How to curb soaring inpatient costs in the UAE

Inpatient spending in the GCC is estimated to grow from $16.4bn in 2015 to $28.9bn in 2020



Unless you’re checking in to one of the glitziest hotels, the most expensive way to spend the night in Dubai is to be admitted in hospital.

A recent report from Alpen Capital into healthcare in the GCC predicted that inpatient spending will grow from $16.4bn in 2015 to $28.9bn in 2020. That’s a rise of 43 per cent in five years. Inflation, by comparison, is expected to hover around 2.2 per cent to 2.9 per cent over the same period. And with an ageing population, increases in chronic diseases and poor lifestyle choices combined with advancements in treatments and technology, this kind of news should be of major concern for insurers and employers alike.

It’s an issue we need to tackle now, by getting to grips with the reasons behind the cost of patient care rocketing, and then being smart about how to tackle it. Cutting costs should not happen at the expense of patients. Our aim should be to find ways to save money while improving both the patient experience and the outcomes.

Five reasons why inpatient costs are out of control

There is an argument that inpatient spending is out of control because too many people are being admitted to hospital. However, the UAE has a reasonable record for diverting patients to less expensive outpatient clinics. A 2014 report from the Dubai Health Authority (DHA) analysed claims made on its eClaimLink system and found that 29 per cent of all insurance expenditure went on inpatient care, compared to 51 per cent in the Netherlands and 48 per cent in Switzerland – two countries where the cost of common diagnostic and operation procedures are broadly similar to the UAE.

It’s when we dig deeper into the inefficiencies of the system that the real reasons for our inpatient cost crisis begin to emerge.

1. Over-dependence on expensive technology

Healthcare is increasingly driven by technology, yet while developments in technology have made other aspects of life such as communication more and more cost-effective, the bearing on medical costs has been the opposite. Yet there is evidence that much of the money spent on the use of new technology is unnecessary.

We have a tendency to equate quality care with sophisticated technology. The more expensive the device, the better the outcomes. While sometimes true, this mindset exposes us to paying for things we may not need and gives manufacturers little motivation to keep costs down.

Take, for example, the treatment of prostate cancer. Researchers at the University of Michigan investigated the US Medicare programme between 2004 and 2009 for use of intensity-modulated radiotherapy (IMRT) and robotic prostatectomy. These technologies are used to treat prostate cancer in patients at low risk of dying from the disease. The research found that use of these expensive technologies increased from 32 per cent to 44 per cent over five years, despite widespread understanding among physicians that most low risk prostate cancers can be treated with nothing more than ongoing observation.

2. Over-reliance on branded medication

According to the US Food and Drug Administration (FDA), generic drugs are on average 80-85 per cent cheaper than branded medications and have gone through the same rigorous testing with respect to identity, strength, quality, purity and potency. Yet here in the UAE, we have a love affair with branded medicines. For example, a 2016 study published in the Journal of Pharmacology and Pharmacy found that consultants at a general hospital in Sharjah prescribed branded medications 95 per cent of the time.

Although in the case of impatient care, the amount spent on the physician, surgeon or anesthesiologist, as well as the procedure and investigation, is higher than that spent on branded medicine, it’s still a cost that could be reduced.

3. Irrational use of medicines

Sometimes medication may not even be required. The Rational Use of Medicines (RUM), as defined by the World Health Organization (WHO), requires that patients receive ‘medications appropriate to their clinical needs, in doses that meet their own individual requirements for an adequate period of time, and at the lowest cost to them and their community’. The general essence is that RUM saves lives and cost.

However, adoption of RUM in the UAE has been slow. A study by Dubai Pharmacy College looked at prescribing practices in four hospitals, with evidence gathered from 100 physicians. The research found that only 46 per cent of physicians followed standard protocols and just 18 per cent had software that would warn them of potential drug interactions or adverse events.

Furthermore, 89 per cent admitted that antibiotics were overprescribed. This kind of practice becomes costly for two reasons: firstly, drugs are prescribed when not needed; and secondly, adverse reactions can increase hospitalisation rates. As hospitals and clinics start to get used to the adoption of RUM, these figures will naturally decrease, but on the whole medicine is still being used and prescribed unnecessarily throughout the UAE – a cost that could be reduced.

