Photo: Pexels/Anna Shvets

As cases of COVID-19 mount, people are steering clear of clinics and doctors are forced to postpone surgeries to free up beds. If something isn’t done now, there’s slim chance private doctors will have the ability to volunteer for the national response because their jobs — and those of their staff – won’t survive the pandemic.


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It’s Saturday afternoon in Alrapark, a township on Johannesburg’s East Rand, and private general practitioner Nkateko Munisi has finally managed to find an open hospital bed.

Five hours earlier, a COVID-19 positive patient with diabetes, the highest risk COVID co-morbidity, arrived at his practice with dangerous complications and imminent diabetic coma. Without hospital treatment, Munisi knew, the consequences would be fatal. So, the East Rand doctor, who also chairs the South African Medical and Dental Practitioners Association, jumped on the phone, calling hospital after hospital to find an open bed.

Five hours later, he got through to the government’s Heidelberg Hospital. The hospital could take him, someone on the other end of the line told Munisi. Minutes later, his patient’s family had bundled him into the car and were off for the roughly 20-minute drive to the facility.

Although fewer than one in five South Africans were members of medical aids in 2018, a quarter of people nationally reported that private doctors were their stop when they were injured, according to a 2018 Statistics South Africa survey.

“GP practices… are in a number of cases, the first port of call for those patients in the township. They see a GP and get referred to see a specialist or even into the public hospitals,” Munisi explains. “Some of them, after being turned away from public hospitals because of the high numbers of COVID-19 cases now, come back to their GPs – particularly the elderly.”

But patients aren’t coming in like they used to. He says the South African Medical and Dental Practitioners Association, which has roughly 2 000 members — based largely in the country’s historically under-served townships — has seen business halved on average during South Africa’s coronavirus outbreak.

“Patients fear getting infected when they come to practices,” he says. “And with the national lockdown, those workers who are paid weekly or for doing piece jobs could not afford to come to see our doctors.”

The association’s members aren’t the only ones. Simon Strachan is a private sector paediatrician and says private practices have seen enormous declines in patient numbers — and many may not survive the COVID-19 outbreak.

“All this when our own private practices are between maybe 70% or 80% of their normal patient loads,” Strachan says. “We’re looking after patients — whether they are in the public or private sector — without any assurance that we’re actually going to have a practice to come back to at the end of this.”

That’s bad for practices, but it’s even worse for the country’s fight against the new coronavirus: If doctors are preoccupied with trying to save failing practices and pay staff, they may not be able to volunteer for South Africa’s national COVID-19 response at a time when many public health facilities — including newly built field hospitals — are struggling with staff shortages.

The problem with private healthcare funding in a pandemic

In the public healthcare sector, general taxes fund the system and healthcare worker salaries get paid regardless of whether patients show up for services. Not so in the private healthcare sector, which relies on a fee-for-service system: You pay your medical aid monthly, and your insurer releases that money only when you actually claim for care. 

But the COVID-19 outbreak means people aren’t seeking out care. About one in 10 people surveyed by the Human Sciences Research Council, for instance, recently reported difficulty in accessing chronic medication during the initial lockdown.

In short, the country’s private medical practices, even those affiliated with large hospitals, aren’t seeing anywhere near the number of patients they normally would, which means medical aids aren’t paying out the money budgeted for healthcare benefits.

If something isn’t done now to keep private practices afloat, we think the country is at risk of losing GPs, family practitioners and specialists who will be forced to retire early or go overseas as practices fail. This also means serious job losses for the staff of these practices. A large radiology practice, for example, may employ 300 people directly and support another 1 000.

People may be putting off non-emergency care for now, but this can’t go on forever. We and major medical aids anticipate that after South Africa sees its COVID-19 peak in the coming months, demand for other health services will rise.

But unless South Africa acts now, there may be fewer private practices left to cater for that surge.

Watch: How COVID-19 has changed township life

The novel coronavirus has swept through Khayelitsha in the Western Cape — and so has the fear of contracting it.

