THE SOUTH AFRICAN SOCIETY OF ANAESTHESIOLOGISTS
(Official group of SAMA)
Association incorporated under Section 21
Reg. No. 1927/000136/08
President : Dr M Raff
Vice-President : Dr P Bettings
Hon. Secretary : Professor P Fourie
Hon. Treasurer : Dr K Klintworth
P O Box 1105
CRAMERVIEW
2060
Telephone : 011 463 0684
Telefax : 011 463 1041
Email : sasa@uiplay.com
kklint@cyberpmc.co.za
RPL SUBMISSION 2011
(in terms of the National Health Act (Act 61 of 2003))
SASA
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Report Date: 2010/01/26
TABLE OF CONTENTS
SASA
INTRODUCTION
3
REVIEW METHODOLOGY
6
APPLICATION OF THE GUIDELINES TO THE REGULATIONS
7
ANAESTHETIC MODEL AND CODING STRUCTURE
10
PROPOSAL ON ANAESTHETIC RAND CONVERSION FACTOR
13
CONCLUSION
14
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Report Date: 2010/01/26
INTRODUCTION
Background
The South African Society of Anaesthesiologists (SASA) has participated in the RPL process
since its inception in 2005. The regulations have changed and the RPL process has become
more refined in dictating the types of practice expenditure, the productivity calculation and
determination of sample size. However the results have essentially remained unchanged. In
2005 the then Council of Medical Schemes (CMS) who was responsible for the NHRPL process
conceded that anaesthesiologists needed a significant increase (67%) to achieve parity with the
public sector anaesthesiologists. A 20 % increase was given to anaesthesiology in 2006 and the
balance of the increases was to be implemented over the ensuing year to lessen the financial
impact to the medical funders. At the time a letter of complaint was sent to the CMS contending
that their behaviour was anti-competitive, as the RPL process determined a reference price and
as such the medical schemes had a choice of setting their price at, above or less than RPL. It
was not the function of the CMS to gradually increase the RPL based on a fear of financial
impact. It was subsequently discovered that VAT had been excluded and that the calculated
anaesthetic RCF needed an even greater increase to include this tax.
The RPL process was then transferred to the Department of Health (DOH) and as such no
further increases or cognisance of the previous costing studies have been entertained.
The Society of Anaesthesiologists has only utilised the services of an Independent Auditor to
collate and report on the practice cost studies and the submission will be made by SASA
representatives, namely Drs. Klintworth and Bettings. The independent auditor, Mr Vaughan
Nisbet, will be available to assist you in your understanding of the practice cost submissions..
The key issue revolves around the conversion of the minute/hourly worth into a Anaesthetic
Rand conversion factor. To date numerous models have been developed, one by the CMS
utilising the data relating to the percentage of anaesthetic cases that are less than or more than
an hour in duration. The rationale for this was to address the issue that anaesthetic coding is not
linear time based when compared to all other surgical disciplines. The CMS model resulted in an
anaesthetic hourly worth, irrespective of the complexity of the procedure, been standardised to
the same value. This obviously disadvantages those specialists who are involved in more
complex procedures over those who do routine anaesthetic procedures. Further models have
utilised the medical schemes data representing 30% of the total schemes data in an attempt to
create a linear time scale, address the issue of relativities, and to predict what the total sum of
anaesthetic units per annum for an average full-time private anaesthesiologist would be. The
issue is that all of these models are based on certain assumptions and due to the lack of
productivity data the interpretation of results may be deemed as biased.
As a result of this learning curve a practice model has been developed collecting data over a
twelve month period and this data includes all of the anaesthetic units generated and compared
to the actual worked standard volume to gain a better benchmark of the total number of
anaesthetic units that are generated per hour for an average efficient anaesthesiologist.
