Applications of quality assurance to administration and managed care Roseanne da Silva Consulting Actuary Toth Resources 24 July 2007 The BHF Southern African Conference 22-25 July’07 Sun City

Some difficult questions How much should schemes spend on non-healthcare costs? How do schemes determine value for money in administration and managed care spending? How do schemes monitor efficiency and quality in administration and managed care contracts? The BHF Southern African Conference 22-25 July’07 Sun City

Appropriate measurement Rand amount? Percentage? Should this differ by: Level of contribution Type of option Low cost Savings Traditional Type of scheme (Restricted/Open) Size of scheme Nature of membership (Individual/Group) The BHF Southern African Conference 22-25 July’07 Sun City

What is QA in health care ? Quality assurance (QA) is a planned and systematic approach to monitoring, assessing and improving the quality of health services on a continuous basis within the existing resources. The BHF Southern African Conference 22-25 July’07 Sun City

A continuous QA process The BHF Southern African Conference 22-25 July’07 Sun City

Quality objectives need to be specific and measurable Targets for waiting time for acute hospital services. “80% of in-patient admissions to be within 6 months of diagnosis” Targets for compliance for TB control programmes. “90% of patients receiving TB treatment complete the full treatment” DOH Strategic Plan 50% reduction in infections; 80% on treatment The BHF Southern African Conference 22-25 July’07 Sun City

QA System Components Audit Quality control Standards setting Client satisfaction surveys The BHF Southern African Conference 22-25 July’07 Sun City

The cost of cutting wastage The BHF Southern African Conference 22-25 July’07 Sun City

Is it efficient to spend more on control? The BHF Southern African Conference 22-25 July’07 Sun City

The BHF Southern African Conference 22-25 July’07 Sun City

Example: Industrial Process The reduction in errors The BHF Southern African Conference 22-25 July’07 Sun City

The BHF Southern African Conference 22-25 July’07 Sun City

Efficiency curve The BHF Southern African Conference 22-25 July’07 Sun City

Optimal claims management procedures Reduce wastage Increase yields Transfer knowledge Influence inflation The BHF Southern African Conference 22-25 July’07 Sun City

Optimising Control The BHF Southern African Conference 22-25 July’07 Sun City

Optimising Control The BHF Southern African Conference 22-25 July’07 Sun City

Optimising Control The BHF Southern African Conference 22-25 July’07 Sun City

Financial Control The BHF Southern African Conference 22-25 July’07 Sun City

Medical Scheme Member Managed Care Organisation Providers Administrator Managed Care Organisation Providers Health Services Claim Payments Administration Services Managed Care Services Contributions Intermediaries Commission Employer Group Fees The BHF Southern African Conference 22-25 July’07 Sun City

Alignment of incentives Administration Nature of membership growth Customer satisfaction/query resolution Turnaround times Managed care The BHF Southern African Conference 22-25 July’07 Sun City

Administration measured on: Turnaround times Query resolution But what about Accuracy Error rates Compliance The BHF Southern African Conference 22-25 July’07 Sun City

Administration measured on: Turnaround times Query resolution But what about: Accuracy Error rates Compliance ACTIVITY EFFICIENCY The BHF Southern African Conference 22-25 July’07 Sun City

Managed Care Evolution Achieve savings modify behaviour reduce wastage Maintain optimal levels monitor maintain current research new technology Prevent under-servicing The BHF Southern African Conference 22-25 July’07 Sun City

Do risk sharing contracts promote greater efficiency? The BHF Southern African Conference 22-25 July’07 Sun City

The managed care backlash” Consolidation among risk takers and providers Preference for PPO models for choice (patients) and range (providers) Disease management programmes based on data and “influence” rather than denial Move to comparative analysis of quality and performance Consumerism demands access to transparent, comparative, evidence-based data Source: American Journal of Managed Care The BHF Southern African Conference 22-25 July’07 Sun City

Financial Management vs. Functional Management If your only strategy is price negotiation How much can you really reduce costs? The BHF Southern African Conference 22-25 July’07 Sun City

This depends on you being: Large enough to matter Able to negotiate Able to monitor The BHF Southern African Conference 22-25 July’07 Sun City

An avoided event costs nothing Focus on Price…. While cost is made up of Price x Frequency An avoided event costs nothing The BHF Southern African Conference 22-25 July’07 Sun City

Frequency is reduced via: Frequency is reduced by Eliminating unnecessary service Reducing errors Over-servicing is reduced by Appropriate incentives Errors are reduced through Quality Assurance The BHF Southern African Conference 22-25 July’07 Sun City

The Risk Management message Quality data means quality outcomes Modelling means control Better pricing Efficient use of capital Early warning mechanism Identifying outliers Structuring incentives The BHF Southern African Conference 22-25 July’07 Sun City

So what about non-healthcare costs? Structure fees to align incentives – in a continuous way Focus on efficiency rather than activity Appropriate measures Proper (independent) audit of outcomes Transparency Access to data The BHF Southern African Conference 22-25 July’07 Sun City