We think we have a solution — and it won’t cost the government a cent.

We belong to the Progressive Health Forum (PHF), a national advocacy network of health experts and activists drawn from the health sector and civil society. In early March 2020, when the first COVID-19 patients were identified, it was clear to PHF and others that South Africa could only meet the challenge of the pandemic if it mobilised all its health resources. The private sector was a surprising omission from the subsequent national response and upon enquiry, two important paradigms emerged. First, medical practitioners and allied health professionals in private practice were unequivocal in their willingness to step up to the national response, befitting of their ethical obligations and with an understanding that the entire population was at risk.

Second, it emerged that the lockdown and patient fears significantly reduced health seeking behaviour. In addition, the pre-emptive preparations for the surge in COVID-19, expected much earlier, resulted in specialists cancelling all elective procedures and appointment lists. These factors combined to produce an unprecedented decline in demand, placing thousands of practices at risk of insolvency. 

These practitioners’ income, unlike their public sector salaried colleagues, was entirely dependent on their practices and they could not be effectively engaged while they faced this risk. So PHF developed a framework that could help save failing practices and, at the same time, protect medical aids from an impending wave of high-cost claims as demand for services resumes. 

Our plan would help to guide the restructuring of individual contracts between medical schemes and private practices to release a portion of private healthcare funding now in the form of top-up payments to stalling practices, guaranteeing them an income of at least 70% of what they earned in 2019. In exchange, practices would agree to caps that would allow medical aids to keep their medical practice-related costs below their historical budgets. 

Read: Strategic response to the COVID-19 pandemic for private medical practices

This plan is already supported by the South African Medical Association, the South African Private Practitioners Forum, the South African Medical and Dental Practitioners Association, the Independent Practitioner Association Foundation and the Radiological Society of South Africa, which collectively represent more than 15 000 healthcare professionals. Major medical scheme administrators, including Discovery Health, Medscheme, Metropolitan Health and Momentum Health, have agreed that it is technically feasible. 

The next step is to fully engage the individual medical schemes. It is well understood that certain corporate groups with health interests may have to forego windfall profits due to reduced patient demand in existing managed care arrangements during this period, and some have already indicated a willingness to do this as part of their contribution to fighting the pandemic.

Here’s how the plan works

First, the arrangement is essentially what healthcare funders would call a pre-funded capitation payment system. An increasing number of schemes already make use of capitation payments for out-of-hospital benefits.

Schemes would agree to pay private practices upfront a guaranteed portion equivalent to 70% of what they billed for in 2019. This will allow practices to cover staff and overhead costs and, most importantly, keep their practice doors open.

So, a practice in 2020 that is billing at 50% of what it did in 2019 for a particular month, would be paid a top up of a further 20% for that month — based on that practice’s 2019 billing history with the scheme. This represents a pre-funded amount of 70% of the practice claims in the corresponding month in 2019. Claims above that threshold will be paid as a fee for service in the normal course.

Second, the framework proposes what we call a “global cap” on claims, meaning that there is a ceiling to how much medical aid schemes will pay out in total for each of the two years covered by our plan, beginning retroactively from April 2020. This ceiling, we propose, will be equivalent to 100% of what a particular practice billed for in 2019, adjusted for existing negotiated or agreed price changes applicable to 2020. When practices reach this ceiling, claims for any patients they see above and beyond that will not be paid out.

Third, the establishment of a cap of 100% of 2019 claims completely protects the scheme from any risk of an open-ended liability. Moreover, the two-year framework envisages a consumer price index increase (which is lower than medical inflation) for 2021 on the 2019 service rates, thereby potentially creating a surplus for medical schemes. Whichever way it is examined, the risk to medical schemes is completely attenuated, with a likelihood of a potential surplus. Having the arrangements in place for two years, also eliminates any risk of a surge in demand and increased claims from deferred care that may arise when the pandemic subsides.

