Lynn Carlisle, Business Day

EVEN though the effects of absenteeism from unscheduled sickness has been widely researched and discussed in business and the media it remains a major challenge for every employer, says Anton Engelbrecht, acting head of Alexander Forbes Health Management Solutions.

The employer experiences a direct cost of paying a salary or wage to the employee when he/she has been absent from work. An additional indirect cost of about 2½ times the working day's cost arises as a result of unscheduled sick leave. The indirect cost components are:

- Additional pay for casual/relief employees who are generally less productive;
- Diverted and additional management time; and,
- Reduced morale among other employees who have to work harder to carry the load.

"This challenge becomes even greater with the impact that HIV/AIDS is starting to present in the workplace."

Engelbrecht says that because employees' HIV status, or any other medical condition, cannot legally be disclosed to the employer without the employee's consent, it becomes almost impossible for an employer to manage sick leave and provide assistance to employees infected with HIV.

"It is recommended that companies use industry experts that provide integrated solutions to changing medical risks.

"The services provided should assist companies to create and implement policies to manage workplace absenteeism and incapacity. This should reduce the cost and impact of disability within the company greatly."

He says such services should be able to provide HIV/AIDS disease management. An effective programme should integrate sick leave management with confidential measurement and management processes.

"Studies have illustrated that the use of sick leave by employees who are HIV-positive and participate in an HIV/AIDS intervention programme, does not vary much from that of employees who are HIV-negative.

"For example, the sickness absence ratio of a company in the information and telecommunications sector did not differ much from the total employee population's ratio at an average of 3%. "This shows that HIV/AIDS workplace programmes allow companies to contribute not only on a socially responsible basis, but also to provide their businesses with an economic return," says Engelbrecht.

The Board of Healthcare Funders of Southern Africa is concerned that moves by SAMA to halt the publishing of the NHRPL for 2007 will thwart the medical schemes’ industry and government’s attempts to bring about greater affordability and access to private healthcare.

The National Health Reference Price List provides medical schemes with guidance in terms of reimbursements to healthcare providers and without this guide, fees charged by healthcare practitioners may spiral.
“Our concern is that more healthcare professionals would gravitate towards the Health Profession’s Council price list which is on average 300% higher than the NHRPL, with some doctors charging as much as 500% of the NHRPL”, said Dr Rajesh Patel, Head of Benefit and Risk at the Board of Healthcare Funders.

BHF’s preliminary analysis of claims data for the first half of 2006 indicates that specialist costs have risen by 20% in-hospital and 30% out of hospital, about 5 times higher than CPIX. This trend undermines attempts through the Health Charter and the Low Income Medical Schemes initiative to bring about affordable and accessible private health cover.

“The methodology used by the Health Professions Council of SA to arrive at their price list has also been brought into the spotlight by BHF as, in terms of legislation, these prices are meant to reflect the ‘norm’, said Dr Patel. “It is therefore difficult to understand how costs which are 300% higher than the NHRPL can be seen as a norm”, he said

BHF will be engaging with the Department of Health as well as the Council for Medical Schemes on the way forward and to ensure that stability is maintained in the medical schemes sector.

FOR FURTHER INFORMATION, PLEASE CONTACT:
HEIDI KRUGER
HEAD OF CORPORATE COMMUNICATIONS, BHF
011 5370237

The new dispensing fee announced this week will give you certainty about what you have to pay for medicines, the Board of Healthcare Funders of Southern Africa (BHF) says.

The BHF, which represents medical schemes, says in a statement: "The new dispensing fee structure will discourage the inappropriate use of high-cost products, thereby making medical scheme contributions more affordable and assisting government and funders in making private health care accessible to more South Africans."

In 2004, the government introduced a single exit price for medicines and put a stop to discounts and additional levies on medicines. The medicine pricing regulations provided only for the addition of a dispensing fee to the single exit price.

The regulations and the dispensing fee then became subject to legal challenges and were eventually upheld, but the Department of Health was ordered to reconsider the dispensing fee.

This week, the department announced the new dispensing fee, which must be applied as follows:

• Where the single exit price of a medicine is less than R75, the dispensing fee is a total of R4 plus 33 percent of the single exit price of the medicine;
• Where the single exit price of a medicine is R75 or more but is less than R250, the dispensing fee is a total of R25 plus six percent of the single exit price of the medicine;
• Where the single exit price of a medicine is R250 or more but less than R1 000, the dispensing fee is R33 plus three percent of the single exit price of the medicine;
• Where the single exit price of a medicine is R1 000 or more, the dispensing fee is a total of R50 plus 1.5 percent of the single exit price of the medicine.

