1. Integration of Service Delivery to SASOG/GMG Members March 2007

2. AGENDA Welcome & Introduction- Prof Franco Guidozzi GSK Overview- Sue King Proposed Integration of SASOG & GMG Services - Dr Chris Archer Healthcare Analysis- Casper Venter Malpractice Insurance- Paul Lewis Proposal – The way forward

3. OBJECTIVES New legislative and economic threats facing Gynaecology & Obstetrics / Private Healthcare Unify Gynaecology & Obstetrics in South Africa under auspices of SASOG Improved Service Delivery contracted by SASOG to - GMG - HealthMan - E2 Solutions - Other

4. 1. Historical Background Analysis

5. SPPCGPPPC Chair 3 Consulting 3 Surgeons 1 Pathology Anaesthetics SAMA STRUCTURE

6. Historical Background Analysis SASOG Representative Association Approx. 500 Members Focus on - Academic - Ethics - Medico Legal

7. Historical Background Analysis GMG Before SHCJV Formation of GMG GMG representation on SASOG SASOG representation on GMG SAMA representation

8. Gynaecology Management Group 10 years old Structured as a public company Functions as a Managed Service Organization (MSO) Membership of 250 Funding from Member contributions and pharmaceutical sponsorships

9. Why the need for change? Enormous challenges & Threats –Appropriate response from Private Practice –Cannot leave it to SAMA Unity in the Gynaecology Community GMG will continue – no debt Better representation for O & G Unfair burden on GMG members Limited funding limits effectiveness Need to employ professional consultants

10. 2. Threats Facing Gynaecology & Obstetrics in Private Practice

11. Reforms originating from Government – objectives  Enabling legislation nearly complete  Ensuring health care services for all  Ensuring equity in the delivery of health care services  Move to an integrated National Health System – Social Health Insurance for the future  Public Private Partnership initiatives are essential Government Initiatives - Legislative

12. Private Practice Key Legislative and other Issues Facing Private Practice Medical Schemes Act of 1998 National Health Reference Price List 2007 Risk Equalisation Fund 2007 Circular 8 of 2006 to be implemented 2008 Management of PMBs, CDLs, DSPs GEMS, LIMS, REF Basic Benefit Package Amendments to Health Professions Act Increased Malpractice insurance costs Increased Litigation Hospitals taking control Lack of new students specialising NHRPL Processes Premier Plan DSP arrangement

13. 4. Proposed Integration of SASOG & GMG Services

14. Where should a PPU be situated? Inside SASOG? Outside SASOG?

16. 5. Funding Member contributions Pharmaceutical interactions – Grants – Sponsorships

17. PROPOSED FEE STRUCTURE FOR MEMBERS 1800 – Full-time Private Practice 1200 – 1 st & 2 nd year Full-time Private Practice 1200 – Academic + RWOPS 450 – Full-time Academic 100 – Registrars

18. The Cost/benefit Relationship Costs: – GMGR2400 – SASOGR360 GMG Value add: – R15,638 per month – 651% return on investment

19. 6. Healthcare Analysis Gynaecology in Perspective Government initiatives – Legislative Funding Issues – NHRPL 2007

20. ECONOMICS OF HEALTHCARE 2000 – R3932001 – R4792002 – R5332003 – R568 2004 – R614Average – 15.52% p.a.2005 – R698

21. ECONOMICS OF HEALTHCARE 1997 – R20 254 9681998 – R23 669 4461999 – R28 747 1532000 – R31 159 571 1997 – 2005 = 168% Increase (20.94% p.a) 2001 – R36 977 7842002 – R43 238 4122003 – R48 635 7372004 – R52 210 917 2005 – R54 192 476

22. Billion Economics of Health Care 2001 - 2005 Admin Expenses14.36% Medical Specialists12.74% Clinical Support13.96%

23. Medical Specialists R/ Million Year

24. Economics of Healthcare BENEFIT PAYOUT (R’000) Hospital Increase - 95.73% -Average 19.15% Pharmaceutical Increase - 15.53% -Average 3.12% Pharmaceutical 2004 – 2005 - (-9.72%)

25. MEDICAL SCHEME Financial Review – Premium Income 2005 Total: R25,135 million - 46.4%

26. ECONOMICS OF HEALTHCARE IMPACT OF CIRCULAR 8 OF 2006 Non-PMB hospital & other common benefits PMB Benefits Option 1 Option 2 Option 3 Supplementary Benefits Common Benefits

27. 7. Gynaecology NHRPL SUBMISSIONS TO CMS 2007

28. RAND CONVERSION FACTOR (O&G) Labour RCF:R9.20 p.m. (Based on R729 405 p.a.) Overhead RCF:R8.49 p.m. (Incl. equipment cost) ROI RateR1.07 p.m. Total RCF:R18.74 Total RCF (Vat Incl.)R21.38 x 30 minutes 30 Minute ConsultR641.60 NHRPL 2007

29. Gynaecology

30. Total: R731,553 Gynaecology

31. SURGICAL Rand Conversion Factor (Incl. VAT) R ENT19.54 GYNAECOLOGY21.40 OPHTHALMOLOGY24.26 UROLOGY19.11 NEUROSURGERY20.28 ORTHOPAEDICS22.38 (AVERAGE)21.16 NON-SURGICAL PHYSICIANS19.06 PAEDIATRICS19.49 PSYCHIATRY17.00 (AVERAGE)18.52 SPECIALIST GROUPS RAND CONVERSION FACTOR

32. TARIFFS – THE WAY FORWARD Awaiting changes to the National Health Act – submissions by 28 February 2007 Chris Archer to re-do coding structure - logical/anatomical sequence - assign time - assign post-op time - assign complexity Obtain hospital data Cost studies to be re-done? Review equipment utilisation

33. 8. Service Offering to Members

34. Service Offering to Members Academic Ethical CPD Medico Legal Healthcare Interactions Communication Commercial

35. Service Offering to Members HealthCare Interactions HealthMan/GMG interacts and facilitates between various stakeholders in the health care market: -Private practitioners -Regional & National IPAs -SAMA & various Statutory Bodies -Medical Schemes -Administrators -Managed Care Organisations Summary of Key offerings -Coding & relative value units -Practice costs & tariffs -PMB disputes & resolution -ICD10 coding structures

36. Service Offering to Members Commercial Offerings HealthMan has established relations with a number of alliance partners that make their services available at preferential tariffs: Alexander Forbes (Malpractice) Citadel (Wealth Preservation) Prosper Financial Services (Investments, Life & Risk Insurance & Employee Benefits) Medigro (Short Term Insurance) Sanlam (Bond Finance) Wesbank (Motor Vehicle Finance) VICIFIN (Bond Originator & Commercial Finance) Absa (Credit card terminals) NuDebt ( Debt collection via ACB’s ) Payroll service HealthFocus Practice Management system

37. Service Offering Communications Website – Design / build, maintain, host and secure – see next slide Bulk E-mail – with auto responses Bulk SMS service Outcome based registers Prescription pad facilitation Internet Access –Dial up / ADSL Electronic Journals

38. Proposal – The way forward

39. QUESTIONS