Hennie du Plessis
13 October 2003
Johannesburg — THE health-care insurance industry is under substantial pressure. International trends show health-care expenditure constantly rising, driven by several factors including longevity and an ageing population; increasing consumer demands; higher utilisation of medical aid funds; and more expensive pharmaceuticals. The increased burden this puts on medical insurers and an accompanying increase in operating costs endanger the health of the industry.
A simplistic view of the functioning of medical schemes is that they receive contributions, manage these funds and pay for services rendered. Complexity is added to this model with schemes trying to reap systems efficiency, compete for membership, manage administration costs down, deal with legislative issues and manage disbursements amid a plethora of other activities.
Probably the most complex task in the medical-schemes industry is that of administration, particularly processing members' claims for professional services. It is in this arena where information technology plays its most visible role in containing the costs within the sector.
This is vital for the future of the industry as schemes come under increasing pressure from members seeking to contain premium increases and from regulators limiting administration cost ratios. How can the medical insurance industry benefit from IT?
Since the early eighties, doctors' practices have become increasingly computerised, with debtor systems being the initial requirement. This has evolved into more sophisticated practice-management applications, now managing other areas of the practice including appointment scheduling, stock control, and electronic medical records.
With the possibility of maintaining these records in an electronic or digital format even the smallest medical business can make better business and clinical decisions based on more complete information. But it remains a challenge for professionals to let go of pen and paper and trust the machine. In the early nineties, well before the internet became a business tool, another group of innovators conceived the notion of conveying medical claims electronically. Borrowing IT protocols from retail and commerce, electronic data interchange (EDI) for the health-care industry was born. Through this interchange medical practices started to submit accounts (claims) directly to the medical schemes electronically.
More than 60% of claims for medical services in SA (almost R20bn a year) are submitted electronically, a higher proportion than anywhere else in the world. An estimated 13000 medical businesses use EDI. More than 95% of claims for prescribed medicines are processed online. The pharmacist knows before dispensing that the patient is eligible and the account will be settled. Most pharmacies and many doctors use an electronic stock-ordering facility. Some scheme administrators say they get more than 80% of their claims electronically.
Changes in work behaviour and backoffice systems that went on to get us to this point are staggering. And the advantages are impressive. Processing an eclaim costs only 10% of its paper cousin, not counting queries. Doctors using an e-claims service are paid typically within two weeks of submission, some even within 24 hours.
These developments are the key to survival of the medical-schemes industry and to the business continuance of medical practices. Information technology brings substantial cost savings through improved business efficiency and a vast reduction in paper used.
Electronic claims submission, or switching as it is commonly known, cuts the cost of printing and mailing claims, reduces call-centre activity, improves compliance with the requirements of medical schemes and enhances the ability of doctors and medical schemes to manage risk. Switching plays the role of a telephone exchange and more. Not only can a medical practice "speak" to a multitude of schemes by "phoning" only one number, but claims so conveyed are scrubbed and verified by the switch for completeness before delivery. As a result, medical schemes receive cleaner claims, payment turnaround is improved and the quality of information exchange between parties is much improved.
Online switching systems enable a practice to ascertain rapidly if the patient is eligible for services and the claim will be honoured, thus reducing the financial risk substantially. This also protects the scheme, enabling it to determine and mitigate its exposure in respect of medicines prescribed and the consequential effects of treatment dispensed.
The online information world holds advantages for the health-care industry beyond the processing of claims. The exchange of patients' clinical information between practitioners, such as laboratory results and historical treatment details and outcomes, access to international medical knowledge bases and the accumulation of national health and biomedical data to facilitate health-care planning, policy making and risk management could revolutionise the way medicine is practised and care managed and access for all ensured.
SA's health-care insurance industry must adopt and implement technologybased solutions more rapidly. It is no longer a question of affordability of technology but whether we can afford to delay this any longer.
Du Plessis is the CE of Digital Healthcare Solutions, a provider of health-care IT and e-Commerce solutions.
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