Since government announced the passing of the National Health Insurance (NHI) Bill, industry experts, business leaders, legal experts, and numerous other commentators have voiced opinions as to why implementing NHI is either going to be a nightmare, or frankly impossible.

By Richard Firth, CEO of MIP Holdings

Reasons have ranged from the difficulty of integrating two very different existing systems to challenges with funding, but all criticisms of the bill essentially boil down to a belief that the execution of the NHI will be, at best, piecemeal and ineffective.

At worst, the implementation of the NHI could remove access to private medical coverage entirely, according to some experts, leaving everyone in the country reliant on the already overstretched and underfunded public health system.

These criticisms are not unfounded. History has proved that state-run kitties like the one proposed for the funding of the NHI are open to looting and mismanagement. In addition, governments are incapable of building entrepreneurial businesses, focusing on policy rather than profits. One just has to look at the Road Accident Fund and Workman’s Compensation Fund to get a glimpse of the complexities involved in managing such large pools of money.

The NHI financial process will make both these units look tiny in comparison to the number of transactions and volume of money that will flow daily through the system.

There are, however, centers of excellence, The Government Employees Medical Scheme commonly known as GEMS have built a quality business unit focused on the healthcare for government employees. Both their member management and claims processes are held up as being one of the best and largest individual schemes in the country. We can take learnings from here.

However, there is a way to ensure that the NHI delivers on the government’s dream of universal healthcare for all, while enabling South Africans from all walks of life to access the world-class medical resources that currently define private healthcare in the country.

Technology can make NHI a viable reality

What is currently missing from the proposed implementation of the NHI is a scientific, unified and integrated pricing approach for all medical procedures agreed by both medical practitioners and payors. We have the technology and the capabilities to price every single procedure and diagnosis, and can use that to create the framework on which the basis for the NHI can be built.

In 2009 the competition commission found the single exit price across all fees was anti-competitive and cancelled this form of pricing. In any successful healthcare model, a single price is the only way forward.

A standardised, structured pricing approach, integrated into the processes of the healthcare system, will guarantee that all spend is allocated correctly. This will not only eliminate the risk of mismanaged funds, but also make sure that patient bills are fair and that the entire healthcare value chain – from doctors, to hospitals, to pharmaceutical providers – is reimbursed fairly.

Take an appendectomy, for example. Using historical data to determine everything from the length of a hospital stay to the exact doses of all medications needed, we can arrive at a standard figure for the procedure. Using this figure, the correct amount will always be allocated to the surgeon, the anesthetist, the hospital, and so on, leaving no room for overpricing or fraud.

This approach would also create an easy way to integrate public and private healthcare. Knowing exactly what each procedure costs, government could start “auctioning” patients to “private” hospitals who generally manage overall utilization by bed availability, allowing them to take on patients and procedures based on their capabilities, the availability of beds, and so on. The end result would therefore be focused on patient outcomes rather than costs, revolutionising how medical care is delivered in South Africa.

Public and private sectors working hand-in-hand

There’s no doubt that the current health system is not working, but without a structured, systematic approach to the implementation of NHI, we run the risk of creating even more problems. It will take years to get the right architecture in place, and once that is done, we will also have to ensure that the right oversight is in place.

Shifting the government funding model from allocating a state hospital a budget to moving all hospitals to a “claim for services” rendered model minimises the risk of fraud and other financial improprieties. This costing model will also help drive quality and patient outcomes will play a big part of the payment and control processes.

The proposed central NHI fund will be dealing with billions every year, and will require stringent controls. A trustee system needs to be set up, preferably with representatives from both the public and private healthcare sectors providing guidance and oversight.

I really believe that this model can be implemented in the government-funded SASSA grantees for a pilot project and then grow the scheme into the private sector. This will allow government time to prove its plan and show how the system can work.

With the right systems in place, and all stakeholders working together, South Africa can build a national health system that not only works for everyone in the country, but that can set a new international standard.