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EF: What in your opinion are the first things you would address in terms of global priorities for healthcare?

RN: I would advocate for behavioural change to positively impact people’s health and lives. We have set a goal for 2025:  to get 100 million people more active and engaged in our Vitality program, affording them a healthier lifestyle and establishing a more preventative approach to healthcare. This means a global population engaged in healthy diets, routine exercise regimens, mental wellbeing, and regular health screenings. We are addressing the behavioural economic conundrum of hyperbolic discounting in wellness – little immediate recognition of value for long-term benefits – by rewarding people for healthy actions today that translate into health benefits they receive in the future

In a developing economy where we have the highest HIV infected population in the world, we would be remiss if we didn’t prioritise reducing infectious disease rates. For South Africa, HIV and TB are critical diseases to be addressed. To tackle these issues, I would advocate for increased access to disease education, awareness and ARV treatment, particularly with regards to mother and child health and primary care.

EF: You have recently been appointed CEO of Discovery Health, what are the priorities of your agenda?

RN: First and foremost, we must entrench our role as a socially responsible and humble participant in the broader South African healthcare debate. As the country with the highest GINI coefficient in the world, which is also represented in a polarized healthcare delivery system, it is clear that a structural change is long overdue. We must jointly identify and co-create mechanisms to narrow the healthcare equitability gap, without harming the quality and cost efficiency of the private sector, a standout national asset. We must leverage this strength to ensure we improve healthcare for all. It is imperative for all healthcare stakeholders to participate actively and meaningfully in the structural discussions, to ensure a sustainable and equitable outcome for our healthcare system. For our part, we can contribute detailed data and health economic capabilities, providing insight around the cost, content and delivery of benefit packages. Healthcare is a human right, not a privilege and we want to be part of broader system of consistent quality and accessibility. Our country is characterised by two contrasting healthcare systems. There’s a diverse population living together in an environment of inherent differences in healthcare access and quality. This requires convergent strategies to deal with both.

EF: Could you give us some facts and figures about the biggest disease burden you are tackling?

RN: There is a significant divide in the country’s disease burden patterns, largely resulting from the history of this country and the socio-economic disparities. On the one hand, the private healthcare environment looks like that of a developed country’s environment; we have low rates of infectious diseases – HIV infection rate of <2% – and a burgeoning  increase in chronic diseases. Ten years ago, the chronically ill proportion of Discovery Health Medical Scheme was about 11% of the membership. Today it is about 23% of the membership. As is the case in developed countries, people are achieving earlier diagnoses, and living longer, all resulting in a higher chronic disease populations.

In contrast, HIV and TB are the predominant issues concerning the public sector, with lifestyle diseases being an important secondary cause of disease burden. Our government has done a brilliant job in HIV treatment campaigns and should be commended for their work. In the private healthcare sector, infant mortality rates mirror the rest of the developed world. In the public sector, they are not flattering and look much more like the rest of the developing world. Lifestyle diseases are by no means irrelevant to the public sector, and focus should be equally on infectious and non-infectious diseases. With the world populations living longer and longer, we need to look at non-communicable diseases with a medium to long term lens.

EF: So what is the strategic importance of Discovery Health in the South African health care map?

RN: 1. Firstly, our strategic importance is to be a meaningful contributor and participant to societal debates on healthcare policy with our intellectual property in the form of data, with our health economic evidence and experience in our environment on packaging  health products, designing benefits, our work on the economics of the benefits, scaling up and execution. We have done this in the formal employment market – not only in the high-income market but in low-income areas as well. 

2. As a healthcare company with a strong social purpose, we have greater social responsibility than companies in other industries. To this end we have a Foundation that supports the training of medical specialists, and offers research grants. Our view is that if we teach the teachers, contracting them to stay in the system to teach more junior doctors, that we will create a sustainable pipeline of skilled healthcare professionals for the public sector. We don’t bring them to work for us in the private sector – they stay in the public system and contribute to academia. In this way, we can have a lasting societal impact to the healthcare of all South Africans. 

3. The tax paying base of the South African economy is small in relation to the population. Discovery health has a significant responsibility of providing funding and a cohesive healthcare solution for this tax-paying population. We also work with large local and multinational companies, and their employees in the country. As almost 60% of the market share of the open competitive medical scheme market, we have an enormous responsibility in that particular segment of the population – their health and productivity drives the fiscal funding. We administer 19 medical schemes in South Africa. The combined gross annual premium income we collect on behalf of these schemes represents about 1,2% of the GDP of SA, and we recognize this comes with pressing societal responsibility.

