Day Hospitals can with the right support from the Departments of Health, make a substantial contribution towards the curtailment of hospital costs

Day Hospitals can with the right support from the Departments of Health, make a substantial contribution towards the curtailment of hospital costs

SA PRIVATE HOSPITAL INFLATION CONSISTENTLY EXCEEDS CPIX Private Hospital inflation, as per Discovery Health, has been13% calculated on a compound basis over the past 5 years. This is more than double the compound CPIX of 6%. The cost of hospitalisation is the main driver of our healthcare inflation. The effect of this driver, if not reduced, will have a far reaching impact on the medical scheme industry.

MOVEMENT OF MEDICAL SCHEME MEMBERS Medical Schemes have experienced a downward trend in membership movement from higher cost options to lower cost alternatives

MOVEMENT OF MEDICAL SCHEME MEMBERS Downward trend will continue and impact on insured beneficiaries unless medical inflation can be curtailed

Movement of Medical Scheme Members

International trend Population (in millions) Number of private hospitals Number of day-surgery facilities Total of all facilities United States 320 6 700 6 000 12 700 Australia 24 280 300 580 South Africa 54 235 50 285 South Africa is lagging far behind the rest of the western world when it comes to day hospitals.

60% Potential growth of day surgery as a percentage of total surgical interventions in South Africa 50% 40% 30% 20% 10% 0% 2015 2025 2035 2045 Current Market Share 7% Potential growth

MODERN DAY HOSPITAL THEATRES INCORPORATE TECHNOLOGICALLY ADVANCED EQUIPMENT

Modern Day Surgery Theatre

PROPOSAL IN TERMS OF WHICH HOSPITAL INFLATION CAN BE CURTAILED The objective should be to achieve a medical inflation rate equal to or close to CPIX Greater utilisation of day hospitals for short procedure surgery can make a substantial impact The general perception that day hospitals are not important should be changed based on overseas experience. These facilities can make a powerful contribution by Helping with the delivery of quality cost effective services, bearing in mind that at least 75% of all surgical interventions can today be attended to in day hospitals.

Methods used to prevent or lessen competition The larger hospital groups use cost shifting techniques to channel day patients away from the more cost effective day hospitals, whilst securing higher charges for their longer stay patients. Prof A van den Heever stated during June 2012: The significant market power wielded by private hospitals permits them to merely convert one revenue stream into another with no market constraint provided by medical schemes.

Anti competitive behaviour resulting from preferred and designated Provider contracts concluded with the larger hospital groups Preferred provider agreements concluded to the detriment and exclusion of Day Hospitals. Patients who prefer to be treated in a Day Hospital are faced with significant out of pocket payments as a result of these agreements. Co- and top-up payments should be done away with or alternatively be structured to make the use of cost effective day hospitals more attractive.

Departments of Health need to change the licencing consideration relating to Day Hospitals Licence applications submitted by day hospitals are evaluated based on the number of existing beds in a catchment area instead of critical economic considerations. An understanding of the scope of day surgery is of critical importance for health policy makers. A change of mind-set is required in order to create a competitive footprint consisting of day hospitals. New licences should in the first instance be granted to independent service providers instead of the existing larger hospital groups.

LESSONS LEARNED FROM THE UK Day hospitals are developed and utilised on NHS public hospital sites. Day hospitals should be considered as a cost effective alternative when it comes to public private partnerships. Day hospitals, when utilised correctly, can help with the cost effective implementation of National Hospital Insurance (NHI). The Day Hospital Association of South Africa is in support of the Governments planned NHI initiative.

Thank you for giving DHASA an opportunity to present