Tuesday 28 May

In the final sitting of this general round of public hearings, the Panel heard from Improved Clinical Pathways Services, Bonitas Medical Fund and the Chiropractors Association of South Africa.

Bonitas: “we [medical schemes] are all expensive to be quite honest” 

Bonitas’s presentation to the Health Inquiry followed a now familiar pattern of engagements between the Panel and the Medical Schemes and Medical Scheme Administrators. Bonitas’s presentation focused on the schemes own challenges and the Panel’s questions urged Bonitas to focus on health outcomes and access to information as is raised repeatedly by members of schemes.

As a Scheme originally founded in 1982, primarily for black civil servants, Bonitas told the Panel that it is not a scheme which is “truly representative of South Africa’s demographic.” Bonitas has also consistently seen a movement of members towards the Government Employees Medical Scheme (GEMS) which have now “stabilised”. This despite the fact that approximately 10% of Bonitas’s membership are government employees who Bonitas’s representatives indicated they “anticipate” are ultimately likely to move to GEMS.

Doctor Bhengu asked Bonitas why, if the decrease in membership through departures to GEMS had stabilized, the information provided by Bonitas indicated that it had lost 42000 members in 2015. Bonitas’s representative responded that this is an issue that Bonitas studies closely and that the likely reason is that people are no longer able to afford medical aid because they lose their employment or because of the prevailing economic climate. However, Bonitas’s representatives later commenting on commonality between schemes, said that “we are all expensive to be quite honest”.

Bonitas also indicated in response to a question that it has the intention to merge with Liberty Medical Scheme, which it considers, despite media reports indicating the contrary, to be in the best interest of its members. In a “consolidated industry [increased] bargaining power will make a huge difference going forward”, Bonitas’s representative said.

Prescribed Minimum Benefits (PMBs)

In Bonitas’s presentation its representatives emphasised the difficulty that schemes face in being treated as mere payers of healthcare providers’ invoices. Bonitas explained that there has been an increase of approximately 52% in the cost per year, per beneficiary in terms of PMB claims. It added that the proportion of PMB claims in hospitals had increased more rapidly than for services provided outside of hospitals.

The explanation Bonitas proffered for this was “upcoding” by healthcare professionals, because schemes must pay on invoice in full and that “the PMBs have made South Africans Hospicentric”. The result is that “most of our members actually end up in hospital”, which Bonitas’s representative plainly admitted “is a problem”. Some healthcare professionals, Bonitas’s representative explained know that if they have a certain number of patients they can plan a holiday to Brazil because they understand that whatever they invoice will be paid because they have a “blank cheque”.

Professor Fonn questioned Bonitas on these conclusions asking whether it is possible that instead representing an increase in the costs of PMBs, this could reflect “a learning” by Bonitas that it was obligated to pay PMBs in full or by patients that they are entitled to full payment for PMB conditions. Bonitas’s response was that although this may be the case, the situation is “not sustainable” for medical schemes.

Fonn followed up by asking if it was possible that there it is a lack of innovation from medical schemes that was driving hospitalization. In response to this Bonitas’s representative noted that funders like Bonitas have become “very defensive around PMBs” and agreed that funders should rather look at this situation as as opportunity to innovate and make services more affordable to patients.

Dr Nkonki noted that it would have been good to have heard more in Bonitas’s presentation about patients difficulties in claiming for PMBs as had been described to the Panel throughout the Inquiry.

Managed care and “improved clinic pathway services”

Bonitas’s representatives expressed strong support for managed care services as an important way of reducing costs, improving health outcomes and combatting hospicentrism. According to Bonitas, the managed care approach is less paternalistic and moves the healthcare approach from one which is “rules-based” to one which is “member-centric”. Bonitas aims to prevent low claimers from becoming high claimers through this proactive approach.

This approach also gives medical an incentive to prevent scheme members from getting sick, according to Bonitas’s representatives, who added that schemes “must empower members with health records and to be able to identify conditions”. The effect will be both lower costs for the scheme and lower premiums for members. A managed care approach has already resulted in a reduction in claims for Bonitas of approximately half a billion rand as a result of managed care in 2015, Bonitas said.

The Chief Justice asked since Bonitas is one of the schemes that has embraced Improved Clinical Pathway Services (ICPS), what the value of those services are from Bonitas’s perspective. Bonitas agreed within two weeks to provide the Panel with a report, including figures, about the benefits of ICPS.

Bonitas’s investments and returns to members

The Chief Justice asked Bonitas what it is that happens with the profits that it makes as a scheme on its investments. In particular, he asked repeatedly whether Bonitas ever reduced premiums as a result of profits made on investments.

