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Seeking the best service at the right priceMANAGED health care in South Africa - adapted from programmes which first appeared in the US in the 80s - has been clouded by controversy and seldom has a health-care issue generated so much debate. The system is defined in the hospital industry as the development of cost-effective packages and products which are negotiated with funders in return for volume of patients referred to specific hospitals or groups of hospitals. Dr Herc Hoffman, medical director of Sanlam Health, says it has been clear for some years that the present fee-for-service system - largely uncontrolled and inefficiently managed - is no longer sustainable. He points out that before the advent of managed care, South Africa was the only country in the world still totally wedded to a fee-for-service system - with its absence of both proper management systems and cost structures and a distorted emphasis on pricing. Hoffman, until recently a doctor in private practice, was chairman of Masa's private practice committee and is still on Masa's board of trustees and its federal council. He says that because doctors were paid fees for services which were sometimes as much as three times below the medical inflation rate, overservicing was often the result. Doctors would not only give more consultations than necessary but would use expensive and sophisticated equipment that was often inappropriate to the patient's treatment. Sales representatives often capitalised on this situation by selling "gimmicks" to doctors for use in treatment or diagnosis to increase revenue. Before managed care there had not been effective control over this type of unnecessary utilisation. The deregulation of the Medical Schemes Act in 1993 was one of the measures which paved the way for the introduction of managed care. Despite this, says Hoffman, many medical aid schemes are still primarily claims processors - increasing premiums or limiting benefits to enable them to meet their bottom line. Until five years ago, members of medical aid schemes were enjoying comprehensive cover. But despite increases in annual premiums of between 15% and 30%, members in reality have been receiving less in benefits. Employers' contributions were also increasing - precipitating a crisis in the system which needed to be overhauled if the entire fee-for-service system was not to implode on itself. Sanlam Health, which was formed last year, contracts with more than 108 hospitals and more than 1 000 individual doctors. It has a co-operation agreement with the SA Managed Care Coalition - the body representing the Independent Practitioners' Associations. It has contracts with major managed-care hospital networks such as Clinic Holdings, Apex, and NHN (National Hospital Network) and is negotiating with specialists in a bid to secure their involvement. Doctors and specialists say managed health care cannot get off the ground unless trust is built between doctors and managed-care organisations, medical aid schemes and hospitals. Dr Coen Groenewald, chairman of the independent Wilgeheuwel Hospital in Honeydew outside Johannesburg, says: "This is the most critical aspect. Only then can the managed-care companies start to talk about the technicalities of implementation, such as per diem rates (whereby hospitals are paid at an inclusive daily rate). "For hospitals to survive on a per diem rate, they need the co-operation of doctors in cutting costs - by making do with reusable instruments instead of disposables, for example." Dr Groenewald warns that if the system is forced upon doctors - as he says was the case with the most recent RAMS scale of benefit fees - a stalemate will result. He says the size of the health-care industry is much bigger than people realise and that the private health-care industry alone generates 5% of SA's GDP. "To restructure the present fee-for-service system to a managed-care process within six months is not possible," he says.
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