Iso Leso Optics Ltd
Healthcare Market Inquiry Submission
Hearings Set #1
24 February 2016 at 2.00pm
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SUBMISSION
The multiplicity of coding structures for the
same eyecare and the management of
these by a specific linked Provider
Network Organizations (PNOs) with eye
healthcare provider groups (HCP groups)
compromise competition and hamper
independent
eyecare HCPs.
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Iso Leso
The core business of Iso Leso, a PNO, is
to be solution driven in seeking and deliver
appropriate eye care models to the
medical aid market that match the needs
of the patient, the fund, the administrators
and the HCPs in the most efficient and
cost effective method possible.
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Iso Leso
• Iso Leso is an open PNO available for any
HCP to contract on a per fund per provider
basis.
• There is no dominant shareholder with each
shareholder /member having equal interest.
• Iso Leso subscribes to maintain coding
efficiency in the market through an industry
standard SAOA Coding set.
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THE NUMBERS
• Optometry is 2.0 % of total medical aid
healthcare spend
• Optometry spend approx R 23.44 pbpm
Risk 49 %
Savings 51.%
• There is limited PMB on optical spend. Eye
health and visual efficiency as well as product
quality are key drivers in member satisfaction
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The Numbers ....2
• Approximate apportionment of typical
Optometry Spend
o Professional Fees 10%
o Base lens Costs 15%
o Frames 35%
o Lens Add Ons 30%
o Contact Lens Materials 10%
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EYECARE SPEND
• Only a portion of total optometry spend
needs to be recognised as an essential
spend for eye health and visual function.
(PMB)
• Essential optometry spend for eye health
and visual efficiency should be identified.
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The Consumers Eyes......
• There is little emphasis on eye health with
large focus on product and fashion
• There is misinterpretation of what the fund
pays, what the funds should pay and what
the providers can and should recover
• Fashion and product enhancements are
seen as part of a healthcare deliverable
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The Consumers Eyes ...2
• Choice can be manipulated by retail
dominance
• There is a lack of transparency driven by
linked PNOs directing consumers to related
retail H C Providers
• A significant fact of the current arrangement
is that consumers / beneficiaries have seen
their ability to choose a provider
compromised.
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Proprietary Codes
• Various PNOs have developed proprietary
code and tariff structures which leads to
confusion and inefficiencies.
• The linkage between a dominant PNO and a
linked large HCP group leads to market
distortion.
• No collective negotiation between HCP
groups and funders/administrators.
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PNOs – differences
• Preferred Provider Negotiators
Single shareholder with direct retail provider linkage
to Specsavers via KFML.
• Iso leso
PNO with broad based shareholding and open to all.
• Opticlear
Independent sole shareholding with possible
alignment to Mellin retail group via shared
management.
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PNOs Market Size
All Lives
24.9%
PPN
43.2%
Misc
2.5%
Iso Leso
13.1%
Opticlear
Discovery
16.3%
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PNOs Market Size
All Lives excl Discovery
3.3%
PPN
17.4%
Misc
Iso Leso
57.5%
21.7%
Opticlear
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Effects of Linkage.....PNO and
HCPs
• Managing of proprietary codes to the detriment of the market and
to the benefit of the linked relationships
• Directing of patient specifically away from independents and non
linked HCPs to a related retail group.
• Clearing of competing providers claims enables control of cash flow
to non aligned providers.
• Access to confidential information of competitor’s pricing structures
and supplier relationships impairs business privacy.
• Creating specific controls on supplier – providers relationships that
enhance PNO’s suppliers relationship.
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..........Linkages’ Effects
• Transfer of profits made on capitation
arrangements has not been returned to HCPs
nor to funders.
• The profits on risk based contracts provide a
capital base to grow a dominant linked HCP
retail provider group.
• The survival of the independent HCP is
significantly compromised by the linkages.
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Conclusion 1
• The linkages between PNOs and HCP
groups distorts eye healthcare delivery.
• Distortion has lead to reduced/unfair
competition and increased costs through
the manipulation of proprietary code
structure and transfer of risk profits outside
of the fund-provider loop.
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Conclusion 2
• The PNO and HCP group has created
barriers to entry for independent providers.
• Abuses of market position through
dominance in the medical aid lives and the
PNO and HCP group linkages.
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Proposal 1
• For efficiencies and transparency the
optometric sector uses a single set of codes
developed and maintained by stakeholders
and endorsed by DoH
• Collective tariff and benefit structures
negotiations should be permissible
• Linkages between PNO’s and HCP groups
be prohibited
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Proposal ......2
• PNO’s with broad based shareholding should be
encouraged to prevent profiteering in the medical
aid market.
• Any positive gain in managed care interventions
should be used to support both the financial
stability of participating HCP’s and medical
funders.
• There is a need for ethical guidelines to be
established to govern behaviour where linkages
exist between HCPs and PNOs
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Ancillary Comment.......
• Circular 51 and Low Cost Benefit Option
• Inter disciplinary co ordination (lack of) as
a cost driver
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THANK YOU
Peter Muller
Contracts Director
[email protected]
Tel 083 7942547
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