The BHF says the newly regulated dispensing fee is a maximum, but many medical schemes are expected to negotiate with providers, such as pharmacies, for lower dispensing fees.

Some medicine providers may also compete by offering lower dispensing fees, and the BHF suggests that you shop around for these.

The BHF says the medicine price increase proposed by pharmaceutical manufacturers does not bode well for medical schemes and their members, as the schemes have already completed their budgets and benefit changes for next year.

Tamar Khan, Business Day

CAPE TOWN — The pharmacy dispensing fees and medicine price hikes announced last week were in line with expectations, and should not affect medical scheme members’ contributions for next year, key industry players said at the weekend.

The news should come as some relief to consumers anxious about their medicine bills. Although schemes spent 8,8% less on medicines last year than they did in 2004 (a drop from R7,9bn to R7,2bn) according to the Council for Medical Schemes, medicines remain a worrying driver of health-care inflation.

The new laws, which are to be implemented in full by January 1, limit the fees pharmacists may charge for medicine sales. They replace a variety of approaches used during the past three years, as government and pharmacists used the courts to contest what constituted an appropriate dispensing fee.

Some pharmacies applied government’s original proposal, which capped dispensing fees at R26; many added “administration fees” to cover their costs; some applied a sliding scale proposed by the industry; and others took an independent approach. To complicate matters, medical schemes applied various rules, with many refusing to pay above the R26 threshold and forcing members to pay the difference.

SA’s biggest processor of medical claims, Medi-Kredit, has analysed the impact of the new laws on medical schemes, and concluded that they will have minimal impact on schemes such as Discovery Health, Profmed and Camaf, which have reimbursed claims above the R26 rate. Discovery, for example, has reimbursed dispensary fees of up to 36%, capped at R59.

“The average markup per medicine (under the old system) was R24,41 for Discovery Health. Under the new system it will be R26,83, representing an average increase in cost per item of about 1,7%,” said the scheme’s MD, Neville Koopowitz. The analysis considered Discovery’s medicine claims since January, during which time the average item cost R120.

Solutio CEO Pieter Dorfling agreed, saying schemes such as Medshield, Fedhealth, and Sasolmed, which had paid above the R26 rate, would be little affected by the changes. Solutio is the health risk-management arm of medical scheme administrator Medscheme.

By contrast, schemes that had paid only R26 would in future pay on average R9 to R10 more a line item, said Medi-Kredit MD Wimpie du Plessis. This translated into an average increase in the cost per medicine claimed of around 3,8% but figures for individual schemes would vary depending on their product mix.

For the schemes within Solutio’s stable that applied the R26 cap, the change would translate into a 7,7% increase in their combined medicine bills, said Dorfling.

Qualsa’s Pharmacy Management head, Dylan Moodley, said all the schemes managed by the company had applied the R26 cap, and expected to see increased costs next year. Since the model announced last week was only a slight variation on the draft published for comment in March, these increases had been built into schemes’ tariffs for next year, he said.

Schemes had similarly anticipated the 5,2% increase in medicine prices, said Dorfling. However, news that further price increases would be allowed next July could have an inflationary effect, he said.

Tamar Kahn: Business Day, 1 November 2006

THE future of independent pharmacies is threatened by government's latest plans for capping the fees they may charge on medicine sales, says the Pharmaceutical Stakeholders Forum, representing SA's three biggest pharmacy organisations.

Health Department director-general Thami Mseleku yesterday announced new dispensing fees for pharmacists, along with measures allowing drug manufacturers to hike prices by up to 5,2%, and a proposed methodology for benchmarking medicine prices internationally.

The new dispensing fee comes almost three years after government first announced its controversial regulations to the Medicines and Related Sub-stances Control Amendment Act, launched in April 2004.

The regulations banned a host of perverse incentives such as free samples, ensured the ex-factory price of medicines - the price at which pharmaceutical companies may sell their products to retailers - was the same for all customers (effectively doing away with discounts and volume deals for favoured clients) and, most contentious of all, limited the mark-ups pharmacists could add to the medicines they sold.

