Regional Variation in healthcare costs in South Africa Linda Kemp - PowerPoint PPT Presentation

Regional Variation in healthcare costs in South Africa Linda Kemp Shirley Collie

Agenda Private healthcare insurance in South Africa The argument for analysing healthcare consumption regionally Methodology applied to obtain South African healthcare drainage districts Methodology to calculate disease burden index Are South African regional healthcare consumption patterns explained by the underlying burden of disease and access to benefits? • Cost of death in the last six months by region • Cost efficiency by region • Supply of beds per region • Are the regional supply of beds commensurate with the underlying demand • Is there a relationship between competition and the variation in supply? Concluding remarks

Agenda Private healthcare insurance in South Africa The argument for analysing healthcare consumption regionally Methodology applied to obtain South African healthcare drainage districts Methodology to calculate disease burden index Are South African regional healthcare consumption patterns explained by the underlying burden of disease and access to benefits? • Cost of death in the last six months by region • Cost efficiency by region • Supply of beds per region • Are the regional supply of beds commensurate with the underlying demand • Is there a relationship between competition and the variation in supply? Concluding remarks

Private healthcare insurance in South Africa Public healthcare available to all with cost in line with ability to pay • Can opt for private cover through medical aid Legislative framework for medical aids: • Open enrolment, community rating • No risk equalisation or mandatory enrolment Schemes must deal with selective joining and withdrawals • Different risk profiles for different schemes and benefit options 6.5% Total Population Coverage: Insurable Families 6.0% Current Voluntary Medical Schemes 5.5% Mandatory from Tax Threshold 5.0% Mandatory Formal Wage Earners 4.5% 4.0% Percentage of People 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% U… 10… 15… 20… 25… 30… 35… 40… 45… 50… 55… 60… 65… 70… 75… 80… U… 10… 15… 20… 25… 30… 35… 40… 45… 50… 55… 60… 65… 70… 75… 80… 1-4 5-9 85+ 1-4 5-9 85+ Gender and Age Bands Female Male Reimbursed on a fee for service basis Private healthcare expenditure per insured life has increased 3-4% above inflation for several years There are long terms concerns regarding the affordability and sustainability of private healthcare given the regulatory environment

Private healthcare insurance in South Africa South Africa • Medical schemes are not-for-profit funders of private healthcare services • 8.7 million lives were covered by medical schemes at end of 2012 Discovery Health Medical Scheme • Roughly 2.5 million lives under administration • Fastest growing open medical scheme (average growth of 5.5% p.a. since 2005) • More than half the lives have been on the scheme for five years or longer • Claims data provides opportunity for deep analysis

Agenda Private healthcare insurance in South Africa The argument for analysing healthcare consumption regionally Methodology applied to obtain South African healthcare drainage districts Methodology to calculate disease burden index Are South African regional healthcare consumption patterns explained by the underlying burden of disease and access to benefits? • Cost of death in the last six months by region • Cost efficiency by region • Supply of beds per region • Are the regional supply of beds commensurate with the underlying demand • Is there a relationship between competition and the variation in supply? Concluding remarks

The argument for regional healthcare analysis Patients access local healthcare for the majority of their needs • Secondary and tertiary services may be further away Patterns of how general practitioners choose to refer to specialists and hospitals allows for consideration of a region as a healthcare system Dartmouth Atlas Project considers variations in how medical resources are distributed and used in the US based on Medicare data • Improve their understanding of the efficiency and effectiveness of health care systems Regional variation in cost of providing healthcare can exist due to disease burden, access issues, technology etc. Where variation is not due to disease burden: Dartmouth atlas promotes learning from regions that have attained sustainable growth rates and consumption levels

Agenda Private healthcare insurance in South Africa The argument for analysing healthcare consumption regionally Methodology applied to obtain South African healthcare drainage districts Methodology to calculate disease burden index Are South African regional healthcare consumption patterns explained by the underlying burden of disease and access to benefits? • Cost of death in the last six months by region • Cost efficiency by region • Supply of beds per region • Are the regional supply of beds commensurate with the underlying demand • Is there a relationship between competition and the variation in supply? Concluding remarks

Obtaining South African Drainage Districts Patients allocated to a district based on where they access the majority of their primary care Hospital referral regions defined as where patients receive the majority of major cardiovascular and neurosurgery care Hospital service areas are defined as areas where at least 60% of policyholders receive cardiovascular and neurosurgery care within the region Adjacent magisterial districts are collapsed into the hospital service areas where the majority of patients receive their care

Obtaining South African Drainage Districts

Agenda Private healthcare insurance in South Africa The argument for analysing healthcare consumption regionally Methodology applied to obtain South African healthcare drainage districts Methodology to calculate disease burden index Are South African regional healthcare consumption patterns explained by the underlying burden of disease and access to benefits? • Cost of death in the last six months by region • Cost efficiency by region • Supply of beds per region • Are the regional supply of beds commensurate with the underlying demand • Is there a relationship between competition and the variation in supply? Concluding remarks

Development of disease burden index Indexed costs by age and gender 6.00 5.00 4.00 Axis Title 3.00 F 2.00 M 1.00 0.00 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 Indexed costs by plan type 3.50 3.00 2.50 2.00 1.50 Costs Costs adjusted for demographic differences 1.00 0.50 0.00 Plan 1 Plan 2 Plan 3 Plan 4 Plan 5 Plan 6 Plan 7 Plan 8 Plan 9

Development of disease burden index Females on plan 5 by chronic registration status 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 Not Registered for a chronic condition Registered for a chronic condition Indexed costs adjusted for age, gender and plan by registered chronic status 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Plan 1 Plan 2 Plan 3 Plan 4 Plan 5 Plan 6 Plan 7 Plan 8 Plan 9 Not registered for chronic conditions Registered for chronic conditions

Development of disease burden index Indexed costs for females registered for a chronic condition on plan 5 by RUB 90 80 70 60 50 40 30 20 10 0 Age 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 1 2 3 4 5 Indexed costs adjusted for age, gender, chronic and plan by RUB 20 18 16 14 12 10 8 6 4 2 0 Plan 1 Plan 2 Plan 3 Plan 4 Plan 5 Plan 6 Plan 7 Plan 8 Plan 9 0 1 2 3 4 5

Disease burden index results Case weights for claimed ACG in 2010 40.00 35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00 100 300 500 700 900 1100 1300 1500 1711 1721 1731 1741 1751 1761 1771 1800 2000 2200 2400 2600 2800 3000 3200 3400 3600 3800 4000 4210 4310 4330 4420 4510 4610 4710 4730 4820 4910 4930 5010 5030 5050 5070 5200 5311 5321 5331 5341 Plan Group 2 Plan Group 3 Plan Group 4 Plan Group 5 Disease burden index in 2010 by plan group 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Plan group 1 Plan group 2 Plan group 3 Plan group 4 Plan group 5 Plan group 6

Disease burden - conclusions Disease burden is a function of: • Age • Gender • Chronic conditions • Other clinical interactions • Access to benefits (including data considerations) Adjusting for the calculated disease burden allows all of these factors to be taken into account

Are South African regional healthcare consumption patterns explained by the underlying burden of disease and access to benefits? Applications