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Report Date: 2010/01/26
Number of Specialist Anaesthesiologists
The HPCSA has 1352 registered anaesthesiologists in South Africa. It is unknown what
percentage of these are still practicing or living in South Africa
The BHF has 1055 anaesthesiologists registered with Practice number codes. It is unknown how
many of these are practicing full time or only participates in limited private practice. The BHF has
reported through the Department of Health in February 2009 that it is projected that there are at
least 672 specialist anaesthesiology practices in South Africa.
The South African Society of Anaesthesiologists that is representative of private, fulltime public
sector, registrars and associate (general practitioner members) has 636 registered full-time
private practitioners and 114 registered full-time public sector practitioners who participate in
limited private practice, out of a total SASA membership of 1280. The 636 members include
those in group practices that number 173 members and represent 14 practices. Therefore
comparing to DOH data we only have 454 private anaesthesiologists – practicing under BHF
practice numbers (636 – 173+14 – 23 respondents who work less than two days per week)
compared to the DOH figure of 535 (672 less the public sector anaesthesiologists that
participate in limited private practice – 114, and the number of respondents (23) who claimed not
to work more than 4 sessions per week.
The South African Society of Anaesthesiologists contends that the sample data published by the
Department of Health to use as the population size is inaccurate. This is based on our congress
data that indicates that no more than 10% of attendees at our National congress, who are in fulltime private practice, are non-SASA members. The cost differential for registration for non-SASA
members attending our annual congress is large, and as all private anaesthesiologists need to
maintain their continual professional development as legislated by the Health Professional
Council, we are convinced that we are representative of 90% of full-time private
anaesthesiologists. Therefore 244 responses out of a population size of 505 (505*90%=454)
achieves a response rate of 48.32%.
The population size is further compounded by the fact that at a number of solo-practitioners work
less than 5 sessions per week. Their practice management is outsourced to administration
companies and significant difficulty is experienced in gaining information from these
administrators as they do not wish their costs to be known as it may affect their competitive
advantage in the market. The other issue is even if these practice costs are released they are
not comparable to the ‘average’ full-time private anaesthesiologist as we have no way of
extrapolating their practice costs to that of a full-time private anaesthesiologist as they often do
not keep records of actual worked sessions.
An adequate sample size is required to ensure that the confidence interval is statistically
significant. However, if the costs associated with solo practitioners are higher than group or
associate practices that have the benefit of economies of scale, by reducing the sample size by
the number of part-time solo practitioners would result in the reported average practice costs
been lower than the actual. The Society of Anaesthesiologists is prepared to accept this nuance
to prevent any further delays in the RPL submission process. To achieve a confidence level of
95% and a confidence interval of 4.1 the sample size of 244 is more than adequate.
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Types of Practice
Various types of practices exist within the anaesthesiology discipline, ranging from solo practices
to practices that have 34 or more partners. There are currently 39 specialist anaesthesiologists
practicing as Associate practices (practice cost data has been received from all of them), there
are 14 group practices representing 173 specialist anaesthesiologists (practice cost data has
been received from all of them) and a balance of 32 solo anaesthesiologists that practice more
than 6 sessions per week.
The practice cost studies attempted to collect information on the number of worked days or
sessions per week. Anaesthesiology is the one speciality that allows for flexible working
conditions that may affect the interpretation of collected data and hence all costs were
extrapolated to weeks worked
Affiliation to the South African Medical Association
SASA is affiliated to the South African Medical Association (SAMA) and this submission has
been prepared under the auspices of that affiliation and will be subject to the peer review
processes within SAMA. However, it is believed that, due to the unique nature of the coding and
fee structure for anaesthesiology services and the very limited overlap with other medical
disciplines, an independent submission is justified.
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Report Date: 2010/01/26
REVIEW METHODOLOGY
This project commenced in early 2009 following the publication of terms of the National Health
Act (Act 61 of 2003) for the RPL process. To increase the sample size the collection of practice
costs information was repeated mid-year and a further 38 practitioners responded (out of the
total of 267 respondents)
A practice cost questionnaire was devised and distributed electronically to all SASA members:
1. Detailed information was obtained from 85 anaesthesiology practices from across the
country, representing 244 anaesthesiologists. The information that was obtained was with
respect to:
1.1.
