Brain Ruff, the founder of PPO Serve Integrated Clinical Consortia, a consultancy of healthcare professionals, presented to the Health Market Inquiry on 17 May 2016. He indicated that he had academic experience and had worked for Discovery Health for 16 years. He was also involved in a hospital strategy project during the period of transition in South Africa investigating a smooth and efficient hand over at the end of Apartheid.

Ruff 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. The Panel was clearly interested in Ruff’s presentation and spent two hours questioning him about both PPO Serve’s alternative vision for the private healthcare system and general issues of concern within the scope of the Health Inquiry.

A new narrative
Ruff began by explaining that a different narrative in order to ensure affordable and efficient healthcare delivery in South Africa. The current narrative, he explained, 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, he said, was ultimately high premiums for patients and lower than desirable quality of care.

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”.

Ruff also explained that in PPO Serve’s ultimate vision medical schemes and administrators cannot not just leave consumers (patients) alone but must make purchases of desirable services on their behalf and in their interests. On this view a consumer must choose the scheme because it is good at producing value on their behalf in the form of high quality healthcare services being made available to them.

The problems are structural

Ruff repeatedly emphasised that the major challenges faced in ensuring better quality health outcomes are “structural” rather than the consequence of the actions of individual actors within the private healthcare system. Ruff said that the state has an important role in “framing the market efficiently” by “managing the structural capacity of the system” through strong regulation on both the demand (healthcare funders) and supply (healthcare providers) side of the system.

This regulation should empower new and existing regulators not only with ability to perform accreditation functions, but also policy functions. This, Ruff suggested, was a weakness of regulators such as the Council for Medical Schemes and the Office of Health Standards Compliance who focus on accreditation or compliance with minimum standards. Stronger regulators are therefore required to provide the necessary regulatory framework.

Chief Justice Ngcobo asked whether medical professionals should take any “individual responsibility” in terms of their oaths for the “poor quality” of services that many submissions to the Inquiry had revealed. Ruff insisted that “it is not about individual doctor, it is about the system that is failing and therefore does not produce quality”. He added that the system prevents even good faith attempts to follow clinical protocols properly. The solution, he suggested, was allowing professionals to work in teams which would enable them to provide improve quality of services. Many professionals, he said
“may be simply unaware” that they are providing services of a poor quality.

The Chief Justice seemed skeptical of a position which he suggested exempted professionals from individual responsibility. To expand on his answer, Ruff provided the much cited example about South Africa’s extremely high caesarian section rate of over 80% and asked rhetorically, how it ended up so high. Answering his own question Ruff explained that this was as a result of professionals “behaving defensively” because the system does not provide them with the “safety net” of working with a team of professionals. As a result, professionals err towards referrals to multiple other specialists which may not be necessary, thus producing over-servicing. In the process of the production of their own safety net the system becomes inefficient and unaffordable.  Ruff, however did admit that there is “of course a question of sustainable income too”.

Ruff argued for regulation at national level but regionalised and localised measurement of health outcomes He explained that on a geographical level the services covered by schemes and providers needs to match level and specificity of demands locally taking into account he specific disease burden and needs in a particular area.

Bringing the points about regionalisation and regulation together, Ruff explained that regional systems like these “cannot be left to market forces alone because this invites over-servicing”, which is a major problem in South Africa’s private healthcare system. Eliminating incentives for over-service is crucial according to Ruff because “there must be no reason to make a decision except the clinical factors in front of a clinician or a hospital”. The need to create a demand must be eliminated, he suggested.

In summary, what is required to accomplish this according to Ruff is detailed regional information and regulation or “national norms with regional application”.

Current problems in the private healthcare system

Ruff frankly observed that “there is scant competition” in the private healthcare system “which disables the market” resulting ultimately in a “dysfunctional marketplace”. A lack of competitive pressure results in poor performance, poor healthcare outcomes and little value to consumers or incentive for medical schemes to create value.

