Brian Ruff, our founder presented to the Health Market Inquiry on 17 May 2016. He presented an overall analysis of the private healthcare market in South Africa and PPO Serve’s vision for how it can be reformed to improve healthcare outcomes and efficiency.
He explained that a different narrative is necessary in order to ensure affordable and efficient healthcare delivery in South Africa. The current narrative largely ignores the poor performance of the healthcare system in terms of both its efficiency and healthcare outcomes. The result of an under-regulated private healthcare system was ultimately high premiums for patients and lower than desirable quality of care.
An Article on Section 27 summarises the presentation:
Ruff continued to explain that although ultimately a “unified” healthcare system is necessary, the process of producing National Health Insurance (NHI) has thus far lead to a “regulatory vacuum” and effectively stifled some key regulators. Overall, PPO Serve, in the short term, is advocating for a “competitive solution” which will crucially require the stimulation of competition on the “supply side” (between healthcare providers) based on value and in a manner that is “accountable”.
PPO Serve’s suggested regionalised system would, according to Ruff, by operated through “branded healthcare systems” with “multidisciplinary teams” including a variety of healthcare professionals working together to produce the quality health outcomes. These teams and regional systems would be able to define value to sets of consumers accurately by taking into account 1) population need, 2) measured patient outcomes and 3) costs.
The full presentation can be found here: Competition Commission pres – 10May2016 – final2
There have been a number of interesting articles we’ve read recently that promote the role of hospitals in integrated care systems originating from ‘Obamacare’ – the US reforms. These include community level clinical and social services for populations. Articles include:
And the US Federal Government has just launched:
This feels to us to be an extremely relevant approach to discuss because in the South African private healthcare sector environment there is a huge and growing dependence on hospitals and hospital beds.
Hospital services are used to address straightforward clinical problems and undertake the simplest of procedures. Weak community healthcare services are both a cause and a result of this arrangement.
Is it possible that hospitals can be part of the prudent solution where services are done in the appropriate site?
In addition, is there a model of population medicine built around the hospital that adds value to the community it serves and is also commercially profitable?
For the hospital to be well aligned with the needs of its client population, it must get rewarded for being part of the integrated care systems. If the hospital remains dependant only on its current volume derived income rather than its population medicine mandate, the contradictions of supporting effective community services are hard to resolve.
There a quantum leap is needed, a major rearrangement of the organisational and financial relationships compared to the current.
The organisation of a system where the hospital is the hub is characterised by clinical service lines designed for identified segments of patient demand (adult chronic medicine; maternity care etc.) that extend from households in the community and free standing clinics to hospital polyclinics and then into wards and theatres and ICUs and back again – continually. The teams that service these channels are made up of multiple disciplines and are focused around the needs of each patient. As a result, each patient can move seamlessly in the integrated system, which is also supported by Care Coordinators and an IT systems to make this work.
Financial arrangements for teamwork need shared recognition and basic remuneration so that individual clinicians get rewards for the success of the team. The upside rewards are measured against the requirements of the population that they serve. This disqualifies the current ‘fee for service’ (FFS) tariff because it rewards an excess of services rather than the minimum and prudent treatment option and is therefore not in the best interests of the community.
In general, this means long term population linked fees for consulting disciplines (GPs; Physicians; Gynaes etc.) and bundled or episode fees for therapies with a well-defined beginning and end, such as elective surgery, and a mixture in between.
All of this is very relevant to the current debate about employing doctors in SA.
Proscribing the employment of doctors is blamed for some of our systems inefficiencies. We believe that simply lifting the block and allowing hospitals to put them on a salaried payroll may not be the right or only answer. If fragmented single practice is the problem, and teamwork is the answer, then a better answer may be the creation of commercially independent and autonomous teams of clinicians who work and earn together and can enter into contracts or joint ventures with both medical schemes and hospitals.
PPO Serve Integrated Clinical Consortia™ are the answer. Joint ventures between them and their hosting hospitals completes the model.
