Private healthcare sector pleads for financial help from medical schemes

  • The Covid-19 pandemic is hitting private healthcare, with doctors and other healthcare practitioners losing income. 
  • But medical schemes have rejected a proposal by private health sector represenatives that would see them tapping into funds to help them stay afloat. 
  • They say they're available to lend an ear - but that the funds must stay put. 

The Council for Medical Schemes has declined a proposal by private health sector practitioners that would see medical aid schemes tap into funds help them stay afloat, as the economic impact of the Covid-19 outbreak puts the future of medical practices in jeopardy.

The pandemic has put many businesses at risk for closure across the country, and private sector practitioners have not been an exception, with many specialists having shut their doors since the beginning of the lockdown in March.

Last week, private practitioners made a plea for assistance to medical aids and banks, through industry groups and associations including the South African Private Practitioner’s Forum (SAPPF), the South African Medical and Dental Practitioners Association, and the South African Medical Association.

Pay in advance, please

Their proposal was that medical aids should pay practitioners in advance, so that they can continue practising without worrying about going out of business, as patients shun healthcare facilities out of fear of contracting Covid-19 and elective procedures are postponed.

Dr Chris Archer, CEO of the SAPPF, said: "The idea is that they [practitioners], would use the payments made by the medical schemes made in 2019 as the base year."

The individualised payments, based on what money the various doctors made last year, would be split into a 70% upfront payment and a capitated fee of 30% that would be paid as a service fee.

He suggested that medical schemes could tap into the funds that they have accumulated during the lockdown, to provide the practitioners with the assistance they need, since those funds have not been paid as fees for services that would normally have been rendered by the practitioners.

Fee for service agreements mean that doctors are paid per service they provide but a capitated agreement means that the doctors are paid a certain fee regardless of whether or not they have provided a service.

Fee for service agreements have the potential to lead to over-servicing, an issue a private healthcare sector issue that was flagged by the Health Market Inquiry while capitated payments could result in underservicing.

Archer explained that private practitioners had seen a reduction of 45% to 60% in their businesses during lockdown, while specialists like ophthalmologists’ business fell by 90%.

Other affected specialists include Ear, Nose and Throat surgeons, dentists, plastic surgeons and maxillofacial surgeons, who perform facial surgeries.

"We need the money now, we need the doctors now because people are literally dying and we can’t afford to spend time talking and worrying about regulations and what boards of trustees might and might not think," said Archer.

He added that older doctors, especially those with co-morbidities, may be retiring early to avoid infection, leaving younger doctors to care for patients.

But the younger doctors are at risk of losing their businesses due to low patient numbers.

However, the CMS has a different view.

On Tuesday Dr Sipho Kabane, registrar and CEO of the CMS, said the council had received proposals from organisations that would require medical schemes to tap into their reserves to help practices stay afloat.

"We appreciate that Covid-19 and the associated lockdown has resulted in many healthcare service providers facing financial distress. Indeed, keeping these practices alive ensures future access to care for medical scheme members.

"However, what these proposals have failed to demonstrate, is the societal benefit from a medical scheme beneficiary perspective," said Kabane.

The CMS is a statutory body that provides regulatory supervision of private health financing through medical schemes.

Medical aids are required by the Medical Schemes Act to keep their reserves at 25% of annual gross contributions.

Available to lend an ear

In a letter responding to the proposal from the practitioners, Kabane said the CMS was available to support the practitioners in line with regulations and by lending them an ear, but agreements with schemes need to be in line with regulations. 

Damian McHugh, executive head of marketing and sales at Momentum Health, said the company was looking at the financial implications for members and the practitioners, but any decision it makes will have to be in line with regulations.

"It’s a good thing that we review the payment mechanisms because there are challenges in the current one and the capitated one. We want to ensure that providers [practitioners] are protected during this, because they are a critical part of our health eco-system and we’ve got an under-supply so we need to think about them as well.

"But we also need to think about the members and the financial implications this has on the members."

Nedbank said it had been approached by specialist practitioner groups and associations and is assisting them with payment holidays, reduced reduced credit card repayments and waived penalty fees on early investment withdrawals.  

"We also have a unique funding package exclusively to the Medical Fraternity with relaxed payment terms," said Alan Shannon, professional and small business services executive at Nedbank.

Dr Ryan Noach, CEO of Discovery Health, said the funds that have not been paid out in claims, since many people are not visiting doctors, are held in reserves meant to benefit members.

"It is important to note that neither the administrator nor any other service providers to the medical schemes have access to these funds. The funds are retained within the scheme risk pools, to defray the costs of members’ future claims," he said.

Noach added that Discovery is in discussions with practitioners and their representative organisations for a joint approach on a financial relief structure that will have a collective benefit.

"We remain entirely alive to the COVID-19 plight doctors are facing, including not only safety risks in the front line of care, but also economic pressure in the circumstance of this unexpected global event," Noach said.

Dr Lungi Nyathi, managing executive for clinical risk and advisory at Medscheme, said the medical aid administrator has been having discussions about a solution with the Progressive Health Forum, which represents practitioners.

"For Medscheme, while the solution can provide relief to the healthcare providers that are currently experiencing challenges, it must also ensure that client scheme members can continue to have access to quality healthcare and it must also improve on the current fee for service model,” Nyathi said. 

A capped payment model approach is not straight forward, and any solution agreed on should align with the Medical Schemes Act.Discussions with practitioner organisations are continuing but the best approach to assisting them will be one that considers the financial impact on medical schemes, which have also been affected by Covid-19, as members lose their jobs and can no longer afford to pay for healthcare. Medical schemes have to keep a close eye on their finances to ensure that they can afford to meet their members’ needs, she said.

FNB, Standard Bank and Absa also had not responded at the time of publication.

*Update: This articles has been updated to include comment from Medscheme. 

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