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The Regula*on of Healthcare In SA
Overview
• History of regula*on in healthcare • Medical Schemes Act • Medicines Act • Na*onal Health Insurance • Interna*onal Benchmark Pricing • What’s it all mean • How will it effect you • What’s happening to fix it
History of Regula3on
• Medical Schemes Act – minimum reserve requirements – PMB’s = minimum benefit requirements – community ra*ng – trustees personally responsible – beJer repor*ng requirements – Managed care provisions – Broker commission regulated
History of Regula3on
• Medical Schemes Act Broker Commission Regulated – Previously unregulated – Each scheme applied own structure – First year commission twice second year commission – Churning was commonplace (what a surprise!) – NOW
• Capped at lessor of 3% and R65pm • Low income plan = R12pm • May get your petrol and telephone costs back in 3 years • Low growth – (what a surprise)
History of Regula3on
• Medical Schemes Act Managed Care Regula3ons Onus of proof is on the MHC company to show that interven3on is evidence based
Obliged to provide you with documenta3on on which decisions are based
History of Regula3on
• Medicines Act – Transparent pricing – Elimina*on of perversity – Rebates outlawed – Single exit price – Once off price reduc*on – Prospec*ve rice controls
• Dispensing Fees
History of Regula3on
• That was just the start • More recently – Na3onal Health Insurance – Regula3on of Hospitals (and specialists)?
– Interna3onal Benchmark Pricing – Pharmaco-‐economic requirements
8
Growth in non-‐healthcare (administra3on/managed care), hospital and specialist cost has outpaced Medical Infla3on in recent years
1 Medical Infla*on, as defined by Sta*s*cs South Africa: Includes doctors fees, prescrip*on medicines, hospital fees and contribu*ons to medical schemes Source: Sta*s*cs South Africa, SA Reserve Bank, Council for Medical Schemes Annual Reports
75
150
225
300
1999 2000 2001 2002 2003 2004 2005 2006
CPIMedical InflationMedicinesGPsSpecialistsHospitalsAdministrators
Indexed (1999=100)
1
Healthcare Cost Drivers in Perspec*ve
Non-‐Healthcare Expenditure Driving Private Healthcare Costs
Meds
Non Healthcare
Historical View Of Healthcare Costs In SA Private Sector
Ref: Stats Online 07/11/07 & Oanda.com Absolute Medicines Expenditure For 2009 Is At 2001 Levels Despite Price Increases And Membership Growth OF Medical Schemes
Source: CMS Report 2009/10
Medicines
CMS Research Findings
Game on ……
• Hospitals are the most important contributor to cost escala*ons
• No evidence to support hospitals claims that this is due to legi*mate reasons
• Cost increases blamed on – Overservicing, contrary to interna*onal trends – Market power – Overpricing – Specialists – not pa*ents – been seen as the client
CMS Research Findings
• Specialists are significant driver of costs • Problem is “systemic” • Pathologists and radiologists highlighted • Increases due to…
“the elimina*on of central nego*a*on by schemes without elimina*ng the collusive opportunity by specialists”
CMS Recommenda*ons
Please note – NOT Regula*ons But CMS Proposal
• Central bargaining for medical schemes • Removal of all ver*cal rela*onships • Dilu*on of market power…. preferen*al licensing of – Non-‐profit hospitals – Hospitals with diverse ownership – Hospitals that employ their own specialists
Healthcare Regula3on Scorecard
• Medical Schemes • Managed Care Companies • Brokers • Pharma Industry • Administrators – warned -‐ self review • Hospitals – proposed • Specialists ?? • Who’s next – Healthcare industry – Pharma again
NHI – The Big SA Healthcare Debate
Apologies for any gross over-‐simplifica3on that may occur
Na3onal Health Insurance
Na*onal Health Insurance – The Big SA Healthcare Debate
Apologies for any gross over-‐simplifica3on that may occur
• Why NHI?
• What has been proposed?
• Feasibility of proposals • What’s happened since the first NHI proposal was “leaked”
The Current South African Healthcare Market -‐ Inequity & Inefficiency Of Healthcare Resources
Government Challenge Is To Allocate Scarce Healthcare Resources More Equitability Across Sectors, Various Disease Areas & Various Healthcare Delivery Areas
62% Of Healthcare Resources
38% Of Healthcare Resources
Access To a Well Resourced Healthcare System & Innova3ve Medicines
Access to Overburdened
Under Resourced Healthcare System
and Limited Innova3ve Medicines?
85% of Popula3on 39 million lives
16% Of Popula3on 8 million lives
MARKET
46.9 Million South Africans
R 9 500 Per Life Per Annum
R 1 500 Per Life
Healthcare Spend
Source: HST Trust Report 2007
6x Diff. Healthcare Resources
Source: IMS TPM Dec 08
IMS Public Audit Sept 08
Transforming Healthcare Systems is Difficult
“Now, these are the facts. Nobody disputes them. We know we must reform this system. The ques3on is how. “ President Obama Sept 9 2009
The document that caused all the fuss.