Don’t want to read the full articles? Here are summaries of the important points:
Hospitals as Hubs to Create Health Communities: Lessons from Washington Adventist Hospital
Hospitals as hubs in community services can bring effective care to people and populations:
They are in a position to also begin to address social determinants, which we know that when ignored invariably negate clinical gains:
- They build community networks linked to the hospital services, which facilitate integrated clinical care and bring services closer to the home.
- The hospital has programs which aggressively enrol discharged patients in community support initiatives.
- They undertake specific ‘hot spot’ programmes i.e. programmes that deal with specific community or locale issues that cause healthcare problems that can be addressed if the system has a population view and mandate
They get population related rewards. This means a population related budget system with rewards related to population based performance. There are penalties for avoidable readmissions. There is a useful new US funding program called the Community Health Needs Assessment (CHNA) that provides additional financial incentives to hospitals to collect addition data upon which to base intervention programs
Clinical data sharing is key – this arrangement permits full population data exchange i.e. record of all activities that the patient experiences is available from an integrated database. This also includes non-clinical data. In addition to aiding better individual patient care, the data is used to identify and address ‘hot spots’ for management; and for risk stratification of the patients in the community in order to design and channel them to appropriate services and interventions.
Multidisciplinary team is key – clinicians and support staff work together on joint care plans and hold regular reviews of individual patients and system processes.
Can hospitals help create healthy neighbourhoods?
Some hospitals are rethink their roles in healthcare systems, not just focusing on resolving acute problems and providing emergency care. ‘Hotspot’ strategies that successfully affect local communities and initiatives to address social determinants of health are prodding the rethink.
There are also now US financial and regulatory nudges too, such as penalties for high 30 day readmission rates. The CHNA (above) requires non-profit hospitals (the vast majority in the USA) to report on their communities social needs and develop strategies.
Difficulties include information sharing because of different data systems, as well as privacy restrictions. Critically, there is a ‘wrong pocket’ problem – hospitals that invest in community partnerships can work against its own bottom line even as the community is rewarded.
Silo budgets are another issue – in SA a medical scheme cannot invest in social services that might reduce the need for hospitalisation and improve longevity that is in the interests of life insurers, even for the same lives….
The authors suggests 4 steps to achieve this reform:
- Develop metrics to measure the social and economic benefits of hospital community work
- Make data sharing easy
- Blend funding pools
- New forms of investment capital
The Accountable Health Communities Model – a CMS Innovation Center pilot project to test improving patient’s health by addressing their social needs
This is a new funding programme for screening people about their health related social needs and related referrals can improve quality and affordability.
Many of these issues – housing instability; hunger, interpersonal violence, transport problems – aren’t revealed in the normal clinical encounter but nonetheless have significant impact on the individual’s use of the healthcare services.
The programme aims to at ‘bridge’ organisations that align clinical and community services by connecting the identified patients to services and assessing the impact that has on their use of healthcare services, especially emergency room use, readmission rates and total healthcare costs.
In continuation of our review of the NHI Health Insurance for South Africa White Paper released on 10th December 2015 we need to look at the demand (patient need) and supply side (health care provisions) issues that are revealed and attempted to be resolved through the reform.
‘Demand side’ management by Health Insurers / Medical Schemes: What’s their role? What are the virtues of a single vs. competing funds?
Schemes and their Administrators / Managed Care efforts are failing to adequately manage the ‘production’ efforts of the private supply side. This is because Schemes don’t compete on the overall ‘value’ proposition for consumers i.e. the member experience and outcomes of the system.
Currently, they’re mostly concerned with attracting healthy members, crudely restricting care and getting marginally better Tariff prices than other Schemes.
They have a short term focus because cover is sold on an annual term. And because Scheme cover is sold nationally, they aren’t involved in local level system performance and they just don’t undertake the role of ‘managers’ of the system. Nor does anyone else.
Would a single Scheme with local offices do better?
