme and under-servicing patients. Taylor says a process of peer review in the medical profession can avoid this. Health Professions Council CE Boyce Mkhize warns incentive schemes run the risk of placing undue pressure on doctors to compromise the quality of the care they provide. He says doctors already feel excessive pressure is placed on them to slash costs. Discovery Health chief operating officer Barry Swartzberg estimates about R1,6bn of Discovery's R8bn annual spend could be saved by eliminating fraud, abuse and over-utilisation. He believes the rising cost of healthcare is not just a response to inflation, tighter regulations and fraud, but also reflects improvement in healthcare quality. (Source: Business Day, 12 August 2002)

Low-cost quality pays off

Private sector healthcare in South Africa ranks with the best in the world, yet barely 30% of the population can access it. The remaining 70% cannot afford private healthcare, placing the responsibility in the public sector. The Medical Schemes Act was intended to widen private sector membership by outlawing discrimination on any basis other than family size and income, but that has not happened yet. By removing the capacity to cherry-pick the best risks, schemes will have to compete by negotiating better deals with hospitals, doctors and other service providers. Soon, schemes will need to enter into risk-sharing arrangements with providers to bring down costs in a sustainable way. Coupled with better product design, this should make healthcare more affordable to the poor. Few schemes are geared up for risk-sharing arrangements. Prime Cure, a primary care provider group owned by its managers and three private equity groups, has built a network of 50 medical centres around the country delivering quality low-cost healthcare. While patients have access to comprehensive primary care from general practitioners and nurses and specialist services such as radiology and pathology, the group manages to turn a decent profit. Prime Cure contracts with a further 250 service providers around the country, expanding its reach beyond the 50 centres. These protocols are integrated into an IT system which doctors can access in real time. This means doctors generally get it right the first time, without hazarding their way through treatments and running up big medical bills. Prime Cure centres are streamlined, with support staff doing the grunt work, allowing doctors to see 90 or more patients a day, about double the industry norm. Prime Cure is paid a fixed fee per patient, eliminating incentives to over-service. Its patients fall into three categories: those with medical aids (who can consult a doctor and purchase drugs for about a third the normal cost of a consultation with a GP and the resulting prescription); cash patients (who are charged R60 to R90 for consultation, medicine and any specialist service needed, such as radiology); and, capitation patients: Prime Cure is contracted by 15 medical aids to provide fixed-fee services for 120 000 members. Prime Cure was started six years ago and it took more than four years to show a profit. As it achieved critical mass, the group leveraged its bulk purchasing power and wrung costs from the system through use of generic drugs and other cost-containment tools. It is this kind of health service the government wants to see proliferate. (Source: Business Times, 16 June 2002)

No health insurance for 84% in SA

The fact that 84% of the population is not covered by medical aid or health insurance, indicates the importance of the public sector health services. This is according to the National Treasury's Intergovernmental Fiscal Review. The National Health Accounts Projects reports that in 1999, less than 20 % of the population was covered by private institutional financing intermediaries. These include medical schemes - covering 16% of the population - health insurance products, and workplaces' health services provided by private firms. However, according to the Review, as many as 30% of non-scheme members may use private services on a direct payment basis. Another indicator is the number of private sector hospital beds compared with the public sector. Private hospital beds increased from 16 415 to 24 537 in 2000. Public sector hospitals have over 110 000 beds. Private healthcare expenditure increased at a rate double that of inflation between 19960 and 1998, from R24,7-billion to R33,3-billion. There have also been steep rises in medical aid rates, as gross contributions per member increased by 20,1 % in 1997 and 12,9% in 1998. By 1999, only 16,4% of the population belonged to medical AIDS, leaving a bigger proportion of the population to rely on the public sector. (Source : The Star, 17 October 2001)

Hospitals call for access to the state's tender system

The private hospital industry, the largest buyer of medicines after the state, has questioned whether the controversial Medicines Act will drive down the costs of drugs. The Medicines Act, recently the subject of court action, was introduced as a mechanism to make medicines more accessible to South Africans. Rick Hogben, Afrox Healthcare CEO, told delegates at the Conference of Healthcare Funders yesterday that private hospitals were philosophically opposed to parts of the new law, and called for private hospital access to the state tender system as a more effective way of cutting medicine costs. The price of the drug was only one factor influencing the eventual cost. Among the ignored cost drivers was utilisation. Hogben said factors like which product was selected, its quantities, and where and when it was used were equal or greater determinants of the rising costs of pharmaceuticals. He questioned the need for any legislative controls on pricing, citing Afrox's extensive database as evidence that ethical drug manufacturers (those that have to be prescribed) had kept their prices down relative to the depreciation of the rand against the dollar. He said the consumer price index (CPI) for the past year was 6,4%, the rand had depreciated against the dollar by about 18% over the same period and the prices of ethical drugs to Afrox had increased by about 10%, showing restraint on the part of manufacturers. Earlier, Fiona Robertson, the BHF's chief tariff officer, told delegates that of all medicines prescribed in SA, only 20% were generics, the rest originals. Bada Pherasi, former chief director of medicines in the health department outlined the government's reasons for introducing changed medicines legislation. Consumers, Pherasi said, had for too long had to adapt to the needs of healthcare providers. The relationship between the healthcare industry and consumers was too unregulated. (Source: Business Day, 10 July 2001)