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An approach to transformational cost reduction in a private hospital.

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The National Healthcare system in South Africa has reached a point of intensifying costs due to increases in escalation of at least 15% year on year. The South African Government‟s imminent roll out of the National Health Insurance (NHI) programmes is going to cost R69 million rand and currently, the government is uncertain as to where the funds are going to come from – in all probability increased taxes. The government and public sector health have failed to deliver quality, affordable healthcare services to the South African population, with more than 80% of the population still having no healthcare coverage or insurance or medical aid. The government‟s current management of the public healthcare sector has confirmed that government is unable to control healthcare costs in the public sector. Culture and behaviour that have been in existence for over 30 years cannot have change forced upon them. There have to be many discussions, forums and role modelling with the evidence-based results as the catalyst for the transformation. Management will have to make their staff and doctors comfortable to be receptive to the transformational cost reductions, highlighting that technology is forming a blueprint of all recordable activities which are being measured and monitored by many of the stakeholders from medical aids and managed care organisations. Based on this information, Insight actuaries in South Africa are able to extract data for the medical aids to dispute hospitalisations, doctor behaviour, and treatment patterns with cost per event as a benchmark forming the basis for increased healthcare costs by service providers. These cost efficiency reports are given to hospitals to control doctor behaviour, healthcare spending resulting in the current decreased occupancies, decreased margins, poor profitability and impact on long-term sustainability.


Master’s Degree. University of KwaZulu-Natal, Durban.