1. Towards cost-effective delivery Within an insurance system

2. Health Insurance: cost drivers
Technology
Billing arrangements (fee-for-service)
Trust-based relationships between patients & professional practitioners
Licensing & educational standards

3. Medical scheme: cost trends
 Benefit category
% annual growth in excess of CPIX
1997 to 2007
Private hospital
6.6
Medicine
0.5
Medical specialists
5.4
Other benefits
3.2
Non-healthcare
11.7
GP & GP-coordinated care
4.3
Total benefit expenditure
5.0
Total contributions
5.9

4. Medical scheme: cost drivers
Patient days
Growth in “procedure” inpatient cases
intervention radiology, endovascular surgery, computerised simulation scanning, prostheses (joints), non-invasive endoscopic surgery
Billing in excess of NRP (PMB & non-PMB)
PMB “code gaming”
Number of scripts; items per script
Medicine price difference (State v Schemes)

5. Cost strategies: International
In-the-box innovation coordinate patient demand, specialised care-giver teams, bulk discounts, eliminate spare capacity
Prioritise benefits clinical efficacy, emphasise primary care
Level of care access management
Eliminate perverse billing incentives

6. Demand curve based on a 10% affordability threshold
(People that don’t have cover ~ 41m, not cumulative)
Thousand people
Average Contribution per Beneficiary per Month
Using a 10% affordability threshold, 65% of people without cover have a price point of R50 per beneficiary per month or lower
Source: GHS 2007
* Affordability is based on medical aid contributions of at most 10% of household income

7. Cost strategies: South Africa
Expenditure (pbpm: 2008)
Polmed
PHMS
LIMS
CIF
Hospitals
225
179
Specialists 60 58
GPs /primary healthcare 88 45 41 31
Medicines
138 80 36 2
Dental 30 20 7 5
Optometry 8 12 1
Radiology 28 25
Pathology 35
Maternity benefit (supplement to wages)
HIV/Aids/health promotion 4
Emergency transport
Administration
29 
 46
Total costs before reserves & marketing
587
453
120 53

8. Cost strategies: South Africa
Mining industry:
GPs employed by the medical scheme
GPs manage referrals to specialists
Mines own & manage facilities
Formulary-based procurement of medicines
Work place health promotion & preventative care coordinated with curative health delivery

9. Cost strategies: South Africa
Clothing industry:
Prioritised benefits (primary care)
Primary care clinics
Contracted GPs
Medicine formulary
Partner with public sector for chronic medicines
Referral to selected public sector facilities (diagnostics, admissions)

10. Discussion points
Minimum benefits
Technology (selection)
Structuring professional practitioner teams
Reimbursement
Centres of excellence