Tuesday, October 14, 2014

I felt like I was back home

While I made presentation at a quality summit sponsored by Discovery Health, as usual I learned more than I imparted.  The similarities between the South Africa health care environment and that of the US are remarkable.

Jonathan Broomberg, Discovery CEO, led off with a description of the challenges facing the South African private health care system (which operates in parallel to the public system).  He noted that medical costs are growing at a rate exceeding overall inflation; that there is a rising burden of noncommunicable (i.e, lifestyle) diseases; and that there is high variability in the quality and value of care to patients.

Later, he provided examples of this variability. Looking at the treatment data from 139 hospitals, Discovery has found that in-patient (case-mix adjusted) antibiotic defined daily dosages vary from 39 to 177 per 100 bed days.  There is also a significant variation in the cost of end-of-life care among the country's regions.

Jonny noted that medical inflation costs are not largely driven by the units costs of care.  Rather it is the growing volume of services that is the critical cost driver.  He noted that insurance premiums rose at an average rate of 11.5% between 2009 and 2013.  Of that, 7.05% (or just 0.3% above inflation) was attributable to tariff increases, but 4.5% was attributable to utilization.

The supply-side drivers, he posited, are a fee-for-service physician payment environment; fragmentation of care along the spectrum of care; the construction of new hospitals; and new technologies and procedures.  He singled out the use of the daVinci surgical robot, noting its increased cost over traditional prostate removal techniques.  "It takes the premiums from 10,000 healthy members to fund 400 prostate cases" using the surgical robot, he noted.

Demand-side drivers come from an aging population; an increased disease burden; and adverse selection. The last item occurs because there is no individual mandate for insurance coverage.  Therefore, a large percentage of young adults between age 20 and 30 choose not to buy insurance--until or unless they need it.  If insurance were mandatory, premiums could be reduced by 15%, he pointed out.

Jonny summarized that a sustainable solution requires an equilibrium with no trade-offs among access, quality, and costs, but that a key aspect of the solution must be an effort to educate and empower patients.  Even among the well educated and relatively prosperous South Africans who purchase private medical insurance, there is virtually complete disempowerment in clinical settings.

After I presented a complementary talk on reduction of harm in hospitals and approaches to process improvement, a panel discussion ensued with representatives from a number of health care sectors, including two of the large private hospital chains (left).  There was remarkable consensus among the panelists as they riffed off of the earlier themes and addressed the questions posed by the moderator (below).

As I listened to it all, the conversation seemed quite similar to those I have heard in the US over the last decade: Well-intentioned people who understand they have a high degree of interdependency.  As in the US, the question will be whether the various stakeholders will decide that their differences separate them or or whether those differences offer the potential for trades that satisfy individual corporate and sectoral interests and create value for society as a whole.


Brad F said...

Unlike the US though, when South Africa raions, do they do so with time (waits), access (dollars), or more egregiously, by class?

SA has similar problems in their FFS system--or so it appears, but do they have a social compact more akin to European nations?


Paul Levy said...

Brad, there is a social compact more akin to the European countries, and, indeed, very much like the NHS system in the UK. A full-access public system exists, and a parallel private syetm exists for those who are able to pay for private insurance. But, a low income version of the private insurance market exists as well, to which some people subscribe so they can get access to private facilities and doctors.

Interestingly, private insurance is not provided by employers (as is often the case in the UK). But some employers require employees to buy private insurance as a condition of employment so that their health issues will be taken care of.

I might argue, by the way, that the US also rations by time, dollars, and class (i.e., income leves) in a number of states where governors and legislators have decided not to take advantage of the expanded Medicaid coverage made vailable under the Affordable Care Act.