The caps were R26 for prescription medicines, and R16 for non-prescription items, levels pharmacists maintained were so low they rendered their businesses unviable.

Pharmacy organisations, private hospital group Netcare and retailer New Clicks took government to court in a bid to overturn these pricing rules.

The Constitutional Court ultimately upheld government's right to regulate medicine prices while ordering Health Minister Manto Tshabalala-Msimang to devise an "appropriate" dispensing fee for pharmacists.

Under the new system announced yesterday, pharmacists may charge R4 plus 33% of the price of medicines costing less than R75, while drugs costing R75-R250 may attract fees of up to R25 plus 6% of their price.

The fee for medicines costing R250-R1 000 will be R33 plus 3% of their price, and for drugs above R100 the fee will be limited to R50 plus 1,5% of their price. The fees include value added tax, and apply to prescription and over-the-counter medicines.

Pharmacies have been given until January 1 to comply.

The system is a slight variation on the draft announced by the minister in March, which said pharmacists could charge R7 plus 28% of the price of medicines costing less than R75; drugs costing R75-R150 could attract fees of R23 plus 7% of their price; medicines costing R150-R250 could garner fees of R26 plus 5% of their price, and fees for drugs above R250 were limited to R31 plus 3% of their price.

"The new model seems considerably less than the one proposed by the Pharmaceutical Stakeholders Forum (PSF). Our concern is that it will jeopardise the viability of pharmacies," said PSF spokesman Ivan Kotze.

He declined to comment further until the PSF had fully analysed the effect of the new system on its members, which include United South African Pharmacies (representing pharmacy businesses), the Pharmaceutical Society of SA (rep-resenting pharmacists), and the South African Progressive Pharmaceutical Association (representing black pharmacy owners).

In contrast to the independent pharmacies, New Clicks welcomed the new dispensing regimen. "We think this is a fair return for pharmacies and benefits consumers," said New Clicks MD David Kneale.

The department's head of pharmaceutical evaluation and planning, Anban Pillay, said the system would see consumers paying less for their medicines than they did in 2003, and urged them to shop around as the new model allowed pharmacies to offer lower rates.

Thabiso Mochiko: Business Report, 1 November 2006

PHARMACISTS have until the end of January to implement a new medicine pricing structure that will also allow drug manufacturers to increase their single exit price by up to 5.2 percent for the first time since 2003.

The single exit price is what pharmacies pay for medicine from suppliers or drug manufacturers.

Under the new regulations, drug manufacturers could apply from October 1 to raise prices by up to 5.2 percent. But approvals may take time as the government is benchmarking prices against those in countries such as Australia, New Zealand, Canada and Spain.

Vicki Ehrich, the chief operating officer of the Pharmaceutical Manufacturers' Association, said the industry welcomed the news as companies had been under pressure from the weaker rand and the fuel price increase.

However, Ehrich said the price increase implementation might be delayed as the government still had to do the benchmark study.

New Clicks chief executive David Kneale said the proposed regulations were viable and the return to the industry would be fair. He added that consumers would also get a better deal.

Thami Mseleku, the director-general at the Department of Health, said the single exit price increase was allowed to be applied to products that were priced below the international benchmark up to the maximum increase allowed, but not exceeding the international benchmarking price.

The news received a cold response from United SA Pharmacies (USAP), the 1200 member-strong retail pharmacy body, which expressed its disappointment with the new regulations.

Under the regulations, pharmacies are allowed to charge a dispensing fee of R4 plus 33 percent of the single exit price of medications that cost less than R75. For drugs that cost between R75 and R250, the dispensing fee is set at R25 plus 6 percent.

On medicines costing between R250 and R1000, the dispensing fee is R33 plus 3 percent. On medication that costs R1000 or more, the dispensing fee is R50 plus 1.5 percent of the price of the drug.

Pharmacies can apply the new fees at once, but have been given until the end of January to comply fully.

USAP chairman Julian Solomon said: "[We] are rather disappointed as this is not going to be adequate." USAP would study the regulations before commenting further.

Mseleku said the new fee structure would ensure that low-cost medicines did not become expensive. Consumers who would benefit the most were those who were not covered by medical aid.

Prices will drop even more once international benchmarking is implemented, the government anticipates.

Since the government and industry players began discussing pricing regulations, medical schemes have made savings of up to 22 percent on the prices of medicines. But those decreases have not been realised by scheme members.

