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Increasing Use Of The Private Health Sector

Contributor:
Fuseworks Media
Fuseworks Media
Increasing Use Of The Private Health Sector

New Zealanders use of the private sector for their health woes continues to increase. Figures released today by the not-for-profit Southern Cross Health Society show average annual cost escalation of around 10% for the year ending December 2009 - up from an 8% rise in the previous year. However, claims cost escalation for corporate groups and some ages far exceed this.

Data from the country's leading health insurer, which covers 840,000+ members, shows that claims for some of its most common procedures have significantly increased in the last two years.

In the last calendar year members claimed for the removal of 39,455 skin lesions with $27.9 million in claims paid, a more than 30% increase on the numbers claimed for in 2007 - 30,062 - totalling $21.9.

There have also been significant increases in both surgery costs and utilisation rates for orthopaedic procedures. In the period December 2007 - December 2009 the average cost for shoulder surgery increased from $7,931 to $9,126 with a huge 78% increase in the number of members claiming for this surgery.

Over the same period, the average cost for knee surgery has risen from $12,858 to $14,036. And with an over 20% increase in members undergoing this surgery, claims paid by Southern Cross have jumped from $27 million in 2007 to $36 million in 2009.

Southern Cross Healthcare Group CEO Dr Ian McPherson says the relentless demand coupled with higher healthcare costs is putting enormous pressure on premiums.

"Rising treatment costs and greater utilisation rates inevitably flow through to premium levels, and so we are working very hard to address this problem.

"Southern Cross is paying 96 cents in claims to members for every dollar they pay in premiums. With healthy reserves we are able to absorb this cost and budget for a deficit in the current financial year. However, this can't continue year on year, so this escalation must reduce."

One way the insurer is addressing claims cost inflation is by strengthening its Affiliated Provider network. Southern Cross Affiliated Providers deliver services to its members at agreed rates. This moderates claims costs and make the claims process quicker and easier for members and providers - and streamlines the businesses internal processes, saving time and money.

"We see the strengthening of this network as being fairly critical to our ability to stabilise claims cost inflation and keep our premiums as affordable as possible. As a result, we are looking to move some of our high volume procedures, such as colonoscopies, gastroscopies and cataract extractions, to be procedures covered by an Affiliated Provider only."

While these three examples are relatively low cost procedures, combined they accounted for over $50 million or around 10% of all elective surgical services claimed for by Southern Cross members in the last calendar year. Making these procedures Affiliated Provider-only benefits, will provide long-term savings for the membership and with Southern Cross expanding its Affiliated Provider network, it believes members will still get a wide range of choice.

Dr Ian McPherson says, "The alternatives are to reduce access to these services or put premiums up. We believe these would prove to be less palatable options for members and healthcare providers in the long run.

"Our members also have a role to play in keeping their premiums as affordable as possible by seeking referral to an Affiliated Provider who is contracted to provide that service."

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