SAHR 2007 - Health Systems Trust

Health and Related Indicators 15
Health Financing
Health Financing – Private sector
Private sector financing
The primary source for private sector health financing data is
the annual reports of the Council for Medical Schemes (CMS)
[Medical Schemes 2005-6 and 2006-7]. The South African
private sector was serviced by 124 medical schemes in 2006
(41 open schemes and 83 restricted schemes). By the beginning
of 2006, the CMS had recorded 381 approved benefit
options, of which 208 were offered by open schemes. The
numbers of both principal members (2 985 350) and beneficiaries
(7 127 343) increasing slightly in 2006, by 6.2% and
2.9% respectively (analysis excluding Bargaining Council
Schemes). A significant increase in the number of beneficiaries
living outside South Africa was noted in 2006.
Between 2002 and 2006, member contributions have
consistently risen more than the CPIX, but the CMS noted
that the gap between the two was narrowing. In 2006, the
total amount contributed by members was R57.6 billion (an
increase of 6.2% over the previous year). Of this, a total of
R51.1 billion was paid out in claims submitted by medical
scheme beneficiaries, which represented a 12.1% increase
on the previous year. Put another way, gross contributions
per beneficiary per month in 2006 were R687.13 and total
gross claims were R610.14.
The contribution of various important categories of medical
scheme expenditure, and the percentage contribution and
percentage change from the previous year, are highlighted
in the following findings from the 2006-07 report:
➤ “Expenditure on hospital services accounted for R17.9bn,
or 35% of the total paid to providers.”
➤ “Private hospitals expenditure was R17.7bn, an increase
of 13.6%, while expenditure in provincial hospitals
increased by 12.5% to R273.6 million.”
➤ “Payments to medical specialists accounted for R10.9bn,
or 21.4% of claims paid in 2006.”
➤ “General practitioners took up R4.4bn, or 8% of total
benefits paid. This was a 17.2% increase on 2005.”
➤ “Expenditure on medicines dispensed by pharmacists
and providers other than hospitals increased by 8.8%
to R8.7 billion. This accounted for 17% of schemes
benefits in 2006.”. This was in marked contrast to the
comment in the previous report: “A significant decline
in expenditure was again seen in the value of medicines
dispensed by pharmacists and providers other
than hospitals, which accounted for R7.2bn or 15.7% of
the total benefits. This represented an 8.8% decrease in
expenditure on medicines compared to 2004.” Single
exit prices for most medicines were increased by 5.2%
from January 2007. The increase between 2005 and
2006 can thus largely be attributed to changes in utilisation,
not unit prices.
➤ “Dental specialists increased their share of expenditure
by 17.6% to R434 million. Dentists, on the other hand,
saw an increase of 0.8% to R1.76bn.”
➤ “Benefits paid to supplementary and allied health
professionals accounted for R4.48 billion.”
Together, expenditure on hospitals, medicines (other than
those issued by hospitals) and medical specialists accounted
for 71.5% of all claims expenditure in 2005. Utilisation in
2005 remained high – 850 per 1 000 beneficiaries visited
the most common primary care provider, a general practitioner,
at least once per annum (compared with only 17 per
1 000 visiting a private nurse). The average number of visits
to a general practitioner per beneficiary was 3.4 in 2005.
In addition, 207.6 beneficiaries per 1 000 were admitted to
private hospitals (compared with only 13.5 medical scheme
beneficiaries per 1 000 admitted to public sector hospitals).
The average length of stay in a private hospital was
1.4 days. All of these utilisation indicators dropped in 2006,
with average length of stay in private hospitals down to 1.27
days.
The contribution of non-health expenditure remains highly
contested, particularly by private sector health professionals.
The 2005-6 report contained the following statements:
➤ “Administration expenditure in all medical schemes
grew 10.4% to R5.4bn in 2005 from R4.9bn in 2004.”
➤ “Managed-care fees increased by 2% to R1.3bn from
R1.2bn. Administration expenditure and managed-care
fees together accounted for 12.3% of contributions, up
from 11.9% in 2004.”
➤ “Broker fees again rose sharply by 21.5% to R855.5
million from R704.1 million.”
➤ “Total non-healthcare expenditure (i.e. Administration
fees plus fees paid for managed care and broker fees,
etc) rose by approximately 9.6% to R7.8bn in 2005 from
R7.1bn.”
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