AN INDUSTRY IN CRISIS DAY HOSPITAL ASSOCIATION CONFERENCE
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1 AN INDUSTRY IN CRISIS DAY HOSPITAL ASSOCIATION CONFERENCE DR JENNI NOBLE 21 OCTOBER 2016
2 MEDSCHEME CLAIMS INCREASES:
3 2017 INDUSTRY CONTRIBUTION INCREASES 2017 Scheme increase Bestmed 10.30% Bonitas 11.90% Discovery 10.20% Fedhealth 12.70% Medihelp 10.90% Medshield 9.60% Momentum 11.00% Profmed 11.45% Samwumed 12.50% TopMed 12.10%
4 CASE STUDIES: SCHEMES HAVE MINIMAL SURPLUS = 2016 DEFICITS AND FALLING SOLVENCY Approx. 70% of claims related to in-hospital services At 11%, contributions will double in 7 years!
5 Overview of Cost Blow-out: 2016
6 CLAIMS BREAKDOWN: 2010 TO 2015
7 INCREASING HOSPITAL COSTS: DRIVEN MOSTLY BY INCREASED UTILISATION Jan-Jun YTD Admissions (Annualised) /15 Change 15/16 Change Admission Rate per Lives % 5.0% Average LOS % -0.5% Days per Lives % 4.4% Admissions increasing LOS stable Jan-Jun YTD Hospital Cost /15 Change 15/16 Change Average Cost per Day % 6.8% Average Cost per Admission % 6.2% Average Cost plpm % 11.5% Average Cost pmpm % 11.1% Avg cost near expectations Expect approx. 8% to 9%. Variance mostly due to increased admissions Reference: Medscheme all schemes, excl Polmed and Samwumed. Jan-Jun YTD.
8 TOP ADMISSION CATEGORIES DRIVING COSTS Top 10 Admission Categories that had a high impact on the change in hospital cost Admission Category 1 Spinal fusion w /w o instrumentation % % 0.4% 2 Knee Arthroplasty % % 0.3% 3 Mental Health Admissions % % 0.3% 4 Congestive Heart Failure % % 0.3% 5 Cardiac Catheterization/Angiogram % % 0.3% 6 Cataract procedures w /w o insertion of lens % % 0.3% 7 Cerebrovascular Disease % % 0.2% 8 Arthroscopy w /w o minor procedures % % 0.2% 9 Laparoscopy w /w o minor procedures % % 0.2% 10 Caesarean Delivery % % 0.2% Total of Top 10 Admission Categories Top 10 as a % of All Categories Admissions / 1000 lives Hospital Cost per Life per Month Impact on Cost % Change % Change Change % % 2.7% 21.2% 21.4% Reference: Medscheme all schemes, excl Polmed and Samwumed. Jan-Jun YTD.
9 INCREASES ARE WIDESPREAD ACROSS SCHEMES
10 INCREASES ARE WIDESPREAD BY AGE, GENDER, PROVINCE, HOSPITAL GROUP ETC.
11 Reasons for Cost Blow-out
12 DEMAND SIDE FACTORS RELATIVELY STABLE Burden of Disease Socio-economic factors Lifestyle Factors Anti-selection
13 AVERAGE PRINCIPAL AGE GRAPH STABLE TRENDS
14 DEMAND SIDE: SOCIO-ECONOMIC DETERMINANTS - Healthcare Costs High when Consumer Confidence Low Is consumer confidence a leading indicator of healthcare demand? Is consumer confidence also a leading indicator of supply induced demand? Reference: Medscheme analysis of claims increases pmpm from year before. Normalised results (claims increases after risk adjustment and removing medical inflation). BER survey
15 SUPPLY SIDE FACTORS Increasing hospital facilities and beds PMBs at cost Inefficiency and defensive medicine New technology and specialised drugs Fraud, waste and abuse Fragmented care
16 SUPPLY SIDE: INCREASING HOSPITAL BEDS 7 new hospitals since June % increase in beds from
17 SUPPLY INDUCED DEMAND: NEW HOSPITALS Limpopo region: New hospitals: Netcare Pholoso, Mediclinic Limpopo Day Clinic Competitors: Mediclinic Limpopo Pietermaritzburg region: New hospital: Life Hilton Competitors: Mediclinic Pietermaritzburg, St Annes West Rand region: New hospital: Netcare Pinehaven Competitors: Life Wilgeheuwel, Lenmed Randfontein
18