Humphrey Zokufa, the managing director of the Board of Healthcare Funders, said this was because some healthcare services, especially hospital fees, had increased, which made it difficult for schemes to pass the savings through to consumers.

Tamar Kahn: Business Day, 27 October 2006

EXPERTS at the World Congress on Stroke have warned that strokes are killing and maiming an increasing number of South Africans as under-resourced health facilities battle to help a population that is rapidly assuming a risk-laden lifestyle. The disease is the third-highest cause of death in SA, after AIDS and heart disease, according to the Medical Research Council (MRC). Of the 500 000 deaths recorded in 2000, 6,5% were due to stroke, 6,6% to heart disease, and 25,5% to AIDS, the MRC's Prof Debbie Bradshaw told delegates. Stroke mortality was highest among black Africans and coloureds and lowest among whites, she said. High blood pressure, smoking, high cholesterol, obesity, diabetes, physical inactivity and a diet lacking fruit and vegetables were among the factors that increased the likelihood of stroke, according to recent research, said Bradshaw, who heads the MRC’s burden of disease unit. The findings on alcohol consumption were mixed, she said, as moderate alcohol consumption appeared to offer some protection, while higher consumption increased the risk of stroke. The congress declared stroke in SA a "catastrophic disease" in a bid to raise awareness about its dangers. The World Stroke Federation president Antonio Culebras said that stroke was a catastrophic illness everywhere, but more so in developing countries. Four-fifths of the 5,7-million annual deaths from stroke occurred in low- and middle-income countries, he said, citing World Health Organisation figures. The social impact of stroke can be measured with Disability Adjusted Life Years (Daly) per 1 000 population, a system that captures the years lost to premature death and lost productivity. A high Daly for stroke means the disease is taking a high toll. According to the WHO, the Daly for stroke in SA was 11, compared with just four for the US and Europe, said Culebras. Other developing nations such as India and China also fare badly, with scores of 10 and 12 respectively.

Jocelyn Newmarch, 25 October 2006

Hospital costs are now almost 70% higher than they should be, because of the increased market dominance of a few private hospitals.

This is the argument of the Council for Medical Schemes, which, along with Netcare, is opposing Medi-Clinic’s proposed takeover of four hospitals in the Vaal Triangle. Competition Tribunal hearings into the matter were held recently.

The council’s argument is based on an analysis by Alex van den Heever, a senior adviser for the Council for Medical Schemes.

Before 1998, hospital costs increased in real terms (after normal inflation is taken into account) at a steady rate. But since 1998 the rate of increase has risen sharply. According to Van den Heever, this is a result of increased market concentration of private hospital groups.

His analysis, based on medical scheme membership data, shows a steep increase in hospital costs while non-hospital costs (such as medicines and doctor consultations) have flattened.

By 2004, hospital costs per beneficiary were 67,9% higher than they should have been, had the 1990 to 1998 trend continued. The 2004 costs are 105,6% higher than the value per beneficiary would have been, had the trend for hospital costs instead followed that for non-hospital claims costs, according to Van den Heever’s affidavit.

The only explanation for this would be a structural change in the hospital sector, said Van den Heever. The annual real change per beneficiary had increased nine-fold, from an earlier real increase per beneficiary of only R50 a year in 2004 prices. The real increase per beneficiary is now R460 a year, also in 2004 prices.

But, according to economist Nicola Theron, Van den Heever has not shown a causal link between hospital consolidation and rising costs. She told the tribunal there were several other factors that could have contributed. In 1998, the rand-dollar exchange rate worsened as a result of the emerging market crisis. This would have led to increased import costs for medical equipment.

“Prices go up easily, but they don’t come down easily,” she said, explaining the lag between the improved exchange rate and still-rising costs.

Theron said other causes could include increased input costs, increased demand for services, changes in the products and services that are purchased, new and more expensive technologies, an ageing population and co-morbidity (separate, unrelated medical conditions). Medi-Clinic data showed that demand for hospital services was driven by a range of factors. Among these were an ageing population, a greater burden of disease and HIV/Aids.

Between 2001 and last year, there was an increase in the proportion of patients aged 60 and above admitted to Medi-Clinic hospitals. Older patients need more medical attention and the incidence of co-morbidities, such as diabetes and hypotension, increases. So older patients push up the overall spending on healthcare, said Theron.