Financial information. The average details from these practices were used to establish
the average costs as recorded in the overhead schedules and to determine the
confidence interval level.
1.2.
Staffing norms. The average details were used to establish the average staffing levels
as recorded in the labour schedules.
1.3.
Time information. The average details were used to establish the effect of the base
units and the units that are associated with the various add-on codes on the standard
volume of time.
1.4.
Utilisation information. The average details were used to establish the average
utilisation per tariff item as recorded in the fee schedules.
2. An independent auditor, Vaughan Nisbet, collected and collated the data and liaised directly
with practice managers, auditors, accountants or doctors on any misunderstanding. He
analysed the data received and compiled a pro-forma costing model for an anaesthesiology
practice. The pertinent data was then transcribed into the prescribed format outlined in
Circular 69 and 1 as well as the guidelines to the regulations to the National Health Act. Our
approach to the prescribed methodology has been set out in the next section.
3. Prepared a recommendation in draft form and work-shopped the contents thereof with SASA
representatives. Having made certain changes resulting from the discussions, a final
submission was prepared.
In light of the fact that the project commenced in early 2009 and was compeleted in September
2009, much of the data that has been used is data that was obtained during the course of
2008/09 and the results of the analyses that were performed have been adjusted by the
appropriate inflation percentages to reflect the costs as of the end of 2009.
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Report Date: 2010/01/26
APPLICATION OF THE GUIDELINES TO THE REGULATIONS
Parameters
Standard Volume for Overheads
We have applied a base standard volume of 90 090 minutes and have adjusted that in order to
accommodate the effects of:
Interest Rates
We have applied the current prime overdraft rate of 10.5% and have not made any allowances
for possible future increases in the overdraft rate.
Risk Provision
We have, based upon our understanding is that the object of the exercise is to establish a
reference price, applied a risk free bankers’ acceptance rate 7.10%.
Labour
Direct Labour
We have utilised the public sector benchmarked direct labour remuneration for an
anaesthesiologist at a level of R1.2 million per annum cost to company. We believe that this is
the appropriate benchmark to be used, based upon the expected levels of remuneration in the
public sector, and referenced to the occupation specific dispensation for 2010.
However, we believe that it is debateable whether this level of remuneration is fair and market
related after considering the following facts:

Risk assumed by the proprietor in setting up a private practice;

The required minimum of 12 years training;

Other benefits that are enjoyed by specialists that are in the full-time employment of the
public sector, such as the ability to earn additional income trough private work;

The fact that an anaesthetist is entirely dependent on his/her own time
generate an income; and

The resource scarcity in South Africa, with only 439 private practicing anaesthetists of
whom a significant percentage are close to their retirement age.
SASA
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in order to
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Direct Labour Productivity
For purposes of our submission we have applied a productivity percentage of 75%.
Anaesthesia differs from other disciplines in that as a true service provider (to surgical
colleagues) we have very little control over our time management. It is reported by the American
Society of Anaesthesiologists and by SASA in previous productivity assessments that our
productivity is less than the benchmarked 75%.
i. Any down-time for the surgical disciplines between theatre cases is
compensated for by them using ‘anaesthetic time’ and not surgical time for the time motion studies. There will always be on average 15 minutes
between surgical times for cases.
ii. As the practice of anaesthesiology is essentially remunerated on a strict
time based system any change to the productivity factor significantly
affects the professional remuneration using the methodology advocated
by the Department of Health
iii. When the surgical disciplines go do ward-rounds, admit new patients,
assess emergency cases, etc. Anaesthesiologists experience unreported/
uncompensated down-time between cases
iv. Theatre cases are booked at surgeons convenience and this often results
in poor time management for the Anaesthesiologists as ‘dove-tailing’ of cases is the exception rather than the rule
v. Pre-anaesthetic consultations are performed in the wards and delays in
patient admission often result in the Anaesthesiologist waiting in the wards
for their elective booked cases to arrive in the ward following the
admission process. More than 80% of all theatre cases are admitted on
the day of surgery resulting in poor time management for the
anaesthesiologist
vi. Compared to most other medical disciplines, anaesthesiologists often
commute between venues during the day to provide an anaesthetic
service, whether elective or emergency.
