The BHF Southern African Conference 22-25 July’07 Sun City Squaring the Circle HEALTHCARE COSTS & QUALITY “A Managed Care Perspective” PRESENTED BY: Charles Harebottle Managing Director, MSO The BHF Southern African Conference 22-25 July’07 Sun City

Hospital Cost Inflation Squaring the Circle The BHF Southern African Conference 22-25 July’07 Sun City

The BHF Southern African Conference 22-25 July’07 Sun City MERC E-CLASS 1973 Squaring the Circle The BHF Southern African Conference 22-25 July’07 Sun City

The BHF Southern African Conference 22-25 July’07 Sun City MERC E-CLASS 2006 Squaring the Circle The BHF Southern African Conference 22-25 July’07 Sun City

The BHF Southern African Conference 22-25 July’07 Sun City TATA INDICA Squaring the Circle The BHF Southern African Conference 22-25 July’07 Sun City

The BHF Southern African Conference 22-25 July’07 Sun City Managed Care Costs Squaring the Circle 2002 - “Managed care costs went up to R986 from R885” 2003 – “Managed care costs went down to R966 from R986” 2004 – “Managed care rose by 14,2%” 2005 – “Managed care expenses rose by 12,6%” 2006 – “Managed care fees increased by 2%” The BHF Southern African Conference 22-25 July’07 Sun City

Actual Managed Care Inflation at a Per Beneficiary Level Squaring the Circle SCHEME Percentage   Scheme A 20.83% Scheme B 4.53% Scheme C -1.68% Scheme D 19.56% Scheme E 12.04% Scheme F -2.90% Scheme G 88.75% The BHF Southern African Conference 22-25 July’07 Sun City

Actual Managed Care Inflation at a Per Beneficiary Level Squaring the Circle SCHEME Percentage   Scheme A 20.83% Scheme B 4.53% Scheme C -1.68% Scheme D 5.50% Scheme E 12.04% Scheme F 0.51% Scheme G 5.54% The BHF Southern African Conference 22-25 July’07 Sun City

The BHF Southern African Conference 22-25 July’07 Sun City HBM Service Inflation Squaring the Circle 2000 to 2005 -12% in absolute terms The BHF Southern African Conference 22-25 July’07 Sun City

The BHF Southern African Conference 22-25 July’07 Sun City Workload Increase Squaring the Circle 27% increase in number of medical protocols to deal with new technology or changed practice. SEP = 4 fold increase in hospital claims audit. ICD10 = 25% increase in talk-time. Introduction of additional cost control measures increased in pre-authorisation contacts per event 3,1 to 5,5. The BHF Southern African Conference 22-25 July’07 Sun City

The BHF Southern African Conference 22-25 July’07 Sun City What of Quality Squaring the Circle Patient care Risk management results Client service The BHF Southern African Conference 22-25 July’07 Sun City

The BHF Southern African Conference 22-25 July’07 Sun City Hospital Inflation 2005-06 Squaring the Circle Industry = +12% MSO Universe = 3% BUT Individual scheme experience from 23% to 1%. The Cost Drivers: Utilisation = -11% Cost per Incident = +15% Highest Inflation Scheme: Utilisation = +12% Cost per Incident = +9% The BHF Southern African Conference 22-25 July’07 Sun City

Hospital Inflation 1st Qtr 2006 - 2007 Squaring Hospital Inflation 1st Qtr 2006 - 2007 the Circle Industry = 15%+ MSO Universe = 9% Highest Scheme = 26% Lowest Scheme = 1% THE COST DRIVERS Utilisation = 3% Cost per Incident = 6% The BHF Southern African Conference 22-25 July’07 Sun City

The BHF Southern African Conference 22-25 July’07 Sun City In Summary Squaring the Circle Quality foundation IP Clear, auditable record of action Clear understanding of scheme and challenges Consistent innovation in response planning Quantifiable results The BHF Southern African Conference 22-25 July’07 Sun City