Author : Dr Olive Shisana
No Olive Branch From Shisana
• One centrally administered NHI fund
• Choice of provider – private and public -‐ free at point of service
• Comprehensive range of primary care and hospital cover
• DHA’s will contract with public hospitals and private prac*ces on a capita*on basis
• Medical schemes prevented from funding services covered by NHI
• Medical schemes can offer top-‐up services only
ANC NHI Commibee
NHI Rhetoric
“These capitalist vultures, which thrive on peoples illness to make huge profits, have to be taught another lesson, as was the case in
the recent April 22 elec*ons’
NHI Rhetoric
the capitalist vultures in the private health care sector would leave no stone unturned to
oppose the introduc*on of a Na*onal Health Insurance Scheme (NHI) for the benefit of the overwhelming majority of the workers and the
poor of our country.
Sharpening The Blade
Dr Blade Nzimande
SACP Secretary General Umsebenzi Online 17 June 2009
The Key Ques*on
What Could NHI Cost?
Efficiency assumption
Medical Scheme Prescribed Minimum
Benefits (PMBs)
Basic Benefits: PMBs+ Primary
Care
High Cost Benefits: PMBs+
all In-Hospital
Core Benefits: PMBs+ Primary
Care+ In-Hospital
Fully Comprehensive:
all healthcare benefits
Medical schemes efficiency: 100% of cost 156 251 224 319 334
Moderate improvement: 80% of cost 125 201 179 255 267
Presumed public sector cost: 70% of cost 109 176 157 223 234
Staff model efficiency: 50% of cost 78 126 112 160 167
Cost in Rbn (2009 terms) of Benefit Package Offered by NHI
Preliminary work. Excludes admin and MHC costs.
Source: Servaas vd Berg and Heather McLeod, August 2009
What Could The Costs Be?
What Could NHI Cost?
Efficiency assumption
Medical Scheme Prescribed Minimum
Benefits (PMBs)
Basic Benefits: PMBs+ Primary
Care
High Cost Benefits: PMBs+
all In-Hospital
Core Benefits: PMBs+ Primary
Care+ In-Hospital
Fully Comprehensive:
all healthcare benefits
Medical schemes efficiency: 100% of cost 156 251 224 319 334
Moderate improvement: 80% of cost 125 201 179 255 267
Presumed public sector cost: 70% of cost 109 176 157 223 234
Staff model efficiency: 50% of cost 78 126 112 160 167
Cost in Rbn (2009 terms) of Benefit Package Offered by NHI
Preliminary work. Excludes admin and MHC costs.
Source: Servaas vd Berg and Heather McLeod, August 2009
Any Op*on Will Cost More Than We Currently Spend, Unless Costs Are Cut By 50%
How Much Money Do We Actually Have?
R48bn
Health Budget
NHI Tax 3%
Tax Subsidy Medical Aids
R79bn
R10bn
R21bn
Total
Need Versus Have?
R78bn
R334bn
R47bn
What we’ve got
What we need
What we could get (maybe)
AFFORDABILITY GAP
Scenarios for Shortage of GPs
-‐20,000
-‐15,000
-‐10,000
-‐5,000
0base year
20062007
20082009
20102011
20122013
20142015
20162017
20182019
2020
General practioners
No change
S1 -‐ 5% per annum from 2009
S2 -‐ 10% per annum from 2009
S3 -‐ 10% per annum from 2009 with 4,000 attracted to SA in 2009 and 2010
S4 -‐ 10% per annum from 2009 with 4,000 attracted to SA in 2009 and 2010 and exits managed
Source: Van den Heever DBSA Process 2008
Inclusion of private doctors = key to success
Which Way Forward? Pravin Gordhan Budget Speech 2010 “ we will con*nue to broaden the use of public private partnerships in the health sector, in par*cular to improve our hospital system”
“Alongside longer term reforms to the financing of healthcare, a closer partnership between the public and private health care system is a prerequisite for the introduc*on of a NHI system”
Plus the tax subsidy on Medical Aid contribu*ons was
INCREASED
Which Way Forward? Pravin Gordhan Budget Speech 2011 The phasing in of Na*onal Health Insurance will require substan*al reforms to
address imbalances across the public and private sectors and expand health professional training.
We will consider and consult on op*ons for mee*ng the funding requirements …
Plus the tax subsidy on Medical Aid contribu*ons was INCREASED again
The Way Forward? • Evolu*on not revolu*on • Use the exis*ng Medical Scheme structure as a poten*al vehicle
• Press ahead with the Risk Equalisa*on Fund • Introduce mandatory cover in a phased in approach • Reduce the cost of PMB’s • Possibly exempt certain forms of Medical Aids (LIMS) from certain Acts e.g. SEP
• ? Have two levels of provider contracts • Show tangible results from partnerships with the private sector
• Don’t re-‐create the wheel – make it more efficient • Precedents exist
Interna3onal Benchmark Pricing
• Govt GazeJe No:33878, 17 Dec 2010 • Concept – Benchmark medicine prices in SA against the prices in other countries
– Eliminate unfair price distor*ons – Apply a fair and reasonable process to ensure price adjustments are not unfair
IBP – The Devil’s In The Detail
• How will benchmarking be done • What countries will be benchmarked? • Methodology for benchmarking? • What products? • Account for local structural differences? • Exchange rate fluctua*ons?