EF: Because you are such big players in the South African healthcare market what kind of impact would you like to see to make healthcare more sustainable? 

 RN: There are two distinct answers to that question, the global outlook and the South African outlook. The global one is easy to explain, we are a proudly African and a South African company and we have developed unique innovation which is exportable. We are very privileged to partner some of the world’s largest insurance companies in emerging and developed economies to export our Vitality program of shared value, and behavioral risk management to enhance and protect people's’ lifestyles in their countries. We have done this in 19 markets and we proudly represent South Africa. We have a responsibility to a South African brand and IP.

The impact we would like to have in South Africa is to emerge from the social and societal debate around healthcare with a structure that is sustainable. It should narrow equity and access gaps, and at the same time treasure the high healthcare quality, delivered at relatively low cost in our private healthcare system. Our social mandate at Discovery is to deliver cost-effective high-quality healthcare, and to empower our members and healthcare consumers with data and opportunity to make informed healthcare choices. We must be the lowest cost producer and we must be the force that pushes down the cost of access to healthcare in South Africa. An audit of the premium contributions for open (commercial) medical schemes in South Africa shows that – on average per benefit unit – our products are 16.7% cheaper in 2020 than our competitors. This may be surprising considering the brand perception is that we provide a very high-end product. The truth is that there is genuine value for money in our products, squeezed out from years of strategic claims risk management, data insights and sophistication. We have a team of 120 clinicians, actuaries and statisticians working feverishly every day – focusing only on reducing the cost of healthcare for our members. 

EF: On the cost of healthcare, in the US administrative costs go as high as 30%, what advice would you give to other medical schemes in reducing that cost? 

RN: Within Discovery administered medical schemes, we have managed to reduce administrative expense to 10% of the gross premium income received. Out of every 100 South African Rand that a consumer pays towards Discovery Health Medical Scheme, only 10 rand of that goes to administration. This administrative cost has been the only deflationary portion of the schemes’ expense basket for the last eight years. Much like elsewhere in the world all other input costs to the healthcare expenses are super inflationary, exceeding consumer price inflation. The administrative cost has been deflationary in real terms, and we are extremely proud of that. Almost the full remaining 90 rand goes to the healthcare supply system. 

EF: Could you pin point out areas for us where there is excessive amounts paid for healthcare expenses? 

RN: That’s a core issue. A sensitive point is drug pricing, on the one hand for HIV drugs we pay less than anywhere in the world which is amazing – but on the other hand in orphan drugs, novel drugs and biologics we pay more than in many parts of the world. We haven’t succeeded as a healthcare industry in securing those kinds of novel drugs for a developing economy, at a developing-economy-price. I know the Minister of Health and Prof Helen Rees have taken an interest in this issue these days, and are applying their minds on how to do more to secure drugs for rare diseases, for cancer, novel drugs at much better prices in South Africa. There is a volume/value equation, at the moment the volume is very small, and I think will stay very small in relative terms. Problematically, we see in our data that the value – i.e. the proportion of healthcare expense paid for these drugs – is becoming astoundingly high, benefitting a very small number of people. This is why pricing becomes such an important discussion in this context. 

EF: What is your personal definition of access?

RN: This is tough to define, off the cuff, let me have a go at it. It is appropriate, quality care, delivered at the right time in the healthcare journey, that is affordable to the person who needs it. Those are the elements to be considered, appropriate: relevant to the complaint, affordable: absolutely critical and central to the access, and then there is a geographical and regional issue we face in this country with rural populations as well. This is about the iron triangle of healthcare – balancing cost, quality and affordability.

EF: Yes, the iron triangle question on cheap fast and good; (cost access and quality). Which two variables would you choose for the health transformation in South Africa? 

RN: You can’t pick two in healthcare; you can’t break the triangle. In healthcare, cost, access and quality are non-negotiable. In our private healthcare system in South Africa I think access has indeed suffered, while cost and quality have out-performed and that’s not sustainable, which is why we’re so supportive of increasing access.

EF: How much of that do you think is a South African problem?

RN: In all the healthcare economies we have studied in the world you see a manifestation of a weakness in this triangle. Some manage it better than others. The Dutch National Healthcare system for me stands out as managing better. Maybe because they have a smaller population and a high GDP per capita. But it does seem that some of their systematic and design principles are scalable and repeatable elsewhere.

