Discovery Health has developed a rating system for South African hospitals, that will give doctors and Discovery Health Medical Scheme members the ability to choose a hospital that offers quality care and is also cost-effective for various procedures.

The Discovery Health Hospital Rating Index already shows that steering patients to the hospitals that offer quality care, lowers medical bills.

Barry Swartzberg, the managing director of Discovery Health, says this finding is counter-intuitive as good quality care is normally associated with high costs.

Discovery hopes that its members will make use of the rating index, which is available on Discovery's website, to choose hospitals that offer better value - higher quality for lower cost - for the medical procedure they need, thereby reducing the hospital bills of the schemes it manages.

The rating index is based on data about Discovery members who were admitted to hospital in 2003 and 2004. Swartzberg says this data covers 744 000 discharges from more than 500 public and private hospitals.

The quality of the hospitals used by Discovery members has been assessed from data about the mortality rate of the members who were admitted, the number of members who suffered complications and the number who had to be readmitted to hospital within 30 days of their first admission.

Hospital admissions for HIV, oncology (cancer) and renal (kidney) problems were excluded because these are long-term illnesses which often require frequent readmission to hospital, Swartzberg says.

The data on the deaths, complications and readmissions has also been adjusted in line with the mix of cases and range and type of patients that the hospitals treat, he says.

Some hospitals deal with more serious cases than others, and the rate of deaths, complications and readmissions is therefore higher than that of hospitals that deal with more of the less serious cases.

Deaths and complications

Discovery's data shows that the average mortality rate in the 100 busiest hospitals is 0.6 percent and the average rate of complications is 2.1 percent.

There are different complication rates, however, for different procedures. For example, organ transplants have a 53 percent complication rate while there is only a 1.4 percent complication rate for procedures relating to the digestive system.

Once the data is adjusted for these factors, hospitals are given scores for the average cost of each of the procedures they performed and the quality of those procedures. The scores translate into a star rating of between one and five for the cost and quality of each procedure, with the highest rating being five stars, Swartzberg says.

A value rating has then been determined from a combination of the cost and quality ratings. This enables members and doctors who use the rating index to see at a glance which hospitals give the best quality and the lowest cost for each procedure.

Users of the rating index can also see how many procedures a hospital has performed over the past two years.

Hospitals which have performed fewer than 10 cases of particular procedure over the period, are not rated for that procedure.

Patients who need a hip replacement, or Caesarean section, for example, can use the ratings to choose the hospital offering the best value for money.

Krisen Govender, the group marketing director of the Netcare hospital group, says Netcare welcomes the new rating system and will be working with Discovery Health in the future. He says it is a "fantastic initiative" that is in the best interests of the patient and brings a measure of transparency.

Pitfalls of the ratings

However, Brian Davidson, the general manager of strategy and development at Life Healthcare (formerly Afrox Healthcare), and Ronnie van der Merwe, the director of clinical services at Medi-Clinic, also welcomed the rating index as a first step in measuring quality and informing the public about value for money hospital services, but cautioned that the system had some pitfalls.

Davidson says the rating system does not take into account the severity of the cases it measures, the quality measurement is very simplistic and the ratings are often based on very small sample sizes.

Van der Merwe says he would caution the public to be circumspect when using the rating index, because while it can give an indication of the quality of care at a hospital, it is not always accurate.

He says Discovery has based its ratings on claims data and the information on the claims essentially comes from the hospitals. The hospitals are aware that their codings are not always a reflection of reality, he says.

Complications and deaths may be a consequence of the illness or a result of negligence, but this is not reflected on claims data.

Internet access

There are also pitfalls in the methodology used to adjust for, for example, the case mix at different hospitals, Van der Merwe says. He says the hospitals would feel more comfortable if the data was audited by an independent auditor.

Nevertheless, Van der Merwe says, Medi-Clinic welcomes the fact that Discovery, as a funder of hospital services, is looking at quality instead of just cost.

The ratings can be accessed on Discovery's website:

Swartzberg says Discovery members who do not have access to the internet can ask the Discovery call centre for assistance.

Swartzberg says Discovery plans to update the data every six months once claims information is available for a six-month period. Members are allowed to submit accounts for the four months after medical treatment.

Data for the first six months of 2005 will therefore be added to the rating system shortly.

The South African system was based on similar systems available to patients in the United States.

Earlier this year, Rick Siegrist, the senior vice-president of a United States-based company that develops software tools for the healthcare industry, Healthshare Technology, told the Personal Finance/Healthwise seminars how Americans were now using similar rating tools to select hospitals rather than relying on their doctors or specialists to choose for them.