HMI Seminar 12 April 2019 Matthew Prior Agenda LHCs Economic - PowerPoint PPT Presentation

www.lifehealthcare.co.za HMI Seminar 12 April 2019 Matthew Prior

Agenda • LHC’s Economic Cycle • LHC Case Studies • Basis for the recommendations • Way forward 2

LHC’s Economic Cycle 200 Index of number of beds/beneficiaries 175 Tariff Inxed / ROCE Index 150 125 100 LHC Real Weighteed Average Tariff Index Total Beneficaries (2004 = 100) Total Private Beds (2004 = 100) LHC ROCE Index 3

LHC Case Studies – Hospital A Year Projected Actual Occupancy Difference between Occupancy Rate Rate actual and projected occupancy 2012 50.0% 17.6% - 32.4% 2013 55.0% 29.9% - 25.1% 2014 60.5% 38.9% - 21.6% 2015 66.6% 45.1% - 21.5% 2016 73.2% 45.0% - 28.2% 2017 79.8% 35.7% - 44.1% 2018 79.8% 28.1% - 51.7% 4

LHC Case Studies – Hospital B Year Projected Actual Occupancy Difference between Occupancy Rate Rate actual and projected occupancy 2006 49.4% 3.4% - 46.0% 2007 60.0% 41.9% - 18.10% 2008 65.4% 53.8% - 11.60% 2009 70.0% 52.7% - 17.30% 2010 70.0% 51.8% - 18.20% 2011 59.7% 45.5% - 14.20% 2012 64.5% 48.3% - 16.20% 2013 64.5% 51.7% - 12.80% 2014 64.5% 55.8% - 8.70% 2015 64.5% 57.1% - 7.40% 2016 Not available as 63.9% business case was 2017 59.2% projected for 10 years 2018 60.7% only 5

Impact of Managed Care Interventions Group Occupancy Rate 73,0% 72,5% 72,0% 71,5% Occupancy Rate 71,0% 70,5% Occupancy Rate 70,0% 69,5% 69,0% 68,5% 68,0% 2013 2014 2015 2016 2017 2018 Year 6

Basis for recommendations 1. The primary purpose of the Health Market Inquiry is to investigate and put forward recommendations to address the above inflation increases in medical scheme premiums. 2. Broad consensus that these increases are driven by utilisation rather than prices. 3. Broad consensus that hospital concentration is not problematic. 4. We do not believe that potential recommendations should be limited by the current legislation. 7

Way Forward | Demand-side 1. Stabilise the regulatory framework under which Medical schemes operate. • Mandatory membership • Risk Equalisation 2. Incorporate primary care into mandatory benefits. 8

Way Forward | Supply-side 1. Standardise an efficient and effective licensing regime. 2. Establish a sustainable price for state patients. 3. Review of HPCSA ethical rules. 4. Quality reporting. 5. Increase the supply of healthcare professionals. 9

www.lifehealthcare.co.za HMI Seminar 12 April 2019 Matthew Prior