Maybe, but the price is likely be a system that is also less responsive to consumers.
We like the Dutch system where membership of a choice one of a number of competing Schemes is mandatory, and the State pays contributions for the poor.
‘Supply side’ provision: What is the policy aim for the design of the effective supply model; and how will this be engineered?
A ‘vision’ of an effective supply model for the whole of SA is not evident in the plan at all, and in our view is the biggest weakness of the whole proposal.
If purchase function and demand side management is solved, with what services would the Scheme (or Schemes) contract? Neither of the current models public or private is an obvious basis from which to build a new system. Nor is there a clear policy vision nor aims for how the sector will be structured and how its processes will work.
Paying differently – DRGs and capitation – are a requirement but experience tells that this alone does not lead to structural change. That takes a whole lot more.
A clear vision of the system and the engineering required to achieve it. With:
- population level structural planning
- a variety of new commercial organisational models based on teamwork and useful competition between integrated systems
- supportive State funding
- supportive State regulation
- clear process and outcome measures
- outcome linked rewards
Unfortunately, the document is largely silent on supply side reform, appearing to believe that the public sector needs a few tweaks to make it a viable basis and that any gaps can be contracted from private providers.
This simply isn’t realistic.
In our view, the key to reform are new models of care delivery that are based on:
- population medicine and patient centered care
- integrated team care with strong self-governance and management
- the value contract measuring and rewarding quality outcomes
- modern patient care IT systems driving proactive measured care
PPO Serve is based on this insight.
The NHI Health Insurance for South Africa White Paper (10th December 2015) has just been released, and it’s important for the sector to understand its intent and debate its approach. The following posts will outline our views:
Consistent with the Green Paper, the proposal is based on an insurance model where the insurer is a single inclusive national fund that collects and pools contributions and undertakes selective purchasing / contracting from providers on behalf of the population.
For us, these are the issues that arise:
- What problem Is South Africa solving?
- What is the tactical approach to achieve Universal Health Care in SA?
- ‘Demand side’ management by Health Insurers / Medical Schemes: what’s their role? What are the virtues of a single vs. competing funds?
- ‘Supply side’ provision: What is the policy aim for the design of the effective supply model; and how will this be engineered?
Addressing the first 2 issues:
The Problem of the public sector is poor service and responsiveness, because it is not structured for its post-apartheid role and is badly managed. Many words written about this, were not going to add more here.
By contrast, there is too little useful analysis of the performance of the private sector, which has a major, worsening crisis of affordability in regard to most South Africans (including current Scheme members) because it provides relatively poor ‘value’. We don’t agree that this can be mostly ascribed to aging and selection. Instead we believe the sector performs relatively poorly:
It has huge excess capacity relative to the currently covered population (it could easily deal with double the population) and consequently over-servicing is rife (in many regions) as providers struggle to meet their (‘threshold’/ sustainable) income requirements.
This process marginalises thousands of general practitioners; invalidates any role for mid-level workers and obliges specialists to take on the primary care role for which they are poorly suited.
All this is made worse by a tariff schedule that fragments patient care because it rewards clinicians working alone and for each service they perform. (A better alternative would be to fund organised teams that are paid to look after the care of a population for which they are accountable and to get merit rewards for doing this well – more in the next posts)
The result is that, while the sector is good at dealing with acute problems, it is badly structured to treat patients with complex medical and social problems, especially the aged. But it is on these patients that the bulk of healthcare costs are expended. They experience poor quality, expensive care, driven by unmanaged and plenty of unneeded hospital services.
Fix this and you go a long way to getting better value and lower premiums.
So is there a feasible tactical approach outlined in the white paper?
We don’t think so. Today there is a two tier system that serve populations reflecting the enormous income and wealth disparities of South Africans. They have very different structures and organisation, costs and outcomes. How is it possible to achieve a unified system in 14 years? We believe this is neither economically or politically feasible, nor is it practical.
But is there a better alternative?
