Chapter 5 Healthcare, including managed care

Question 1

What does Healthcare refer to? (3)

Answer 1

Healthcare refers to the

• prevention, diagnosis, and treatment of…
• …disease, illness, injury…
• and other physical and mental impairments in humans.

Question 2

What aspects/pillar do we find in a well-functioning healthcare system?

(4)

Answer 2

• Robust financing mechanisms
• A well-trained and adequately-paid workforce
• Reliable information on which to base decisions and policies
• Well-maintained health facilities and logistics to deliver quality technologies

Question 3

Into what 3 main categories may the provision of care be classified? (3)

Answer 3

• Primary care
• Secondary care
• Tertiary care

Question 4

What is Primary Care?

Consider what primary care refers to (5)

The scope of primary care (4)

Answer 4

Primary care refers to

• the work of all healthcare professionals who acts as a point of first contact for all patients in the healthcare system.
• e.g: physiotherapist, general practitioner, non-physician primary care provider like nurse practitioner.
• theses primary care healthcare professionals often
  
  • refer careseekers to secondary/tertiary care
  • possess a wide field of knowledge

Primary care involves widest scope of healthcare:

• all ages of patients
• patients of all socioeconomic and geographic origins
• patients seeking to maintain optimal health
• patients with all manner of acute and chronic physical, mental issues.

Question 5

What is secondary care?

Consider the key features of secondary care (5)

Note on self referrals (2)

Answer 5

Secondary care refers to

• the healthcare services provided by medical specialists that don’t have first point of contact/consultation with the patients…
• …often to provide acute care necessary for a short time for a brief but serious injury
• patients are usually referred to medical specialists by primary healthcare practitioners.
• e.g. dermatologists, cardiologists and urologists, allied health professionals (usually, but not always)
• is sometimes called ‘hospital care’

Self referrals

• seconday care may involve self-referrals, although rarely.
• secondary healthcare specialists like speech therapists, dietitians, occupational therapists are usually done by self-referrals

Question 6

What is tertiary care? (3)

Give examples of tertiary care services (5)

Answer 6

Tertiary care refers to

• specialist consultative healthcare
• usually for in-patients referred by primary or secondary health professional
• in a facility with personnel and facilities for advanced medical treatment and investigations, such as a tertiary hospital referral.
• examples of tertiary care services are:
  
  • cancer management,
  • neurosurgery,
  • plastic surgery,
  • surgical investigations,
  • treatment of severe burns, etc.

Question 7

What two key sectors may be responsible for the supply of healthcare?

(2)

Answer 7

• Public sector healthcare supply
• Private healthcare supply

Question 8

What is public sector healthcare? (2)

Who can use public sector healthcare? (1)

What can often be associated with public sector healthcare? (1)

Answer 8

Public sector healthcare is that which is generally administered by the government/State

• These healthcare services are heavily subsidized or provided for free

These healthcare services are used

• by either foreigners or individuals without any medical aid

Often associated with

• significant queues, prescribed protocol, limited alternatives/choices

Question 9

What is private sector healthcare? (2)

Who can use private healthcare? (2)

Answer 9

Private sector healthcare is that which is administered by private institutions.

• Consist of listed and unlisted companies.

Who can use?

• Any member of the public can use these providers as long as they can fund the cost or are covered by a funding structure such as a medical aid scheme.
• Where insurance used (within the private sector healthcare cover) does not pay the full cost of care provided, the patient is liable for difference.

Question 10

Who are the supply-side key providers of healthcare services within a health system? (8)

Answer 10

• Doctors
• Nurses
• Support medical personnel and clinical associates
• Hospitals
• Upstream service providers (ie other industries that supply healthcare goods/services)
  
  • pharmaceutical manfacturers
  • medicine distributers
  • suppliers of medical equipment

Question 11

Supply-side key providers: doctors, support personnel and nurses

What balance needs to be struck between supply-side providers doctors, support personnel and nurses in a well functioning health system? (1)

In most countries, what often reduces a health system’s ability to supply health services? (3)

How does the private sector play a role in this? (4)

Answer 11

Regarding doctors, support personnel and nurses, there needs to be carefully planned balance of professional workers.

