Discovery’s shared-value insurance model drives greater stakeholder engagement

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An ageing medical aid membership base and a shaky economy which discourages youngsters from buying medical cover present a significant threat to medical schemes. Yet, there is a risk to individuals too, and not just in the form of higher premiums. Cancer rates are rising in young adults and a survey conducted in America shows 54% of millennials have been diagnosed with at least one chronic illness. , 

We are swimming against the tide; something Discovery Health is working hard to change with its Vitality programme which incentivises members to take better care of their health. Using the principles of behavioural economics, Vitality rewards us for making healthier choices.

Discovery Health is hoping to further reduce risk and create value for its members through a shared value healthcare approach. It is one of a handful of companies in the healthcare sector focusing on shared value creation with the aim of improving the health of individuals and populations round the world (others include Eli Lilly, Medtronic, Becton Dickinson and GE Healthcare). 

“Shared value healthcare is premised on the simple notion that if you can change the behaviour of patients and providers alike, you can shift the health risk curve,” says Dr Jonathan Broomberg, CEO of Discovery Health. “In the traditional insurance world, if the insurer saves on claims it makes a profit from those savings. But in terms of shared value, the surplus on claims you achieve by improving members’ health and by improving the quality of care they receive from their doctors is deliberately shared with all stakeholders. As a result, both patients and providers are incentivised to change their behaviour.”

For Discovery members, this means tapping into Discovery’s broader ecosystem of rewarding low-risk behaviours. Members are not only rewarded for looking after their health, but also for changing how they drive and how they manage their money (Discovery Bank is being touted as the world’s first behavioural bank). Beyond that, however, is the need to increase consumer engagement in terms of healthcare.

“The whole idea behind behavioural incentives and shared value is that all stakeholders become active participants,” says Broomberg. “Many medical aid members are passive about their healthcare. They don’t ask enough questions. They don’t actively seek out the best doctors and hospitals, even though we publish ratings for their benefit. Only 15% of our members check if their hospitals are highly rated before they are admitted for procedures. Patients give up a lot of their power and, as a result, they are likely not making the best use of their healthcare benefits. I often say consumers spend more time selecting their next cellphone package than they do on researching an upcoming medical procedure.”

The notion that patients should hold doctors accountable may be strange but this type of behaviour is to be encouraged, according to Broomberg. Doctors do not always make optimal choices for all patients. They may place a burden on the healthcare system when they order unnecessary tests, for example, or use high-cost products when they could use cheaper ones that are just as effective.

“The most developed model of shared value we have is in hip and knee replacement surgery,” says Broomberg. “We noticed a wide variety in results when it comes to orthopaedic surgeons. Doctor A’s patients may get out of hospital sooner after a hip replacement, recover more rapidly, be less prone to infections and need fewer repeat operations compared to Doctor B’s patients. We have developed a network of centres for excellence for these procedures and we direct our members to centres with the best results (they would have to pay a 20% co-payment if they went elsewhere). We pay doctors more for good results in that we tell surgeons if they can save money without compromising on quality they can be rewarded.”

Broomberg explains the major expense with hip replacements is the hip joints and there is a wide variation in cost regarding these products. “Lower cost products can be just as good, if not better. We get the surgeons thinking not only about good clinical results, but about how to save money without compromising patient care. If they can use sutures that cost R150 rather than R2 000, the saving can be passed onto them. It’s simply a question of sharing information and changing incentives.” In terms of the shared value model, Discovery is moving from paying providers purely in terms of service volumes to a system which rewards providers for improved quality and better patient outcomes. He says that while it’s difficult to quantify how much is saved by dealing proactively with issues like waste and fraud, data shows that claims would probably be around 15% higher every year if it were not for these savings. It is therefore in the best interest of medical aid members to actively seek better providers who demonstrate more mindful behaviours.

Using data to manage risk

Dr Broomberg encourages Discovery members to urge their doctors to sign up to Health ID, a digital healthcare platform for doctors. This platform allows doctors to access their patients’ electronic health records via iPad or computer and it offers a complete view of medical history and test results. Doctors frequently operate in silos and may order unnecessary tests for a patient because they have no idea the patient has had these tests performed by another doctor or specialist. If patients are vocal about what tests they have had, they can be part of the virtuous cycle of eliminating waste, but doctors should be part of this process, too.

Broomberg adds that doctors sometimes order multiple tests or scans as they are worried about missing something and being sued, but Health ID can track which tests or scans have already been done and provide results, avoiding wasteful duplication. “There’s so much waste in healthcare but cutting costs while adhering to quality standards can make a difference. Historically, we haven’t had much data to work with, but we’re building up a registry now, which makes it much easier to assess outcomes. Discovery rewards doctors for signing up to Health ID, too, so it makes sense for them to do this,” he asserts. 

Medical malpractice is a huge issue in South Africa, particularly when it comes to obstetrics but the shared value model can have some impact in this area. “We have good data on the results obstetricians achieve, so we can work with the insurers and try to negotiate lower premiums for them.” While only around 50% of doctors treating members of Discovery Health’s client schemes have signed up on Health ID, there’s a great advantage to signing up. “Doctors are busy, change-averse and risk-averse; they do not want to take the time to sign up but they may be faced with higher insurance premiums,” Broomberg explains.

While improvements in the health status of the population depend on the private sector, it makes sense to focus on shared value health strategies that make stakeholders active participants. While there is business value in the model, there is social value, too, particularly important in a country like South Africa, where poor health has such huge socio-economic consequences.