Ultimately Ruff noted that, “we currently have a two-tier, fragmented system which is wasteful”. The “emerging middle class” must therefore choose between unhappily using state and paying extremely high prices. In addition, Ruff highlighted various specific problems with the structure of the private healthcare system that prevent PPO Serve’s vision of a private healthcare system from realisation.

Overall Ruff observed that instead of a dynamic system the private healthcare system is, and has for nearly two decades been a “static system”. The suggested “regionalisation” of the private healthcare system has the aim of reversing this.

How would regionalisation work?
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.

Chief Justice Ngcobo pushed Ruff to explain what he meant by “measured patient outcomes”. Ruff responded that there is a there is a decade of experience in how to this can be defined around the world in a manner which is measurable, reproducible and scientific. To achieve these preferred patient outcomes a focus on both structure and process is necessary. If done properly this could improve outcomes for individuals and indeed regional populations. Outcomes, Ruff noted, could be both “soft” or “hard” such as mortality rates, longevity and quality of life.

Questions from the Panel

After Ruff’s detailed presentation the Panel spent over two hours questioning him. Several panelists asked Ruff about the relationships between medical schemes and medical scheme administrators. Ruff said that there were sometimes conflicting interests because on the one hand schemes exist for the benefit of members while on the other administrators are listed companies whose financial performance is evaluated every six months and must act in the interests of shareholders. This financial reporting, he explained clearly has “bearing on your decisions” and creates a risk of “short-termism”.

Dr Bhengu, who described PPO Serve’s suggested model as “very comprehensive and well-thought out” questioned Ruff further on the feasibility the model practically within the existing system since there have been other “revolutionary models” suggested that have not succeeded or been accepted by healthcare practitioners. This question was repeated later on by Professor Van Gent who asked “what’s in it for the doctor?”.

Ruff responded that it is exactly healthcare professionals that PPO Serve works with and it is the reason why he left Discovery to start PPO Serve. He explained that “on the ground” in PPO Serve’s experience doctors are often interested in working on the types of teams suggested by PPO Serve’s model.

Professor Fonn asked Ruff whether it is possible within the existing system to force national medical schemes to “offer regional options”. In reply, Ruff explained that although the “regional construction is key”, PPO Serve was not suggesting that national medical schemes disappear. National offices, for example, could play an extremely necessary “informational” role “but there is a lot that needs to happen on a regional level”, he said. PPO Serve’s recommendation is that “we should obligate national schemes to define regions” and then operate within these regions. Schemes should have to “sell themselves regionally and on value”, Ruff concluded.

The Chief Justice questioned Ruff on the “data analysis and health information” gathered by Discovery during his time there. He asked repeatedly why it is if this kind of information is “crucial” to consumers, it was not made publicly available. Ruff explained that there was an attempt to make the information available through the failed Hospital Rating Index. He warned however that what is more important is that medical schemes accessed and used quality information because it is often “too late for patients” to try and acquire information medical schemes should have used in bargaining with healthcare providers. The Chief Justice requested that Ruff study the provisions of the National Health Act relating to the information and, later in the Inquiry process, suggest if there is anything missing that the Panel could suggest including.
Continuing a trend in his questioning Professor Van Gent followed up by asking whether even in the absence of regulation, hospitals, as they have elsewhere in the world, should go ahead and publish information on quality of care. Ruff responded initially that in the absence of regulation requiring this he could not see this happening. Van Gent replied that hospital groups who appeared in front of the Panel had told the Panel that they were committed to doing so.

Conclusion: the need for a unified healthcare system

The Chief Justice thanked Ruff for his presentation with “only one gap” which is the public sector. Perhaps revealing an emerging view of the Panel, he asked in closing whether it is possible to fix the private sector without fixing the public sector “or should we be looking at one whole system?”. Ruff confirmed that a “unified system” is the right way to go but that PPO Serve’s submissions were suggesting more efficient examples of how supply-side competition, efficiency and access could be improved in the existing private healthcare system during the process towards unification.
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