In most countries a lack of life-saving interventions/services is often caused by

• poor mix of types and range of skills,
• uneven grogrpahical distribution
• critical shortages, especially in rural areas

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Private sector influence

• Private pays better so more likely to work there.
• Health system may allow doctors to work part time in private sector to supplement income. However, this may not be allowed in all countries as can
  
  • undermine delivery in private sector and
  • misappropriate public sector resources

Question 12

Supply-side key providers: hospitals

What contribution towards a country’s healthcare budget do hospitals make, and why? (3)

Comment on the potential broad onwership structure of hospitals within a healthcare system, and some characteristics specific to each ownwership structure (5)

Answer 12

Hospitals are usually the single largest component of a country’s (healthcare) expenditure, mostly because they are:

• labour intensive + technology intensive…
• …leading to costs rising faster than inflation

Hospitals mey either be

• publically owned
  
  • many poorer countries spend more on primary care, so tertiary care has suffered due to budgetary constraints
• privately owned
  
  • number of beds has been increasing, higher investment in staff, equipment, training and hotel services…
  • …leading to disparity between public and private sector.
  • private hospitals help alleviate pressure from public sector.
  • main users are: insured, wealthy, foreigners, beneficiaries of funds

Question 13

Structure and ownership of private hospitals (2):

Answer 13

• For-profit private hospitals
  
  • These hospitals are either privately owned or listed companies with a direct profit motive.
• Not-for-profit private hospitals
  
  • Faith based hospitals
    
    • These hospitals and small hospitals played large role in providing hospitals to the rural poor; not very common
  • Mining hospitals
    
    • Geographically remote mining companies provide a range of healthcare services to their staff and sometimes families of staff.

Question 14

Upstream service providers

Give examples of upstream service providers (3)

What important contribution do upstream service providers make towards the healthcare system? (1)

Answer 14

Service providers (ie other industries that supply healthcare goods/services)

• pharmaceutical manfacturers (largest part of this group of suppliers)
• medicine distributers
• suppliers of medical equipment
• food/beverages, water/elec

The provision of healthcare sector services is only possible because various other industries supply the necessary goods and services.

Question 15

Funders of healthcare (6)

Answer 15

1. the government
2. non-government organisations and donors (may include foreign governments)
3. employers
4. commercial insurance products
5. out-of-pocket expenditure by the users themselves
6. trade-related employer groups

Question 16

Funders: Government

How does goverment compare with other funders in terms of size? (1)

How might government funding be secured/provided? (7)

Answer 16

• The largest funders of healthcare in a country
• Usually funded by
  
  • taxes
  • reserves
  • grants
  • revenue funds
  • departmental receipts
  • can have specific funds e.g.
    
    • Road Accident Fund
    • Workmen’s Compensation Fund
• In some instances gov may fund private healthcare
  
  • to alleviate the public sector demand
  • through tax or direct funding

Question 17

Funders: Non-government/donors

Give examples of non-government/donor funders of healthcare systems (1)

What kind of collaboration might occur between private and public sector in terms of non-goverment/donor funding sources for healthcare services? (2)

Answer 17

Healthcare funding from non-goverment/donor sources includes

• foreign governments and organisation

In some cases, public and private sector may collaborate and private may fund public sector.

• a example of this includes funding from the International Finance Corporation (IFC) being used to fund health and education in emerging markets

Question 18

Funders: Out-of-pockets expenditure

List the 3 forms of out-of-pocket expenditure used to fund healthcare provision (3)

Answer 18

There are 3 forms of out-of-pocket medical expenditure.

