Industry News

MEDIA STATEMENT

04 June 2009

In Categories: Industry News , Industry News > General

HOSPITAL ASSOCIATION OF SOUTH AFRICA

Research shows excess capacity in private hospitals significantly lower
than state advisors suggest

Thursday, 4 June 2009: The Council for Medical Schemes (CMS) has argued that spare capacity in private hospitals is much higher than officially reported because of supplier-induced demand; a scenario in which healthcare providers deliver more services and pharmaceutical products than absolutely necessary to drive up profits.

But research presented at the Hospital Association of South Africa (HASA) conference by Medi-Clinic Health Policy General Manager, Hein van Eck shows that when CMS data is adjusted for factors outside of the control of hospitals and specialists, admission rates are not much higher than other countries. 

According to CMS research, medical scheme hospital admission rates, at 301,7 admissions per 1000 people, are significantly higher than countries such as the United States, which has a hospital admission rate of 132,2 per 1000 population.  The council concluded that significantly higher admission rates in South Africa’s private sector, combined with a much lower average length of stay showed that  “patients of low acuity are being systematically admitted to hospital” (ie. supplier induced demand).

Van Eck points out though, that comparing SA private sector admission rates with the US, the CMS isn’t comparing apples with apples.  The CMS data has been also been used as a basis for the Development Bank of Southern Africa’s (DBSA) Roadmap to Health Reform in SA, a study which looks at ways to improving healthcare in SA.

Firstly, hospital admission rates are measured differently in each country. The definition of an in-patient admission under the US definition is an admission with a duration of 24hr or more, whereas in SA admission rates often included emergency unit visits (that do not lead to hospital admission) and ambulatory procedures such as gastroscopies and colonoscopies. 

The SA figure also includes admissions and visits to facilities other than acute care hospitals, such as day clinics, mental health institutions, etc.  The USA figure on the other hand, covers in-patient admissions to acute care hospitals only. 

Van Eck says that after adjusting for these factors that are outside the influence of the hospital industry, SA private hospital admission rates are not much higher than the US, resulting in a difference of 21,7 admissions per 1 000 people rather than 169,5 admissions per 1 000 people as the CMS contends. 

There are also a number of differences between the US and SA populations that make it difficult to draw a comparison and which contributes to the remaining difference.  For example, SA has higher incidences of HIV-related hospital admissions, and experiences higher maternity rates.

In the US, health insurers are able to charge different contribution rates to people with different health risks. In SA, however, the introduction of Community Rating in 2000 meant that medical schemes could no longer charge different contribution rates based on a person’s age or state of health. As a result, younger, healthier members experienced a large increase in their contribution rates and many opted out of the system.  On the other hand it became more affordable for older and sicker individuals, who joined medical schemes.  With more sick and old individuals joining the industry, this process of adverse selection led to a significant deterioration of medical schemes’ risk profiles, also impacting hospital admission rates in SA to this day. 

“Obtaining a scientifically sound estimate of the true free capacity in the private hospital sector is critically important since it impacts on health policy planning and National Health Insurance (NHI) planning specifically,” he said. “If admission rates are compared on a like-for-like basis, it shows that there is not as much excess capacity in private hospitals as was alluded to in the CMS findings and which has been published by the DBSA.”

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