Proactive management requires a deep understanding of hospital admissions. Medical schemes need to determine whether they are purchasing necessary, cost-effective and high-quality healthcare services. Medical schemes must also be able to identify opportunities to purchase more efficient care.

This requires medical schemes to compare the value propositions delivered by different hospitals and healthcare professionals. Benchmarking should extend to both the cost and quality of care. Benchmarking should be clinically and statistically robust, and the methodologies used should be clear and transparent.

Different hospitals and healthcare professionals treat a different mix and severity of patients. Those treating more complex patients are likely to be associated with higher costs per admission and differential outcomes. Meaningful benchmarking must adjust for the mix and severity of admissions.

That is where the Insight Diagnosis Related Grouper (DRG) comes to the fore. The Insight DRG classifies hospital admissions into clinically intuitive and statistically homogenous categories, which allow for the quantification of case mix.

Clinical intuitiveness means that categorisations can be easily understood and interpreted by someone with (limited) clinical knowledge. Statistical homogeneity means that all the admissions within a particular category are expected to be associated with similar levels of resource utilisation and similar costs.

The Insight DRG is not limited to application in medical schemes. Hospital groups and healthcare professionals also derive significant value from the Insight DRG. Hospital groups and healthcare professionals use the DRG to better understand and manage their efficiencies and to structure alternative reimbursement models.

Development Process

The Insight DRG was first developed in 2011 and has grown to become the defacto market DRG in South Africa used by most hospital groups, medical schemes and managed care organisations. The Insight DRG is the culmination of extensive actuarial, clinical and clinical coding expertise. The DRG algorithm is regularly updated to account for emerging healthcare technologies and techniques, new clinical codes, and changes to admission cost patterns.

Creating a More Sustainable Healthcare System

Healthcare funders and providers have applied the Insight DRG in a variety of ways. Key applications include:

• Unpacking trends in the hospital admission rate and the cost per hospital admission to formulate managed care interventions, benefit design changes and other risk management strategies.
• Underpinning cost efficiency assessments are used to inform the selection of efficient networks and facilitate collaborative efforts between healthcare funders and providers to foster more cost-efficient and better-quality care.

These networks cover approximately 1.5 million medical scheme beneficiaries.

• Underpinning alternative reimbursement models which incentivise and reward healthcare providers for the provision of more cost-efficient care.

The Insight DRG has had a profound impact on the private healthcare sector and has significantly contributed to efficiency and sustainability. We are confident that its reach and impact will only increase with time.