19 SUPPLY SIDE (AND LEGISLATION): PMB COSTS ESCALATING Cost plpm index: PMB vs non-pmb % Claims lines PMB (A) PMB cost plpm doubled since 2011 Non-PMB cost plpm increased much less PMB cost plpm increase owing to: o Increasing utilisation (A) o Increasing payment for PMBs (B) Late in 2011 Again in 2016 o Schemes with specialist networks fared better with respect to payment at cost Specialist PMB charge and paid rates (B) (schemes without specialist networks) Payment at cost starts
20 SUPPLY SIDE: THE RISE OF DEFENSIVE MEDICINE INCREASED INVESTIGATIONS
21 SUPPLY SIDE: THE RISE OF DEFENSIVE MEDICINE - MALPRACTICE INSURANCE PREMIUMS
22 SUPPLY SIDE: WASTE IN-HOSPITAL SPECIALIST EFFICIENCY Relative efficiency, in hospital, of physician practices in 2015 and 2016 (DRG-based)
23 SUPPLY SIDE: WASTE IN SURGICAL PROCEDURES (ICPS EXAMPLE SHOWING HOW MORE EFFICIENT CARE CAN BE DELIVERED) Significant waste in many surgical procedures: longer lengths of stay and readmissions longer theatre time unnecessarily high levels of care Hip and knee replacement global fee case study (ICPS): METRIC GLOBAL FEE CASES (n=174) OTHER CASES (n=3986 ) Average length of stay (Days) Hip Arthroplasty Knee Arthroplasty Average theatre time (mins) Hip Arthroplasty Knee Arthroplasty High care utilisation (% cases) Hip Arthroplasty Knee Arthroplasty 90 day revision rate (per 1000 cases) Hip Arthroplasty Knee Arthroplasty % 2% % 70% 22 10
24 SUPPLY SIDE: FRAUD HOSPITAL CASH PLAN INSURANCE POLICIES DRIVING HOSPITAL ADMISSIONS Identify abnormal admission rates using risk adjusted claims data Identify aberrancy from large insurers 15 of 22 doctors identified in claims and insurer data as suspicious in KZN Admitting to 9 hospitals beneficiaries (2015) medical admissions * bed days in hospital* R150 million+* *not all known to be fraud
25 SUMMARY Supply induced demand Inefficiency Fraud, waste and abuse In-hospital allied health workers Unaffordable increases in admissions into hospitals Resulting in: Severe pressure on affordability Negative impact on sustainability of private healthcare
26 THE PERSON ON THE STREET IS BLEEDING
27 WHAT OF DAY CLINICS? % increase in spend 2014 to to % 26%
28 WHICH PROCEDURES ARE DRIVING INCREASES? Impact % of total cost increase Base DRG rank 2014 to to Cataract Procedures 63.6% 26.0% 2 Dental Extractions and Restorations -13.6% 23.1% 3 Tonsillectomy and/or Adenoidectomy (Child) -2.8% 6.0% 4 Circumcision -1.8% 5.6% 5 Knee Arthroscopies 3.0% 4.6% 6 Spinal Disorders 7.0% 3.0% 7 Other Eye Procedures 34.4% 2.4% 8 Diagnostic Curettage or Diagnostic Hysteroscopy -4.3% 2.2% 9 Minor Skin, Subcutaneous Tissue and Breast Procedure -3.2% 2.1% 10 Hand Procedures 0.5% 2.0% 11 Cystourethroscopy -1.1% 1.9% 12 Laparoscopic Removal of Lesions and Adhesions 2.4% 1.8% 13 Corneal, Scleral and Conjunctival Procedures 2.5% 1.7% 14 Other Disorders of the Eye 1.5% 1.7% 15 Eyelid Procedures 1.1% 1.6% 16 Tonsillectomy and/or Adenoidectomy (Adult) -1.6% 1.6% 17 Retinal Procedures -2.9% 1.5% 18 Myringotomy -1.8% 1.4% 19 Other Male Reproductive System Procedures -1.1% 1.3% 20 Endoscopic and Laparoscopic Procedures For Female 1.0% 1.3%
29
30 PARADIGM SHIFT As an industry we must: Manage utilisation Coordinate care Control supply induced demand Procure more efficiently Manage fraud, waste and abuse A paradigm shift is required
31 PARADIGM SHIFT SOME INITIATIVES Electronic health records GP referral to specialists Published profiling (hospital, doctor) Hospital and facility licensing and access Stronger incentives to treat in appropriate setting Zero tolerance to fraud, waste and abuse Alternative reimbursement models
32 Thank you!
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