How Discovery Health’s ‘shared value’ model helps keep premiums down
Collaboration with members and their doctors improves efficiency and quality of healthcare, says Discovery Health CEO
Last week in this column, I asked: what is driving up our healthcare costs? I shared our data, which indicates that higher usage of healthcare services is the key driver of medical scheme claims increasing by 5% above the consumer price index each year.
Our healthcare system, both public and private, is facing a massive challenge from rapidly escalating rates of chronic conditions such as diabetes and heart disease. These pressures are aggravated by high-cost new medicines and technologies and by inefficiency – in particular due to unnecessary tests and procedures – and fraud.
Discovery Health is deeply committed to tackling these issues, in cooperation with health professionals and our members, through what we call a shared-value health insurance model. In this model, we collaborate with members and their doctors to improve efficiency and quality of healthcare throughout the system. This makes members healthier and reduces claims significantly.
The resulting surplus is shared with members through richer benefits and lower insurance premiums, and with doctors through increased remuneration in return for improved quality of patient care. In this virtuous cycle, ongoing improvements create additional value for all parties.
One key element of this model is Vitality, Discovery’s science-based wellness programme, which rewards members for living a healthier lifestyle. Our data indicates that, compared with non-Vitality members, highly engaged Vitality members have 10% lower hospital admissions, 25% shorter hospital stays and 14% lower overall claims costs.
The impact of Vitality reduces the Discovery Health Medical Scheme’s claims costs by about 3% each year – generating total savings of about R11.6-billion since 2008. This allows the scheme to provide richer benefits to its members at premiums that are, on average, about 16% lower than other competitor schemes on a like-for-like basis. This is a classic example of shared value: all parties benefit from the increased value arising from healthier members’ lowered risk profiles.
A second element of the model is our collaboration with leading specialist associations to create shared-value clinical programmes. These bring together doctors, members and our schemes in a mutually reinforcing approach to improving the quality and efficiency of care.
For example, members in our DiabetesCare programme enjoy enhanced, clinically appropriate benefits and improved care. At the same time, doctors engaged in the programme are paid higher fees when they achieve defined quality-of-care measures. The early results are extremely positive, with significant increases in the percentage of diabetes patients having critical monitoring tests performed, and with clear evidence of improved outcomes as well.
We have seen similarly excellent results in our dialysis and other clinical programmes, with all parties benefiting significantly: patients through improved quality of care, doctors through enhanced remuneration, and the medical scheme through lower claims.
To many, this approach seems counterintuitive – it is usually assumed that savings can only be achieved by cutting corners and reducing quality of care. But in healthcare this is not the case. As there is so much waste in our system, such quality-focused collaborations create a win-win situation, with both reduced costs and improved quality of care. There is a vast amount of global evidence to prove this, and our own data shows the same pattern.
A final element is to ensure doctors also take care of their own health. So many of our doctors are overworked and stressed, and our data shows healthier doctors have healthier patients. Through our Vitality Active Rewards for Doctors programme, we are incentivising doctors to exercise more, eat more healthily and take charge of their health. It is another example of the win-win impact of the shared-value model.
In next week’s column, I will expand on shared value’s powerful potential to create a healthier, more prosperous society and, critically, to empower patients to take charge of their own health and healthcare.
This column is sponsored by Discovery Health in the interest of increasing awareness of the issues and opportunities in healthcare.