Healthcare Lessons On Price Tariffs

Healthcare Lessons On  Price Tariffs

The COVID-19 pandemic has created opportunities for public and private partnerships, with government entering into contracts with private hospitals to admit public patients.

It based these contracts on prescribed rates calculated on a cost-recovery basis, and determining the prescribed rate speaks to Dr Gideon Botha’s PhD research, A framework for price tariffs in the costing structures of South African private hospitals.

As part of his research, Botha reviewed various costing models and price tariff payment models used in healthcare, and proposed the best combination to determine private hospital tariffs in South Africa.

“I used a laparoscopic appendectomy procedure to determine the price tariffs for the procedure based on various combinations of unit costing and price tariff
payment models,” says Botha. Based on the results, he recommended a combination to determine price tariffs in private hospitals in South Africa.

“Price tariffs in South Africa are not based on the cost of the resources used or what it actually costs to provide the treatment,” Botha explains.

How costing should work
The price tariff charged to patients needs to be based on the cost of the resources used, which should be determined using a unit costing model.

The unit costing model should then inform the price tariff charged to the patient to ensure it is reasonable. At the same time, it should allow the healthcare providers to cover their costs and make a profit.

The price tariff is then onward charged using a payment model that affects the characteristics of the price tariff. The model should try to increase value for the patient by improving their healthcare outcome at the lowest cost.

“Government contracting private hospitals to admit patients during COVID-19 has created a great opportunity for the public and private sectors to work together in partnership,” says Botha.

The determination of the price tariffs is key to increasing private-public partnerships as the country moves towards implementing the NHI, says Botha, as it
“creates transparency for all parties and establishes trust in the process”.

Test phase
His model is already being put to the test.

“We are piloting the research in Namibia. The results of our research could potentially inform price tariffs over the next couple of years and could lead to policy changes on how price tariffs are determined. “The piloting of this research shows that it is invaluable and can create positive change.

“I love taking what I’ve learned and being able to apply it.”

Proud alumnus
The completion of his PhD at Nelson Mandela University is not the end of Dr Gideon Botha’s academic road.

Prior to graduating “virtually” in April 2020, he enrolled for his master’s degree in Futures Studies at the University of Stellenbosch.

“I would not have been able to complete this PhD without the support and guidance of my supervisor, Prof Miemie Struwig, and co-promotors Dr Paul Dalmeyer and Dr Heidi Janse van Rensburg.

“They have been exemplary in every way and we are looking forward to publishing articles on the research done for my PhD.

“Mandela University will always be close to my heart, as it formed me as a student and cultivated my love for learning during my undergraduate and honours years. Completing my PhD at this prestigious institution has been a great privilege, especially under the supervision of such exemplary academics.”

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