The NHI plan will serve patients, healthcare services better

The National Health Insurance (NHI) philosophy is not complex, nor unusual. It defines the role of the suppliers of healthcare services and the way these services are purchased.

Purchasing should be done by a competent agency equipped to enter into value-based care (VBC) contracts with suppliers.

It is a best practice solution to the current dysfunction, and scaremongering reactions are either poorly informed about the options or defending their role and profits.

At present, the public sector is funded by a “supply-driven” budget determined by existing facilities and staff, not population need. Funds are guaranteed regardless of production and service.

There is no “case mix” data about how sick patients in the system are, or where and how they are treated.

Managers do not know about the relative productivity of their own systems, and governance arrangements are working in the dark.

Under the NHI, public services will be subject to market competition for contracts and required to improve their productivity and service delivery – or face losing their contracts.

VBC contracts are also largely absent in the private sector, which is still funded by “fee for service”, paid to isolated and competing individual clinicians. This leads to fragmented services.

Fee-for-service has clinicians seeing low patient volumes and delivering high-cost care of variable quality. Productivity simply isn’t a concern.

It is tragic that, despite the Medical Schemes Act of 2000 obliging medical schemes to do active purchasing for their members, they have failed to do so.

Rather, they have interpreted their role to be securing low prices from providers per service. They have ignored rampant over-servicing from the oversupply of doctors, specialists, and hospital beds relative to scheme members in the country.

This lost opportunity is well described in the Health Market Inquiry (HMI) provisional report, which shows how schemes failed their members by not commissioning and supporting new care delivery models. Only the shareholders of the administrators are happy.

In contrast, the separate purchaser role put forward by the NHI is the proper model for healthcare systems. Under it, providers – whether public, private or “not for profit” – compete for local contracts, to deliver primary healthcare (PHC) and hospital services, based on how well they deliver value.

This competition will be a major wake-up call for both sectors and ultimately serve South Africans better.

Of course, the NHI needs to appoint a competent team to design robust and fair strategic contracts. These VBC contracts must use case-mix sensitive payment models that support the use of all available resources and assign funding according to local need and the delivery of value.

Accountability for producing the best outcomes, at the lowest cost, will sit with the providers – while financial risk is carried by the funder.

The NHI Bill will drive a major shift towards developing a strong system of community PHC, reducing the hospital-based care compromising the efficiency of both sectors.

VBC contracts will support multidisciplinary teamwork, a more patient-centred model. The challenge for all stakeholders is how best to transition to this model.

The debates should centre on how to create a transition that is compelling and safe for those clinics and hospitals that embrace the accountability model. We need realistic milestones and a strategy that poses no threat to their income.

• Dr Brian Ruff is co-founder of healthcare management company PPO Serve.

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