A study by economist Mike Schussler for the Hospital Association of South Africa found that labour costs made up 73% of total costs at private hospitals. Theron said an international shortage of nurses, especially theatre staff, means that the local private hospital industry must compete globally on salaries. Cost inflation for nursing staff, according to Medi-Clinic, was much higher than CPIX inflation between 2003 and last year.

Theron said many other countries found that hospital inflation outstripped CPIX inflation, but admitted under cross-examination that she had not studied the healthcare sectors of any other countries.

Van den Heever produced figures showing that the change in age profile of medical schemes beneficiaries, when weighted for cost, explains only 3,6% of the cost change.

“The overall real per capita cost change for the period is calculated at 45,5%. This shows that the changes in the beneficiary age profile in the medical schemes cannot explain 41,9% of the cost change actually experienced over the period,” he said, in response to Theron’s evidence.

He said medical schemes specifically limit the use of expensive new technology to situations where they are cost-effective. “It is therefore not appropriate to talk in general terms about the impact of new technology on costs.”

Tamar Kahn: Business Day, 25 October 2006

HEALTH Department director-general Thami Mseleku has told parliament that authorities would use their legal powers to quarantine patients with extremely drug-resistant tuberculosis (XDR-TB) who refused to stay in hospital and comply with treatment. He said that the department would ask for court orders to quarantine patients if need be. Patients would be released when their disease was under control (making them less infectious), provided they agreed to complete their course of medication, he said. The recent emergence of XDR-TB in SA has alarmed public health experts around the world, as it appears to pose a particularly high risk to people infected with HIV. All of the 78 confirmed cases in KwaZulu-Natal, 74 of which have so far proved fatal, tested positive for HIV, said Mseleku. Documents presented in Parliament detailed low cure rates (51%) for ordinary TB, and even lower rates for multi-drug-resistant MDR-TB (23%). The papers also highlighted problems in handling patients with MDR-TB, which is resistant to first-line treatment drugs rifampicin and isoniazid. Often patients with MDR-TB discharged themselves from hospital or stopped taking their pills - due to drug or alcohol abuse problems, or because they suffered side-effects. The latest strain of TB to emerge in SA, XDR-TB, does not respond to first-line drugs and is also resistant to at least three of the six classes of second-line drugs. It is tackled with older, less effective drugs, such as capreomycin and para amino salicylic acid. Mseleku said doctors could obtain a court order to confine infectious patients to hospital in the interests of public health, but this was considered a measure of last resort. He said more emphasis needed to be placed on raising public awareness of the dangers of not completing the standard six-month course of antibiotics for combating ordinary TB, as failure to do so increased the risk that patients would develop drug resistance. Patients infected with such drug-resistant strains could transmit the disease to other people by sneezing or coughing, thus posing a public health threat. Mseleku said that if people developed resistance to those drugs (capreomycin and para amino salicylic acid), nothing else was left. He noted that the new TB drugs were not expected to reach the market before 2015.

Tamar Kahn: Business Day, 24 October 2006

THE Medical Research Council (MRC) expects to increase its contract research income 36% this year, rising to R300m from R220m in the financial year ending March 2006, president Anthony Mbewu said at the recent launch of the council’s annual report. The emphasis on external funding is in line with trends at other statutory research councils, which have reduced their reliance on grants from government. The MRC received R184m from government during the period under review, about a fifth of the state's funding for health-related research. Highlighting the MRC's successes in the fight against malaria, Mbewu said that research made no difference to health unless it was translated into policy, practice, promotion and products. The MRC helped develop antimalaria techniques used in the Lubombo Spatial Development project between SA, Swaziland and Mozambique, including the use of low concentrations of DDT to kill malaria-bearing mosquitoes. The project has seen malaria decline rapidly in the region, and helped persuade the World Health Organisation (WHO) to reverse its ban on DDT. The WHO changed its policy guidelines on malaria prevention in September, saying indoor spraying of DDT could be added to prevention techniques such as insecticide-coated bed nets. Mbewu said that this showed the power of research to test practice and inform policy. The MRC was deeply involved in SA's attempts to combat the recent emergence of extremely drug resistant TB, he said. MRC scientists were also developing quicker TB tests, which now take several weeks. The HIV/AIDS epidemic was SA's most pressing public health threat, and remained a focus of the MRC's work, he said. About half the council's research budget, and a third of its staff, were dedicated to HIV-related projects.