• Payment of invoiced medical services by users of commercial health insurance products
• Payments by those that don’t have commercial health insurance products
• Payments for medical services not invoiced

Question 19

Funders: Out-of-pockets expenditure

Briefly expand on the following forms of out-of-pocket-expenditure used to fund the provision of healtchare services:

• Payment of invoiced medical services by users of commercial health insurance products (3)
• Payments by those that don’t have commercial health insurance products (3)
• Payments for medical services not invoiced (2)

Answer 19

Payment of invoiced medical services by users of commercial health insurance products eg:

• make co-payments
• fund diff between actual and covered price of service
• pay for services if threshold payments have been met.

Payments by those that don’t have commercial health insurance products eg:

• young and healthy ppl who elected not to take any insurance
• wealthy ppl who choose to self-insure
• lower income individuals

Payments for medical services not invoiced eg:

• surgeons and midwives.

Question 20

Funders: Trade-related employer groups

Describe how trade-related employer groups can be used to fund healthcare services and benefits (5)

Answer 20

• Trade-related employer or groups often join to form bargaining councils.
• Bargaining councils are established to manage schemes to benefit their parties or members.
• These are generally low-income schemes with benefits to
  
  • primary healthcare, and
  • managed care options.

Question 21

Funders: Commercial insurance products (CIP)

In what way can these be used to fund healthcare benefits/services? (5)

Answer 21

• There are various products in the insurance industry that contribute to healthcare costs.
• Insurance policies designed to fund healthcare can be divided into four groups:
  
  • Optional alternative
  • Optional complement
  • Compulsory alternative
  • Compulsory complement

Question 22

Funders: commercial insurance products

What do we mean by the following groups of commercial insurance products, in terms of funding healthcare benefits?

• optional alternative (3)
• optional complement (4)
• compulsory alternative (3)
• compulsory complement (3)

Answer 22

Optional alternative

• comprehensive State provision, with private insurance offering more quality/choice
• opting to use commercial insurance products as an alternative to what the public sector already provides
• hence, paying for commercial insurance products to cover expenses in private sector

Optional Complement

• limited state provision, with private insurance providing balance
• opting to use commercial insurance products to complement what the public sector already provides
• eg for elective procedeurs soner than the state would provide
  
  • waiting policy or gap cover

Compulsory Alternative

• comprehensive State provision for the poor, with private insurance purchase by those who State sees as not poor
• using commercial insurance products where the health system has made it compulsory to fund alternative benefits to that given by the state
• eg comprehensive cover for the wealthy whom the state considers can afford comprehensive cover

Compulsory Complement:

• State providing some benefits for free (to all), with private insurance being used to cover the rest
• using commercial insurance products for funding where the health system has made it compulsory (compelled) to obtain benefits not provided by the State to anyone at all
• eg purchasing top-up plans, dental plans

Question 23

Funders : Employers

In what way can employers contribute to funding their employees’ health benefits? (6)

Answer 23

Employers contribute to financing employee health in various different ways

• full or part payment of
  
  • commercial insurance prods e.g. med aid premiums
  • bargaining council premiums
• payment for off- and on-site health services
• payments to healthcare providers for acute medical treatment
• payment towards social security funds eg UIF
• wellness programmes

Question 24

Healthcare funding and supply mechanics: overview

What kind of ‘mechanics’/dynamic exists between the funding and supply of healthcare? (2)

What is the 3rd party payer problem? (5)

How might the issues within these funding/supply mechanics be mitigated? (3)

Answer 24

• There are multiple funders in the healthcare ecosystem
• Healthcare is subject to the “3rd party payer” problem ie a misalignment in motives between participants:
  
  • patient/user mostly isn’t paying for the service, resulting in healthcare users abusing “free” service
  • provider incentivised to provide more expensive/comprehensive treatment than actually required (to get paid more)
• Ways to address these issues is by using
  
  • managed care
  • administrators who are profit organisations
  • underwriting principles to avoid and exclude risk

Question 25

For more information on managed care, see flashcards on ‘Managed Care’ (chapter 27)