Cost drivers
Differences in cost are driven by the following factors: • Improved equity – private sector – Costs being managed in the private sector lead to a lower cost of care – The utilisation of services being managed in the private sector leads to lower cost – The regulation of the private sector leads to transparency on pricing, pooling and quality of care, which supports better value in private sector – and reducing costs – A standardised benefit package guides utilisation down towards the appropriate levels and decreases costs – A gradual approach to NHI allows time to establish trust and mutually beneficial contracts with the private sector, leading to a greater variety of private providers to contract with • Improved equity – public sector – Improvements in public sector, as in the Status Quo Gold Standard scenario • Improved equity – Greater economies of scale likely achieved from overlap/merge of private and public sector, leading to lower costs of care – NHI implemented after notable experimenting and trials, and therefore more likely to be done efficiently, leading to overall better value through lower costs and/or better outcomes – Central data repository supports resource allocation and new research leading to greater opportunity for value – Standardised benefit packages ensure equality and more defined cost • Monopsony is maintained and may lead to loss of efficiency due to the absence of competition. Costs could then rise – The effect of a monopsony is greater here than in the Status Quo scenario since there is no private sector to compete with
Power to the People: Purchaser provider split but with multiple purchasers Summary NHI end results are largely achieved as set out in NHI Rejigged, with the primary difference being the multi-purchaser environment. A purchaser-provider split is still maintained. Provincial Departments of Health (PDoHs), local municipalities and private providers are providers of care. There is a process to apply to be a purchaser, but the envisaged purchasers are the government body (through a fund such as the NHI) and medical schemes (that would be appointed by the relevant body to act as purchasers for UHC) as they have experience in performing the purchaser role. Users can select their preferred purchaser, who is then allocated funds accordingly. There is a clearly defined benefit package in place and these are used in the contracting between purchasers and providers. As with NHI Rejigged, the public sector is improved, medical schemes in their current form are closed and OOP expenditure and corruption decrease over time.
What drives costs in this scenario? This scenario (Table 9) has many of the same cost drivers as the NHI Rejigged scenario (e.g. information systems and quality improvement costs), with some additional cost drivers. The big potential cost saving factor associated with this scenario the choice given to
TRADE-OFFS ON THE ROAD TO UHC: A QUANTITATIVE ASSESSMENT OF ALTERNATIVE PATHWAYS FOR SOUTH AFRICA | 16
