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Low-cost quality pays off
Business Time
2002-06-20

Private sector healthcare in South Africa ranks with the best in the world, yet barely 30% of the population can access it. The remaining 70% cannot afford private healthcare, placing the responsibility in the public sector. The Medical Schemes Act was intended to widen private sector membership by outlawing discrimination on any basis other than family size and income, but that has not happened yet. By removing the capacity to cherry-pick the best risks, schemes will have to compete by negotiating better deals with hospitals, doctors and other service providers. Soon, schemes will need to enter into risk-sharing arrangements with providers to bring down costs in a sustainable way. Coupled with better product design, this should make healthcare more affordable to the poor. Few schemes are geared up for risk-sharing arrangements. Prime Cure, a primary care provider group owned by its managers and three private equity groups, has built a network of 50 medical centres around the country delivering quality low-cost healthcare. While patients have access to comprehensive primary care from general practitioners and nurses and specialist services such as radiology and pathology, the group manages to turn a decent profit. Prime Cure contracts with a further 250 service providers around the country, expanding its reach beyond the 50 centres. These protocols are integrated into an IT system which doctors can access in real time. This means doctors generally get it right the first time, without hazarding their way through treatments and running up big medical bills. Prime Cure centres are streamlined, with support staff doing the grunt work, allowing doctors to see 90 or more patients a day, about double the industry norm. Prime Cure is paid a fixed fee per patient, eliminating incentives to over-service. Its patients fall into three categories: those with medical aids (who can consult a doctor and purchase drugs for about a third the normal cost of a consultation with a GP and the resulting prescription); cash patients (who are charged R60 to R90 for consultation, medicine and any specialist service needed, such as radiology); and, capitation patients: Prime Cure is contracted by 15 medical aids to provide fixed-fee services for 120 000 members. Prime Cure was started six years ago and it took more than four years to show a profit. As it achieved critical mass, the group leveraged its bulk purchasing power and wrung costs from the system through use of generic drugs and other cost-containment tools. It is this kind of health service the government wants to see proliferate. (Source: Business Times, 16 June 2002)

Private sector healthcare in South Africa ranks with the best in the world, yet barely 30% of the population can access it. The remaining 70% cannot afford private healthcare, placing the responsibility in the public sector.

 The Medical Schemes Act was intended to widen private sector membership by outlawing discrimination on any basis other than family size and income, but that has not happened yet. By removing the capacity to cherry-pick the best risks, schemes will have to compete by negotiating better deals with hospitals, doctors and other service providers.

Soon, schemes will need to enter into risk-sharing arrangements with providers to bring down costs in a sustainable way. Coupled with better product design, this should make healthcare more affordable to the poor.

Few schemes are geared up for risk-sharing arrangements. Prime Cure, a primary care provider group owned by its managers and three private equity groups, has built a network of 50 medical centres around the country delivering quality low-cost healthcare.

While patients have access to comprehensive primary care from general practitioners and nurses and specialist services such as radiology and pathology, the group manages to turn a decent profit.

Prime Cure contracts with a further 250 service providers around the country, expanding its reach beyond the 50 centres. "

Prime Cure had to re-engineer the way healthcare was delivered to arrive at a workable business solution while delivering quality care on a sustainable basis, says Jonathan Broomberg, a director of Praxis, one of the shareholders. They rigorously researched clinical protocols to ensure standardised and effective treatment and to ensure that doctors were up to date on the latest treatments and research.

These protocols are integrated into an IT system which doctors can access in real time. This means doctors generally get it right the first time, without hazarding their way through treatments and running up big medical bills. Prime Cure centres are streamlined, with support staff doing the grunt work, allowing doctors to see 90 or more patients a day, about double the industry norm. Prime Cure is paid a fixed fee per patient, eliminating incentives to over-service.

Its patients fall into three categories: those with medical aids (who can consult a doctor and purchase drugs for about a third the normal cost of a consultation with a GP and the resulting prescription); cash patients (who are charged R60 to R90 for consultation, medicine and any specialist service needed, such as radiology); and, capitation patients: Prime Cure is contracted by 15 medical aids to provide fixed-fee services for 120 000 members.

Prime Cure was started six years ago and it took more than four years to show a profit. As it achieved critical mass, the group leveraged its bulk purchasing power and wrung costs from the system through use of generic drugs and other cost-containment tools. 

It is this kind of health service the government wants to see proliferate. Broomberg says one area in which further savings can be won is hospital services, which have yet to come up with a genuine and comprehensive capitation product. (Source: Business Times, 16 June 2002)

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