Medical aid boss warns of hospital costs in South Africa

Hospital admissions are one of the biggest cost factors for any private medical plan, which is why rates are often reviewed and negotiated annually. If no deal is reached, medical aid members will usually bear the brunt of the high co-payments.

Lee Callaoppen, senior director of Bonitas Medical Fund, says hospital admissions are half the annual cost of plan claims.

“Last year, due to the pandemic, hospital admissions and use of other medical assistance benefits fell to record levels. However, claims experience in 2021 has shown that many benefits, including overnight benefits and several categories of hospitalization, are already close to 2019 levels. ”

Callaoppen warned that if hospital costs rose above the CPI, membership premiums would also rise, making medical aid unaffordable.

“We call on all of our service providers, including hospital groups, not to pass their costs on to plans and, by extension, to members,” he said.

On the way to 2022

Callaoppen said there are great concerns about 2022 usage levels, not least because of the risk of an increased disease burden due to gaps in care that may have arisen during the pandemic, which is neither party’s fault.

It also provides for a catch-up in elective procedure requests after so many people were canceled in 2020 and 2021 during national blockades.

Other areas of concern include the unknown impact of long-distance Covid and the costs of new or more expensive Covid-19 treatment, including booster vaccines, which may emerge.

“All stakeholders in the healthcare value chain need to be prudent in managing their operating costs. The intention of the negotiated hospital rates is to reach an agreement that supports the sustainability of the healthcare ecosystem and ultimately the membership, ”he said.

“The problem arises when no agreement is reached and members may have to pay the difference between what hospitals charge and what the plan is able to pay. We try to avoid such a situation so as not to have a negative impact on the members, but if the parties are unreasonable in their demands, this situation may arise. “

What happens if the negotiations fail?

However, when the costs of doing business are passed on to plans and, by extension, clients – or medical aid members – things get complicated, especially when rate increase deals cannot be reached, a said Callaoppen.

He said that in these cases there are two possible scenarios:

  • A plan pays what it considers a reasonable rate and the hospital bills its rate. This means that the member would be required to pay the shortfall on the account unless the hospital decides to override the difference.
  • A system excludes the hospital from its network and actively discourages a member from using that hospital. The member may be required to pay a deductible or co-payment if they choose to be admitted to this facility, unless the hospital decides to reverse the difference.

“Neither of these situations is a good outcome,” says Callaoppen. “This is why it is imperative to reach a workable middle ground on hospital costs / tariffs,” he said.

Read: Wages will remain under pressure in South Africa, economists warn