Strategy to Understand and Enhance Private Audiology Practice in South Africa

October 2017

The Pillars of Private Practice

The Practitioner

The Profession

The Practice

The Medical Scheme

Environment

The Regulatory

Environment

Regulatory Challenges Facing Private Practice

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National Health Insurance Overview

NHI Structure

Private Hospitals and

specialists

Private Doctors

NHI Authority

(Revenue collection, negotiation, purchasing)

NHI Fund (Pooling)

Primary Care Clinics

Medical Scheme contributions

Medical Schemes

Complementary Services

General Taxes New Payroll Tax

4% Increase

Central

Hospitals

Districts (CUP)

Community Outreach Workers

District Hospitals

Provinces

Hospitals

Phases of the NHI

• Phase I - 2012 to 2017 • Health System Strengthening Initiatives • Moving Central Hospitals to National Sphere • Establishing NHI Fund

• Phase II – 2018 to 2021 • Purchasing of Services • Mobilising of Additional Services • Establishing NHI Fund + Management & Government Structures • Population Registration • Amendments to Medical Scheme Act

• Phase III – 2022 to 2025 • Mandatory Prepayment • Contracting Private Hospitals and Suppliers • Finalisation of Medical Schemes Amendment Act

Projected Private Sector Expenditure

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

0

50

100

150

200

250

300

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Private Spend Projections

Spend % of GDP

283

NHI Budget (R256 Bil)

Davis Tax Commission: Current Concerns Focus on Funding the

NHI

General Consensus on Funding of NHI

• GDP Growth much lower than NHI Projections • Tax base narrow • Unemployment too high • Service Basket needs to be defined NHI not the correct model for UHC in South Africa • Is unaffordable in current economic climate • Costing needs to be done before further implementation

Single NHI Fund

CMS Strategic Plan

CMS Roadmap to NHI

HPCSA Regulatory Issues

SPECIALIST / GENERAL PRACTITIONER SURVEY RESULTS

Employment of Doctors

• HPCSA Sanctioned GP employment by Life Healthcare in Casualty, ICU and Maternity

• SAPPF Requested Research Report from Econex • Included Survey of Doctors • 20% response rate – 620 doctors • Research and questionnaire to Inform SAPPF position

statement on doctor employment

Corporate Employment?

18

In general do you think doctors should have the OPTION of being employed by hospitals?

In general, and if the contract terms are agreeable, would YOU consider being employed by a hospital?

57% 43%

Yes No

45% 55%

Yes No

Most cited advantages and disadvantages

19

22%

57% 55% 52%

42% 39%

0%

10%

20%

30%

40%

50%

60%

Advantages

1%

87% 77%

62% 59% 48%

0%10%20%30%40%50%60%70%80%90%

100%Disadvantages

HPCSA – Global Fees

HPCSA – Global Fees

• HPCSA issued Press Release on Global Fees in April • Currently still awaiting the Final Position statement Concerns: • Business models (rule 8) • No fee sharing (rule 7) • No subcontracting / professional appointment (rule 18) • Medicines and devices: no involvement in marketing,

advertisement or manufacturing (rule 23) • Possible exploitation (rule 22)

Competition Commission Health Market Inquiry

May 2014 Draft Statement of

Issues

June 2014 Receive Comments on

Draft Statement

July 2014 Consider Comments on

Draft Statement

August 2014 Publishing of Guidelines

Timelines

October 2014 Written Submissions

February 2015 Analyse and Publish

Submissions

Aug 2015- June 2016 Research and Analysis

26-29 January 2016 Conduct Pre-Hearings

16 Feb – 9 June 2016 Conduct Public Hearings

5 Aug 2016 Provisional Report and

Recommendations

15 December 2016 Publish Final Report

and Recommendations

HMI Schedule for 2017

• 28 February - Analytical Report of Prescribed Minimum Benefits • 28 February - Supplier induced demand in private healthcare Report • 1 March- HMI Facilities Analysis report • 1 March- HMI Practitioner Analysis Report • 1 March- HMI Funder Analysis Report • 15 March - Profitability Analysis on Private Healthcare Funders • 15 March - Profitability Analysis on Private Healthcare Facilities

• May - June 2017 – Further Public Hearings

• 20 October 2017 – Tariff & Coding Submissions • 30 November 2017– Provisional Report & Conditional Recommendations • TBC - HMI Final Report and Recommendations

The Audiology Landscape

First Need To Understand The Revenue Model

Discovery Audiology Code/Revenue Distribution (2016):

R 310 Million Claims

79%

7%

14% Hearing Aids

Procedures andEquipmentConsultations

Top 10 Codes (2016)

Code

Descriptor Claims Numbers

Unique Practices

Amounts

1 1830 Global Hearing Aid 19 122 269 244 746 366

2 1011 Audiology consultation. 16 - 30 mins 44 042 245 8 683 732

3 1825 Repairs to hearing aids 5 978 161 5 689 822

4 1013 Audiology consultation. 46 - 60 mins 12 230 222 5 488 976

5 1012 Audiology consultation. 31 - 45 mins 12 482 236 4 044 688

6 1100 Pure Tone Audiogram (Air conduction) 37 030 305 3 587 542

7 1580 OAE (Oto-acoustic emissions) 25 900 141 3 506 222

8 0020 Report writing 11 178 496 2 974 992

9 0301 Material 7 070 70 2 209 226

10 1105 Pure Tone Audiogram 24 518 290 2 116 494

Practice Cost studies

Why do the Cost Study Now?

Studies now being done for Specialists, GPs, Optometry & Physios

A request from the Comp Comm – Health Market Inquiry

Need a tariff structure to possibly replace HA mark ups?

Need to review Equipment Codes

Scheme Rates are too low for Professional Fees

Price Control a threat

Insight Actuaries Appointed

Practice Cost Model Following elements to be included

1

2

3

Overhead Distribution 2008 & 2016

Financial Survey – O & G

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2008 2016 2016

Standard Equipment

Sundry Expenses

Finance and Insurance

Management &AdministrationPremises

Personnel

Challenges for the Future

Challenges for Audiology Practice

• Professional Fees are under remunerated • Reliance on Hearing Aids to keep Practices Financially viable • Price Regulation for Private Practice – Mark Ups on Hearing Aids? • Competition Commission probe into Private Healthcare • Change in HPCSA Ethical Rules to improve competition in Healthcare • Health Professionals Employment by Corporates • Multi Disciplinary practices across various Professional Boards • HANC Coding System for Hearing Aids v NAPPI Codes • Fraud & Waste in Audiology – Forensic Reviews

The End of Business as Usual