Indirect Labour
Indirect labour is limited to administrative staff, combined with receptionists and office
maintenance staff.
Responsibility Values
Responsibility values are reflected in the anaesthetic base unit. It is difficult to quantify what
constitutes a responsibility value of one. It is our interpretation that a responsibility unit of one
should relate to the ‘average’ case based on complexity, ability and risk. For anaesthesiology
these are all procedures that have a base unit of 5. The anaesthetic coding structure allows for
the add-on of certain modifier codes such as controlled blood pressure and obesity, These
modifiers maybe used for some of the codes to increase the ‘base unit’ value to compensate for the additional expertise or risk that is required. All orthopaedic procedures have a base unit of 3
to which is added a bone modifier (dependent on the anatomical site). For example the knee is
an additional 2 units whereas the hip is additional 5 units and this equates to a total base unit
value of 5 units for a knee and 8 units for a hip.
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Report Date: 2010/01/26
The Anaesthetic Model has included all of the base units and the modifiers and an adjustment
has been made to report the total base unit to 5 that equates to a responsibility factor of 1. This
is to ensure that all anaesthetic procedures do not earn the same and compensates for work
performed on high complex procedures.
Specialist Equipment
No provision has been made for specialist equipment.
Standard equipment
This equipment comprises items such as furniture, fittings and computers. The cost of these
items was determined from the information that was obtained from the practices. The useful
lifespan of the equipment was estimated to be between three and ten years, depending on the
type of equipment.
Overhead expenditure

The average overhead expenditure per anaesthesiologist amounts to R357,646.
These overhead costs comprise:
Staff Salaries & Related Costs
Equipment Costs
Rent and Utilities
Practice Management & Administration
Finance & Insurance
Other Costs
Overhead expenses are based upon the results of the information received from the practices.
Confidence Interval Adjustment
The confidence interval adjustment that was applied to the overheads is 10%. This confidence
interval was calculated on the normalised data that was received from the practices.
Application of Direct Labour and Overhead Rates
The labour and overhead rates were calculated by applying the methodology that is prescribed
in the regulations to the National Health Act. However, various adjustments had to be made to
the model spreadsheet in order to accommodate the unique way in which accounts for
anaesthesiology services are compiled.
The tariff codes used have been derived from the fee structure that is currently being used and
published by SAMA and is directly related to the coding structure used by the American Society
of Anaesthesiologists (ASA). It has the same base unit values and hence relativities as the ASA
CPT coding system.
SASA
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Report Date: 2010/01/26
ANAESTHETIC MODEL
Principal
The anaesthetic model needs to:
1. Be reflective of the average public sector anaesthesiologists work and productivity
2. Medical scheme data is not reflective of productivity as no information is available for
a. Actual number of anaesthesiologists generating the annual anaesthetic income
b. Anaesthetic units are directly related to time, whereas clinical and consultation
units are not, this makes the collation of all anaesthetic data meaningless
c. The number of actual worked sessions per annum is unknown as many solopractitioners may only work 6 sessions per week. This makes the extrapolation of
the anaesthetic data to an annual basis impossible
d. Medical Scheme data has no way of identifying work that is only conducted
during office hours
3. A time model has been created based on the annual data collected from a large audited
anaesthetic practice that is reflective of the National average regarding case mix. In the
model:
a. The number of worked sessions is known
b. The total number of leave sessions is known
c. The number of non-anaesthetic sessions, namely critical care service is known
d. The number of after-hours cases, including public holiday and weekends is
known
e. It is deemed that the workings of the sample practice are reflective of average
efficiencies and case mix
f.