Bonitas responded that over the last few years it has resolved not to keep reserves that are as high as they used to (up to nearly 40%) and instead “pass on to the consumers” profits made on investments. Dividends and and contributions are therefore ultimately diverted back to members in order to either lessen increases in premiums are or “enrich the benefits” available on scheme options.

Unsatisfied, the Chief Justice asked pointedly whether to Bonitas’s representatives the scheme had ever, after a year in which there were strong profits, happily informed members that there would be a reduction in premiums instead of a mere lessening in the increase. Bonitas’s representative answered that he was not aware of this ever having happened in Bonitas nor in the medical scheme industry in South Africa at all.

When asked a similar question again by Professor Fonn later on Bonitas’s representative responded “the short answer is no”. Professor Fonn then asked whether it doesn’t worry Bonitas that members were compelled to just wait for increases “year in year out”. Bonitas responded that it was a concern and that “the lack of alternatives is a big problem”.

Fraud, Waste and Abuse

Bonitas also dedicated a portion of its presentation to instances of fraud, abuse and waste which it described as “the elephant in the room” in the private healthcare sector. Bonitas noted that it had assessed 1.4 billion rand of claims over 2 million claims events and identified that 72 million rand or five percent are lost to fraud, waste or abuse.  This is below some industry estimates which go as high as 12 percent.

Instead of “harassing providers” or trying to catch them out Bonitas’s representative indicated that it uses this information in a preventative manner in order to “dialogue” and “engage” with healthcare professionals. When asked by the Panel why this was Bonitas’s approach, Bonitas’s representative explained that the process of taking legal action or laying complaints through channels like the HPCSA could take several years and that dialoguing is often more productive in ending fraud, waste and abuse which is not always intentional and sometimes there is a good explanation.

Quality of healthcare provided by healthcare professionals

A somewhat related concern raised by Bonitas is the quality of services provided by many healthcare professionals.

In response to a question from Dr Bhengu, Bonitas explained that it has a network of over 6200 doctors that services it members. Bonitas does “upskilling” for doctors across the country each year in an attempt to train doctors to do “what they do best” – care for patients. Bonitas’s representative noted that this is especially necessary to improve doctor’s confidence in an environment in which there are a “huge number” of medical malpractice lawsuits.

Professor Fonn pushed Bonitas to explain how it measures the qualitative improvement of the outcomes through the upskilling of doctors. Bonitas responded that it does not do so effectively enough but it does try to allocate members with higher needs to professional who achieve higher scores in their assessments. In addition, Bonitas uses TV programmes and electronic and print media to inform members of where they can get the best interventions and healthcare services.

The Chief Justice followed up with a series of questions about why the scheme, though obliged to act in the interests of its members, does not provide them with clear information in its possession that a provider is not going to provide them with quality healthcare. “How is that possible?” he asked.

Bonitas’s representatives conceded that this was “regrettable” but that there was a reluctance to “mark” doctors as “good” or “bad” especially when they may have received poor training. Bonitas does not want to get into “an ugly interaction with healthcare providers”. Doctors, Bonitas said, also often found “innovative ways” around actions taken to eliminate poor quality care.

When pressed further by the Chief Justice about sacrificing members’ ability to access quality care, another representative of Bonitas interjected to clarify that from a “philosophical point of view” the Chief Justice was correct but the concern was a “significant backlash” from healthcare professionals which may include litigation. He concluded that the problem requires “an industry-based solution” for healthcare providers to be “side-lined” if they are not producing results or are not doing so cost effectively.

Unions role in representing their members in the medical scheme environment

Professor Fonn indicated that there had been “rumours” about “kickbacks” being paid to unions by brokers in exchange for influence on appointments. Bonitas’s representative indicated though he had heard such rumours “often”.

Unions, he explained, had a “difficultly” with the Medical Schemes Act because they are not actively acknowledged as representing their membership for the purpose of medical schemes.

Unions would therefore, in his experience, “like to have a bigger say” in matters relating to their members negotiating membership in medical schemes. They want to be acknowledged “on the same level as the employer” and in the absence of such a mandate in terms of the Medical Schemes Act, the tendency is for the employer to “step forward” and arrange brokers and/or medical scheme membership on behalf of employees.


In response to a question Bonitas’s representative indicated that Bonitas would be in favour of “low cost options” for members and prospective members because “there is a high demand” for these options. He added that Bonitas would support low cost options that included preventative and primary care and not only hospi-centric PMB cover.

