KEEPING a medical scheme sustainable and affordable for its members in a difficult economic climate can be quite a juggling act - it's a delicate balancing act, says Katy Caldis, principal officer of Fedhealth.
"A medical scheme is a not-for-profit trust owned for the members by the members, and its only source of income is member contributions. From the pot of money accumulated we need to cover our members' healthcare needs cost-effectively and efficiently.
"In so doing we are bound both by the rules of the scheme and the legislative environment in which we operate.
"Paramount to our continued existence is ensuring that there are adequate funds to meet our obligations, which means not only prioritising expenditure but also ensuring that we manage to balance all member needs and keep contributions affordable."
The dilemma, says Caldis, is that members want as much cover as possible. However, they often fail to understand that it comes at a price. It is therefore often too easy for members to fall into the trap of selecting the cheapest option available without understanding the resultant loss in benefits.
A member selecting an option based on affordability rather than their healthcare needs should be fully aware of the risk of having to cover certain costs out of their own pockets.
"From a scheme perspective we need to ration the available funds carefully to ensure we are covering the right things."
She says hospital bills are the most expensive bills most of us present to our medical aid.
Caldis says this is an area where Fedhealth has tried to reduce some of the expense to members, who on many other schemes end up paying for many of these bills out of their medical savings accounts.
"We remain the scheme that pays for more benefits from risk than any other scheme.
"Our trauma cover, for example, comes out of risk, and that helps to extend members' day-to-day cover.
"We also pay for about 60 procedures that are done in a day clinic out of our hospital benefit, as well as for CT and MRI scans. And should you need rehabilitation once you're discharged from hospital, Fedhealth pays for 30 days of post-operative rehabilitation."
The scheme also offers a threshold benefit option, depending on the options members choose, where if you run out of benefits in a particular year, once you hit a certain threshold you are covered by the scheme again.
For families with young adults struggling to become financially independent it provides cover for financially dependent children at child rates until they turn 27.
Caldis says it all comes down to understanding risk.
Many people on medical schemes are still stuck in the medical-aid mindset of years gone by when medical costs were covered by a third-party payer and benefits were virtually unlimited.
"People never even saw their medical bills, and many still do not realise that their medical bills are their own responsibility - the schemes are merely there to assist with those costs. Also, doctors are not trained to consider the impact of costs and I would like to see medical aids working more closely with doctors in future.
"Our aim is to bring together the member, the doctor and the scheme, to the best advantage of all parties. A rising tide of information, has seen consumers becoming more educated, but still not sufficiently to know what questions to ask their doctors.
"One of the main problems with the system is that the financial onus is on the member. If a doctor says you need this test, who are you to argue?
"Our challenge in the future is to find a way of ensuring that healthcare remains affordable - at least for the few who are privileged enough to afford it. Our only hope in achieving this is to work with doctors and specialists so that they begin to understand our world and the impact that their decisions have on everyone in the system.
"Too often funders and healthcare providers find each other at opposite poles. While managed care protocols may cause bureaucracy and red tape for members and doctors, without these interventions cost escalation would be even worse."
Caldis says one of the biggest challenges has been that medical inflation has outstripped normal inflation year on year for more than a decade.
"This has resulted in higher contributions from members and a general reduction in incidental or out-of-hospital care due to the higher cost of more serious cover. One of the major cost drivers of medical inflation is the introduction of new technology and new medicines.
"The healthcare environment is the only industry I know where new technology pushes up the cost instead of making things more affordable. We all want progress but at what cost? Who are the ultimate beneficiaries?"
She says that the cost of new specialised medication - for example biological drugs - is equally of concern, as desperate people will pay desperate prices for a chance at life without questioning whether the efficacy of the drug always merits the enormous price tag.
"Within this highly charged environment board members of medical schemes are required to make extremely difficult decisions. This is done in association with clinical funding experts who evaluate each new drug and technology, its cost-effectiveness and affordability for our system.
"If we had unlimited resources, choices would be simple, but sadly we need to cover almost unlimited demand with a clearly finite pool of resources that needs to be rationed equitably over all the competing needs.
"Working together towards a common goal of a sustainable industry is the only way forward and the first step in achieving universal coverage for all South Africans," says Caldis.
Mandy Collins: Health News: Business Day, 30 June 2010