Cost drivers affecting the economics of private obstetrics in SA

Report regarding cost drivers affecting the economics of private obstetrics in SA

Underpinning the management of private obstetrical practice are major cost drivers, the most important being the cost of litigation insurance. This has increased exponentially with further increases in the future to be expected. Obstetricians have no alternative but to pass this on to patients – or stop obstetrics as has widely been reported. This is coupled to the relatively low remuneration afforded by medical aids, with a large gap between payment and expenses.

Medico legal pressures have increased dramatically, causing huge stress on obstetricians. Many have responded by either raising fees to reduce delivery numbers, or alternatively by doing more caesarean deliveries to avoid the unpredictable pitfalls of vaginal deliveries.

Patients’ expectations have increased, often unrealistically, as have the attentions of lawyers. (For example the recent case of “wrongful birth” which was settled in the Constitutional Court, sets new levels of expectations for perfection in an imperfect world.)

The implications of the above are complex and far reaching.

For some time now, the cost of liability (malpractice) insurance has been escalating at an alarming rate. This insurance premium (at present around R65,000 per month) indemnifies obstetricians in private practice against medical claims for alleged malpractice. Clearly this insurance is no longer affordable to many obstetricians and gynaecologists, and the collapse of private obstetric (midwifery) care is now a real possibility, and has begun in several smaller centres.

Soon a major town in the Karoo, which previously had the services of 4 private obstetricians, will be without any obstetricians practicing midwifery. Pregnant women with medical aid needing pregnancy care will either have to drive to larger regional centres to deliver when in labour (this is of course a major problem) or they will have to deliver in an already chronically overburdened, poorly resourced public sector.

It is likely that this trend will now accelerate, and women especially in smaller towns, will face similar challenges.

The South African Society of Obstetricians and Gynaecologists (SASOG) is attempting to improve matters, and several measures have already been put in place to try to deal with this situation. SASOG has determined that the doctors cost price of a delivery is in the region of R13,000 and medical aid re-imbursement is typically around R4,600.

This shows that obstetrical care for private obstetricians is not worth the salt, thus many have already stopped practicing obstetrics, retired, or are emigrating to greener pastures. There is nothing inherently wrong with delivery in the public sector – but a flood of previously “private” patients to public facilities will result in chaos. Especially if they request epidural analgesics for pain relief in labour, or other facilities available only in private institutions. The result of no private obstetricians in any area means that specialist paediatric facilities will probably also be suspended, and anaesthetists will similarly be affected. Labour wards will close if family physicians are unable to fill the void. Obviously they are generally unable to perform difficult vaginal deliveries or emergency caesarean deliveries, resulting in the unscheduled transfer of patients in labour to public facilities for further management.

The suspension of private obstetric practice has a host of downstream consequences, and the women previously enjoying private obstetric medical aid cover will need to develop an appetite for prescriptive care in state facilities such as midwife obstetric units (MOU’s). There is nothing wrong with MOU’s, but women previously exposed to the undeniable comforts of private practice will need to embrace care in less luxurious facilities.

The main driver for this state of affairs is the crippling cost of litigation insurance increasing exponentially driven in no small part by lawyers touting for business. Urgent attention by government legislators is appropriate, otherwise the collapse of private obstetric care in South Africa which has already begun, will accelerate.

Medical Aids have responded by calling for fewer CD to reduce costs. Their calculations need closer scrutiny. The cheapest delivery is an elective CD done during day-time in the normal theatre.

The cost of a vaginal birth must include the costs, and complication expenses, of the vaginal birth AND those of emergency CD’s, since one cannot include emergency CD’s lumped together and analyzed with the cost of an elective CD. This makes for accounting nonsense.

Nursing issues have become a problem, especially with the use of inexperienced agency staff unable to interpret CTG tracings. It may be more prudent for obstetricians to do an emergency CD rather than to trust a tyro agency nurse with a high-risk woman in labour, and an equivocal CTG tracing. The best midwives have better prospects elsewhere, and often leave for greener, better paid pastures.

Another suggestion for doing more vaginal deliveries, is doing more second stage instrumental deliveries. In the past 10 years the number of 3rd degree tears has tripled, often due to instrumental deliveries in the second stage of labour. Lawyers often interpret any obstetrical mishap as negligence. And any foetal compromise, of any description (especially in the case of assisted instrumental delivery) will be gris to the lawyers mill.

They consider CD as the benchmark of good are, and complication of delivery inevitably attract lawsuits. While Medical Aids have an appetite for more forceps deliveries, lawyers don’t.

The damaged child often attracts huge payouts (not uncommonly spent on luxuries by the parents). Obstetricians liability insurance increases, an expense not covered by Medical Aids, but by the doctors and ultimately the patients themselves. The obstetricians – particularly the older, more experienced ones – find it easier to stop midwifery, further stressing younger, less experienced colleagues, who respond with less labour ward obstetrics and more CD’s.

Legislation may go a long way in curbing legal fees and the huge amount of settlements. Legal fees and settlements are a large percentage of Department of Health budgets, and capping the tort of payouts is an obvious way of preventing escalation of costs. Legislation is slow in incubation, and is only a part of the solution.

The cost of litigation insurance is always borne by obstetricians alone. Private hospitals have no interest in assisting cover costs, despite the profits they accrue. Since lawyers perceive CD to be the standard care, a move away from CD is less and less likely. Nowadays many obstetricians are women, and given the crime situation fewer and fewer women obstetricians wish to venture out alone at night to practice their art. My wife, and obstetrician, has on occasion been followed home at night after deliveries by stalkers, a situation clearly unacceptable. I have been informed that many women obstetricians opt for CD to avoid this possibility. Female anaesthetists and other specialists are also subject to this social ill.

SASOG’s response

SASOG, under the dynamic leadership of Dr Johannes van Waart, is in the process of addressing the above issues. A programme of guidelines has been drawn up, a review panel established, a system of lead obstetricians and review meetings instituted at private hospitals, and so forth. Certain measures such as elective CD at 39w gestation are easy to establish. Others, such as adherence to guidelines, may be less so.

As mentioned SASOG has determined that the obstetrician’s cost of a delivery is around R13,000. The average medical aid pays around one third of this figure, highlighting the unsuitability of private obstetrical care in SA. While some private obstetricians are in the fortunate position of being able to demand cash “up front” for deliveries, or charge large co-payments, the majority are not in this position. And hence, the only alternative is to cease obstetrical practice.

It has taken several years to get to this point of crises. And we can’t expect a quick fix. Only by concerted efforts on the part of SASOG, will things improve.

Compiled on behalf of SASOG by Dr Peter De Jongh (September 2016)

Dr Johannes Van Waart
President: SASOG

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