4. Overstay

Overstay is a significant and costly problem around the world. A 2012 study by the Royal College of Physicians in the UK looked at overstay on a neurology ward and found that 20 per cent of patients overstayed by an average 6.75 days. If extrapolated nationwide this would soak up 5.6 per cent of the UK’s annual neurology budget.

The same is happening in the UAE. The DHA’s Clinical Services Capacity Plan 2015-2025 report revealed that in a single hospital, 127 patients with chronic diseases had stayed for over a month. Of that number, 23 per cent were deemed fit to go home and 38 per cent were fit to be discharged with only basic care needed from a caregiver.

5. Fraud

Healthcare fraud is incredibly costly to the system and it’s rife in the UAE. UAE authorities estimate that 5 per cent of all paid health insurance claims in the UAE are fraudulent and push up premiums by 20 per cent to 30 per cent.

In the Middle East as a whole, losses due to this abuse are estimated to total $1bn. It’s also reported that doctors working in medical facilities with expensive equipment tend to have higher average insurance claim costs, as they are more likely to use what is available to them, even if it’s not entirely necessary.

And four ways to fix it

The danger, when trying to cut costs, is that it’s tempting to focus only on information that is easy to access. Factors like personnel, payroll and equipment are simple to target and cuts may bring short-term results; however, such measures are shortsighted. Cutting support staff, for example, can lead to highly-trained physicians spending more time carrying out basic administrative tasks and less time with patients.

The issues raised above are unlikely to be solved through such an approach. Instead, we should be reducing charges by making what we have more efficient.

Here are four proposals that could all make a difference.

1. Adopt best practices: Ensuring that care is evidence-based and standardised can improve the overall patient experience and lead to savings. This could mean producing, updating and enforcing guidelines in different specialties to include dosing, the use of generics, and reducing unnecessary reliance on technology. The Dubai Health Authority has increased efforts to audit hospitals, but they still have a long way to go.

2. Improve care coordination: Restricting the chances of patients experiencing fragmented care may also reduce expensive readmissions and complications. A 2012 paper published in the Journal of the American Medical Association found that for the US Medicare and Medicaid programmes, implementing strategies to improve care coordination could have saved $25bn and $45bn in 2011.

3. Invest in space: Sometimes you have to spend money to save money. Specialised rooms such as operating theatres are expensive but ensuring the hospital has the most efficient number can make a real difference. In 2014, researchers from Harvard Business School made the observation that surgeon productivity is drastically reduced by only having one operating room available to them. In essence, the team is idle while the room is being readied for the next operation. Analysis showed that, long-term, it’s most cost-efficient to invest in a second operating room, rather than having a surgery team waiting around – paid but unproductive. This also affects the patient care, as those needing surgery or procedures that have limited resources, such as ultra sounds, need to stay longer in hospital than necessary. The lack of space or resources, therefore, directly affects the overall patient bill and insurance claim.

4. Clamp down on fraud: The financial services sector spends a lot of time and money clamping down on fraud, because overall the process is cost-effective. As most hospitals now rely heavily on digital systems, they have the facility to implement analytical detection technology, capable of spotting potential cases of fraud, which can then be further investigated. Dubai Health Authority is increasing its efforts to audit hospitals around the emirate, collecting data to analyse trends and even physicians – all in the hope of reducing costs and fraudulent activities.

It’s about everyone playing their part

In the end, governments, healthcare providers, insurance companies and employers clearly have a larger role to play in shaping our healthcare system than the rest of society. Education on health needs to be increased, with physicians raising awareness and asking patients to seek a second medical opinion before undergoing any surgery or impatient procedure. If you don’t have a second medical opinion covered under your insurance policy, your broker will be able to assist in offering alternative providers who can cover this.

Ultimately, the healthcare system belongs to all of us, so alongside change implemented by major institutions, an important aspect of keeping inpatient costs down is to take responsibility for our own health.

Stephen MacLaren is the regional head of Distribution for Human Capital and Benefits at Al Futtaim Willis

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