EF: What would you like to see happen in South Africa considering the current conditions?

RN: This is part of a broader debate, with many contributors and we are keen to participate in the conversation. A smart potential move could be to expand access at a lower cost by amending currently restrictive regulations in the private healthcare system in South Africa. By reducing the prescribed minimum benefits (PMB) in our medical scheme legislation. The Prescribed Minimum Benefits (PMB’s) determine the entry price for medical scheme coverage in South Africa, and that is currently at about R900 a month, which makes it quite unaffordable to many. If by an Act of Parliament, we could allow citizens below a certain earnings point to access medical aid at a lower set of PMBs, it would allow the population to access a low cost form of medical insurance immediately. This would undoubtedly expand the medically insured population – potentially by between five to eight million currently employed but uninsured people. Government could also consider a compact with business and labour, to make this coverage mandatory for a defined set of individuals – perhaps on an earnings basis – in formal employment to give meaningful healthcare cover. This could potentially alleviate the burden of 5 to 8 million people from the public healthcare system – overburdened as it is at the moment – creating immediate capacity in the public system. I believe and I think the hospital groups would agree that there is still available capacity in the private sector so that without much capital investment we could use this available capacity of the private sector to great effect. This sort of cover would be predominantly primary care focused, so there would be a much better preventative healthcare regime. Tertiary care would likely still depend on the State. Given all the positive effects we know primary care should have (early detection etc.), this would be excellent for population health. The private sector pays taxes and the healthcare sector is a very big contributor to the Fiscus – so instead of the state system having to care for the employed yet uninsured with their constrained capacity out of tax money, they would create capacity to care for the unemployed and benefit from additional tax income in the fiscus, leveraging capacity in the private sector. I would argue that if we got people from treasury and health economists around the table they could prove that it is beneficial to our GDP, that it actually saves the country money and puts tax money back into the Fiscus. Finally, we would have better access, affordability by virtue of an Act of Parliament supporting the public sector to deal better with their burden of disease, use capacity in the private sector creating a virtuous circle. There would of course be complexity with labour, and the ideology of using the private sector more, but it would yield a much greater benefit to a far wider set of people.

EF: The obvious follow up is to ask how do you perceive NHI, is it a challenge or an opportunity?

RN: It is an opportunity and we support a move to Universal healthcare. We must do something structural to change how healthcare works in South Africa and the opportunity is to leverage it to make it a robust system. Critically, we should do this leveraging and using the strength of an excellent private healthcare system, not breaking it down. Private healthcare is perceived as very expensive in South Africa, but on a purchase pricing parity adjusted basis we deliver some of the best quality healthcare for money that can be got in the world. The International Federation of Healthcare Funders (IFHP) released a report recently on the purchase pricing parity adjustment which rated the South African private healthcare system one of the best in the world for value for money. South Africans have a particularly good work ethic and the quality of South Africans healthcare professionals trained in our Universities is globally recognised as outstanding. We have committed healthcare professionals.

EF: Being in Discovery Health and having a medical background gives you a very unique perspective so what do you think are the main three trends that will take off for healthcare in the future?

RN: 1 Digital healthcare for me is a very exciting trend and we are trying very hard to be on the forefront of that even though it is difficult and confusing. For me digital healthcare is using the ubiquitous access to cell phone and internet to help improve healthcare accessibility. There is a tool for healthcare accessibility with good advice and guidance from a reliable source of where to go to solve your problem, for monitoring particularly in the context of non-communicable diseases, in adherence to treatment and mental health diseases which is a huge upcoming surge, probably trend number two globally. Digital health potentially provides an amazing tool to help manage mental healthcare and I think it is a very exciting healthcare area.

2 Value based healthcare in the South African context is nascent but very important, and we are driving an agenda to achieve alignment of incentives between the suppliers and the payers of healthcare. We have a lot of initiatives underway here and are striving for both suppliers and payers to be aligned around delivering a high-quality healthcare product at the lowest possible price. Change management associated with value-based healthcare is painful and slow, as the US experience has demonstrated.

3 The third trend is extended life span, non-communicable diseases and mental health diseases that are changing the burden of diseases and we need to be ready to be able to deal with that. And that’s about behaviour change and behavioural risk modification. 

February 2020
South Africa