Improved Clinical Pathways Services

Dr Grant Rex, the Managing Director of ICPS led the submission accompanied by Dr Monica Springfield.

ICPS describes itself as a pioneering standardised care pathway group, which employs evidence based processes to address cost and quality concerns in healthcare provision. The internet has made it possible for more information to be shared and faster between health care providers and as a result ICPS has reengineered and made improvements to the managed care process. ICPS was established three years ago in South Africa and currently has 45 participating surgeons across all the provinces.

ICPS presently focuses on knee and hip replacements because of the high volume of these surgeries. Their first client was Transmed, and Medscheme and Bonitas have also come on board. Dr Rex explained that initially medical schemes and administrators were hesitant to work with ICPS, concerned that their members would be further restricted to the particular surgeons within the ICPS network. He added that because independence is highly cherished in the private sector, they initially experienced resistance toward standardised pathways, but their processes could not be argued with at a scientific level.

Dr Rex and Dr Springfield told the Panel that ICPS monitors hospital bills to assess whether the clinical teams are sticking to guidelines, saying that adherence to the pathway is a key quality indicator.

Clinical Initiatives

The key cost drivers the group identified are theatre time, length of stay, level of care (ICU and high care utilisation), surgical consumables utilisation, drug utilisation, clinician cost, radiology and pathology cost. ICPS offers a global fee to the providers within their network. The fee covers the cost of a surgeon, anaesthetist, consumables, hospital care, management fees and a physiotherapist. Even though ICPS uses global pricing, they still get detailed bills which they can use for clinical quality data.

According to Dr Rex, in South Africa, anaesthetists will usually see a patient for the first time when they prepare to go into surgery, however within the ICPS network a patient is seen by an anaesthetist at least two weeks before they are booked to undergo a surgery. This is done so that the patient can be optimised for surgery. This is particularly important for knee and hip replacement patients, because this kind of surgery is largely not in an emergency and due to the patient age group the candidates often have other health conditions the clinicians should be aware of and can therefore manage before surgery.

Only once the patient has been optimised, which means their other conditions are well controlled, will ICPS authorise the operation. The pre-operative assessment looks at kidney function, haemoglobin, diabetes to determine whether a patient can be operated on. The patients are scored to establish how compromised they are before undergoing an operation, and those whose condition is deemed to be uncontrolled will be investigated and managed before they are booked for an operation. Dr Rex added that this scoring is used to as a predictor of postoperative mortality and may predict early failure of arthroplasty.

The pre-operative assessment is performed by anaesthetists in most case, but where one is not available a physician will step in. Dr Rex said that anaesthetists are best placed to do the assessment because they make the determination on what anaesthesia will work best. Further he stated that it is best practise across the world to conduct a pre-assessment, however there are structural reasons these evaluations are not discharged. Most anaesthetists work as individuals he told the Panel, and they are remunerated using time units which cover the time patients spend in the operating room. It is not financially viable to allocate time for pre-assessments for anaesthetists, unless one is part of a group practise and a member can be allocated to perform the assessments. He suggested that alternative reimbursement models should be used to incentivise doctors to take quality into account.

Unlike in the public sector where pos-toperative case reviews are conducted, in the private sector a retrospective review is non-existent. ICPS carries out adverse incident reporting to evaluate a patient after their operation so that clinicians can identify mistakes and improve quality. The patient also reports on their outcomes, measuring the level of pain, function and comfort before and after the operation.

Additionally, ICPS spoke about quality measures they take to ensure clinicians provide good services to patients such as looking at the re-admission rates of the clinicians in their networks.

Finally, ICPS asserted that their global fee reduces administrative costs, eliminates unbundling and multiple coding and improve efficiency. Even so there has been backlash against this fee system as clinicians have been threatened by their respective associations claiming that the global fee is a breach of the fee sharing prohibition envisaged in the Ethical Business Practise Policy of the Health Professions Council of South Africa. Dr Rex considers the global fee as fair because once a surgical procedure is standardised the cost associated should be similar between clinicians in any case. The global fixed fee is paid out of the hospital benefit of a medical scheme

ICPS’s business model was not envisaged in the Regulations and the organisation currently does not fall under the jurisdiction of the HPCSA or Council for Medical Schemes. Dr Rex argued that ICPS is a managed care company and should fall under the CMS’s purview, but currently does not because they do not take on enough risk to be covered by the regulatory framework. He concluded that although ICPS would be best fitted within the CMS framework, the rules regarding registration were too onerous and would have to be amended to cater to an entity of their nature.


Leave a Reply

Your email address will not be published. Required fields are marked *