As health systems continue to grapple with finding the right balance between providing quality care for patients and keeping the costs of care down, healthcare funders are turning to innovative payment models that reward quality and efficiency. CEO of Medical Specialist Holdings (MSH), a holding company for the Independent Clinical Oncology Network (ICON), Dr Jacques Snyman, talks about driving the shift from fee-for-service to value-based care in South Africa.

Papers published in the Harvard Business Review in 2006 sparked the first discussions around failings in healthcare systems to improve quality care while keeping costs down. Since then there’s been a call for new approaches that deliver value for patients and reform how healthcare providers are paid. It was argued that under the traditional fee-for-service model, industry structures were not aligned to delivering value for patients. This model rewards providers for volume of services rendered and treating illnesses and injuries as they occur.

Whereas, the value-based care model rewards providers based on patient outcomes, rather than just paying them for providing a service. Under this model, providers are incentivised to achieve better clinical outcomes – either by actively preventing illness or by treating it early when it’s more cost-effective to treat. Value-based care carves out a great deal of the waste in the system; tailoring the benefit to the need of the patient, instead of the other way round.

A shift in reimbursement models

Many doctors and surgeons are cautious about changing the way they have been billing, and have concerns about their future income. And because medical schemes usually ask for a discount on tariffs, doctors tend to seek another tariff to add to make up for the discount. But the value-based care model means the provider should get paid more in order for them to continue to do the right thing and drive efficiencies of care. ICON’s model has demonstrated that if doctors follow protocols, they are reimbursed and earn a proper income under alternative agreements, while their patients still benefit from quality care.

In 2017, ICON conducted a study in collaboration with a leading South African medical scheme which demonstrated that it is possible to improve healthcare outcomes without spending more. The results showed a 13% saving on direct oncology costs – in the treatment of certain cancers – without reducing access to treatment or sacrificing patient outcomes. The medical scheme was able to reduce costs while achieving the same or better patient outcomes on a number of key metrics including hospitalisation rate and average patient stay days.

How it works

The model ensures quality care and limits the financial risk to medical schemes by the implementation of evidence-based protocols drawn up by the participating doctors. The outcomes and cost of the protocol-based treatment cycles for different specialities can then be measured and calculated to ensure that the desired impact is achieved. The information required for this analysis is collected through an online IT system called e-Auth®. The system allows doctors to submit their patient diagnosis and full treatment plan directly to medical schemes and integrates it with financial data from claims, provided by the medical scheme. The data collected is analysed and assessed by a panel of experienced care providers. These results can be used to tailor, refine and update treatment protocols going forward.

We use pre-defined metrics to determine whether a patient received the correct quality care, including clinical outcome metrics, process metrics and downstream costs. Establishing these metrics is understandably easier in the case of something like cataract surgery; but far more complex in oncology, where we must consider metrics for the treatment of various types of cancer, unnecessary hospitalisation, whether life was prolonged by the treatment and even whether the patient died with dignity.

Moving towards Universal Health Coverage

When we transition to National Health Insurance (NHI), which will seek a move to value-based care, it will be even more important to maximise cost-effectiveness. This is a change which could cause some concern in certain quarters. However, we at ICON have embraced the value-based care model since 2009, and we have demonstrated that it can be very successful.

We believe the private sector’s drive to value-based care should be replicated in the public sector.

However, implementing the model in the public sector would be time consuming, complex and costly, and in its current form, state structures likely do not have the resources necessary to roll out value-based care models. It may be that the move to value-based care will be driven by the private sector to support the government’s efforts in implementing this model.

Unfortunately, our current regulatory environment is not aligned to support value-based care unless it is implemented within an integrated network of health professionals who collaborate to improve patient outcomes.

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