This type of agreement is called the fee-for-service cap agreement in many places around the world. We have developed this shared-risk framework between schemes and managed care companies (the intermediaries accredited to enter into managed care agreements) on the one hand and medical practices on the other.

So, in exchange for ensuring that practices can make at least 70% of their 2019 turnover, medical aids would apply a global cap — that idea that practices cannot bill medical aids annually for more activities than what they did in 2019 — to both the 2020 and the 2021 financial years.

But, you might ask, won’t capping claims mean that practices will just stop seeing patients after they hit this ceiling?

Here’s why we believe that’s unlikely to happen:

In terms of billing, 2019 was not a bad year — so exceeding those levels would take some effort which is improbable. If practices do manage to bill for more than they did in 2019, it’s likely they will only realise this after the fact, once the schemes have reconciled claims.

This framework comes into practice through a set of individual service level agreements between schemes and medical practices that would provide schemes with the ability to audit any unusual declines in patients seen.

Guaranteeing certainty in uncertain times has its cost. Here’s what the risks are

This arrangement allows medical schemes to curb two major financial risks posed by the pandemic. The first is the eventual resurgent demand for services and the second is the expected increase in COVID-19 claims. Since the claims are capped at 100% of 2019 claims for two years, with a consumer price index increase for 2021, any excess future demand or high current COVID-related claims do not pose any additional financial risk.  

At the moment, the number of private-sector patients in intensive care units (ICU), high care units and general wards is rapidly increasing and is reaching alarming levels. At the current rate, South Africa will reach its private sector bed capacity during July/August and this will be costly for medical schemes. With this framework, schemes will face no additional financial risk as a result of either COVID-19-related claims or resurgent demand when the pandemic subsides.

It’s important to note that medical schemes have budgeted for activity increases beyond 2019, so the way our plan is structured is a real net saving for them.

Most South Africans don’t have private medical aids. Why should they care about this?

Experience abroad shows that when facilities become overwhelmed, clinicians in non-acute care disciplines will have to be pressed into service to help with COVID-19 patient care. Ophthalmologists, dermatologists and gynaecologists are all perfectly capable of managing patients in high care or intensive care units under the direction of physicians running those wards.

Members of the Independent Practitioner Association — mainly GPs and family practitioners, which represent over 2 000 GPs and family practitioners, who have been particularly hard hit by the fall in demand — have already volunteered their services to the national response. They’ve offered to help at community clinics and field hospitals set up by the government and which cannot be adequately staffed by the public sector. Assuring doctors such as these that their practices won’t shut during COVID-19, allows them to devote more time to volunteer their services to the national response.

As our colleague Mark Human from the South African Medical Association recently said: “If you’re not having to quite literally sweat bricks about keeping your practice and your staff intact because you’re guaranteed an income, then that available time that you have anyway, you can donate to… join the fight, and that’s the social solidarity side of this.”

Moving from paper to practice

In the past weeks, we’ve discussed our proposal with major industry players in the medical funding industry, as well as with the banking sector and National Treasury — none of them have flagged any feasibility issues. Indeed, the banking sector and Treasury have indicated support for providing certainty for medical practitioners in the context of re-invigorating the broader economy.

Given that medical schemes are regulated entities, we have also consulted the Council for Medical Schemes. The Council has provided written, non-binding, feedback which indicated no concerns with the proposal. The Council also signalled that it would be willing to engage on an ongoing basis to resolve any regulatory concerns that may arise when final contracting occurs.

Enabling the participation of such a large contingent of medical professionals in the pandemic response is a necessary effort that will be welcomed by the entire population. For the government, it provides a resource that is larger in some respects than the public system medical contingent. 

As we write, the COVID-19 surge is well underway and public and private hospitals are experiencing an overwhelming demand, with most already filled to capacity. And this is just the beginning. This proposal goes some way to mitigating that dire situation. 

Aslam Dasoo is a medical doctor and a convenor of the Progressive Health Forum. Alex van den Heever is adjunct professor and chair of social security administration at the Wits school of governance. He is also a member of the Progressive Health Forum.