Sound like Nirvana? Well, such a system does exist – in South Africa. I visited this country in September as part of a Healthcare Financial Management Association (HFMA) group participating in a people-to-people delegation. The purpose of the trip was to learn about the healthcare system of South Africa with a special focus on its debate over a national health insurance system.

No CFOs, No Claims, Patient Data

So how does the South African system work – or does it? Each public hospital (there are approximately 400) receives a budgetary allotment based on its historical budget, population to be served, number of beds, capacity, etc. In reality, however, this allocation is based on a proportional increase over a previous budget.  Funding for capital expenditures and plant maintenance is part of the country’s public works budget, rather than the health budget, and is not controlled by hospital administrators. There is no CFO in any public hospital.  Financial management of the public hospitals is focused on cash flow analysis (expenditures versus the provincial government allotment).

What is the end result of this type of hospital financing system? First, there is no information upon which to build a financial plan or operating budget.  Since there is no claims database or patient abstract database, there is no detailed information related to expenditures, revenues, profitability, diagnoses, procedures or services. . In the United States, we take for granted the amount of information we have to manage our facilities: data that outlines revenues and expenditures, not just gross, but broken down by service type, DRG, APC, provider or unit, payer type, etc.

Could anyone actually manage a healthcare enterprise without this type of information? We not only have incredibly detailed financial information, but the statistics that go into our claims databases also is used to determine quality of care through identification of Hospital Acquired Conditions and other quality initiatives.

Insurance companies = Schemes

South Africa’s private hospitals (those managed by large healthcare companies) have far better databases. Payment for services at these facilities comes from medical schemes (the term used for medical insurance). Billing and coding do occur at these facilities and, as a result, the private hospitals have a wealth of information to use in managing their operations. Some of the reports our group was able to view included: Top 25 ICD-10 codes by percent of patient days (yes, they have converted to ICD-10); revenues, growth, EBITDA, etc. compared to facilities/companies in other countries; and percent of admissions due to HIV-related diseases -a huge problem in South Africa.

One of the problems the government of South Africa is facing in trying to create a national health insurance plan is that it has limited data. There is no national source of information on the types of care being delivered to the population or their various costs.

So, we in the United States are indeed fortunate to have our elaborate billing and coding systems because, besides being the basis for reimbursement, the data organized by such systems allows providers, payers and government agencies to have the tools necessary to plan the future of our health care system. We might wish that the RACs were not around to use this data to audit our performance, but try to run your facility without your billing and coding data.



About the Author

Cheryl E. Servais, MPH, RHIA, has more than 25 years of experience in health information management. In her position at Precyse Solutions, Ms. Servais’ responsibilities include planning, designing, implementing and maintaining corporate-wide compliance programs, policies and procedures, and updating them to accommodate changes in federal and other regulations. In addition, she oversees training and development programs related to ethics, compliance and patient privacy; develops and chairs compliance and privacy advisory committees at the executive and board levels and takes an active role in professional organizations.

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