Developing countries with similar income inequality problems that have succeeded in healthcare reform have succeeded by understanding the economics of the healthcare system. Eddy van Doorslaer from the Institute for Health Policy & Management & School of Economics Erasmus University Rotterdam provided a good overview of Asian healthcare changes. Essentially they adopt an incremental approach with clear supply strategies linked to demand within income bands, with a special focus on the ‘gap’ market i.e. people neither wealthy nor poor.
New efficient delivery models of care are promoted that meet the affordability and care needs of the ‘gap’ market segment are key. These are not cheap and nasty nor do they offer a narrow range of therapies.
They are affordable because they are efficient.
This is supported by State provide partial subsidies for access via Scheme premiums as well as for supply side innovation.
It offers support in other ways too because supply side reform is the key to success.
Finally, systems that provide comprehensive care of good quality at affordable price have strong community level primary care services. They also rely on market driven competitive systems to deliver iterative population value and market equilibrium, within a population determined capacity plan.
There is lots for us to learn in the SA private healthcare sector about a better model of delivery for patients from this excellent article in the NYT. (more…)
PPO Serve was created to help clinicians work in a rewarding environment where providing consistently great care is routine.
It’s an uncomfortable truth that there’s a wide variation in the quality provided by the health care sector. While clinicians believe they are providing the best level of care possible, health economists and large funders see real differences and patients experience it differently. Care provision varies significantly between individual clinicians, whole systems and geographic regions. In fact, there is more variation in healthcare outcomes than in most other industries. Most industries routinely apply standard operating procedures and measure quality standards, so that, as a consumer, you expect and reliably get high quality food from restaurant chains and franchises. Similarly, we happily pay ‘top dollar’ for a top car brands because of the reputation for quality it carries….
Atul Gawande, in his 2012 article BIG MED poses that question and answers it – we need to learn from other industries.
Gawande proposes that our sector could learn a great deal from restaurant chains that routinely provide complex, high quality products at prices affordable for the mass market. Also, value as the basis for competition between branded healthcare systems is in the best interests of consumers and patients.
The ‘Cheesecake Factory’ is a very successful national US restaurant chain that provides food and service of a type and quality usually associated with ‘up market’ restaurants. They have a huge and complex menu and are able to provide this at prices affordable to the mass market. He contrast this with the healthcare sector with our high costs, mediocre service and unreliable quality….
Gawande identifies key factors in the success in consistently providing these quality services.
- Scale is critical, the single or small practice (mom and pop restaurant) vs. large organised teams in a sophisticated chain; and branded systems that compete on
their reputation for quality and reliability. In our hospital systems, in the absence of meaningful measures, public speculation about questionable practice do occasionally harm hospitals but typically patients can judge quality only by appearances. In the US, large chains are increasingly competing on for patients and being paid by insurers based on their clinical production.
- Process re-engineering is crucial. The Cheesecake Factory is a process reengineered restaurant chain, with an approach remarkably similar to that taken by the most progressive and successful integrated healthcare systems. Tasks are carefully designed and assigned, electronic systems provide support, record performance measures and enable the monitoring of quality. Also, while standardisation is key (95%), customisation is fine (5%) and individual professional autonomy determines how results are achieved.
- Reduce waste. A dynamic capacity planning model matches the demand for products and the supply of staff and consumables (food or drugs…) so waste is reduced to under 2.5%. Planning includes a forecasting element, predicting high utilisation by season, weather or large events.
The article explores the application of these principles in the setting of the ICU – our most complex clinical system and where patients typically experience highly variable outcomes.
The intervention described is of an ‘off site’ technology support centre that provides a package of back up services to many ICUs, including monitoring and compliance. Interventions are based on aspirational standards of care, with related reference lists and alerts.
The conclusion acknowledges that change is hard to navigate and is a deliberate process needing time and careful support.
PPO Serve exists to help you navigate this change. We can help you create the teams, the brand, the planning model and the processes.
Read Big Med and then engage with us.