The total number of anaesthetic related work hours per annum is calculated
adjusting for an eight hour day, 75% productivity and time spent on after-working
hours anaesthetic activities
4. An activity model has been created based on the annual data collected from a large
audited anaesthetic practice and reflective of the 80% basket as reported by Discovery
Health Tracker and other practices in different geographical locations
a. All anaesthetic cases over an annual period where grouped to indicate the 80%
basket of cases performed by an ‘average’ anaesthesiologist practice
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b. The top 5 cases by volume were:
i. Caesarian section
ii. Cataract operations
iii. Dental procedures
iv. Cystoscopy
v. Epidural labour
vi. Laparoscopy
c. The Discovery tracker of most reported, treated conditions as (that would exclude
dental as a out-of hospital benefit and hence not reported)
i. Caesarian
ii. Abdominal pain
iii. Tonsils and adenoids
iv. Cataract operations
v. Vaginal delivery
d. The model is dependent on the utilisation of the common procedures been
reflective of the national average, and more importantly that the procedures with a
high base unit value and common utilisation been included. The reported 80%
basket is reflective of commonly reported anaesthetic procedures.
e. As confirmation, the 80% case basket was also converted to a 80% time basket
to ensure that low utilisation items which had high time units was also included.
The time basket was representative of 87.61% of the total anaesthetic time
f.
The consultation units were converted to anaesthetic units by dividing the total
value of the consultation by the 2009 anaesthetic unit value to derive a
comparable anaesthetic unit, and a time value of 10 minutes was apportioned to
each consultation
g. The clinical procedure units were converted to anaesthetic units by dividing the
total value of the procedure, namely arterial lines, central venous lines, nerve
blocks by the 2009 anaesthetic unit value to derive a comparable anaesthetic
unit.
h. The relative work value of 1 was achieved by adjusting all anaesthetic procedures
that had a total base unit value exceeding 6 or more base units to 5 base units
SASA
i.
The model works on the premise that the sum of all the units generated per
annum is based on:
i. Average complexity and work relativity
ii. The hourly worth is not equitable and dependent on level of technical and
functional expertise
j.
The total number of generated units from the 80% basket was increased to be
reflective of a 100% basket and any items not reported were examined to ensure
no material change by non-reporting, such as would happen if it was an item with
a high base unit value. This resulted in the basket of cases in the model
accounting for 89.57% of all reported anaesthetic cases.
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Report Date: 2010/01/26
Coding Structure
The coding structure used is that referred to in the Doctors Guidelines to Billings by the South
African Medical Association. It is an accepted coding structure and the principals are used by the
American Society of Anaesthesiologists in their ASA CPT™ coding structure.
The principals are:
1. Pre-operative assessment based on at least 10 minutes face to face contact with the
patient. These are reflected as consultation units and to enable the comparison to hourly
Anaesthetic value units all of these consult items have been converted to ARVU’s in the model
2. Anaesthetic time, that commences from the preparation of the theatre to when either:
a. The next patient on the surgical list is anaesthetised
b. Or when the patient is safely transferred from the recovery room unit
c. Or whichever comes first – this is to prevent double billing. So although the
anaesthesiologists may still be responsible for the care of a patient they no longer
bill if thee has commenced a second anaesthetic
3. Anaesthetic time is 2 ARVU for each 15 minutes for the first hour and then 3 units per 15
minutes for each and subsequent hours. This non-linear time model is to address the fact
that in subsequent hours no additional base unit is added and hence the earnings for
subsequent hours would be less. Complex cases usual take longer than one hour and as
the average low-complexity anaesthetic has at least 11-12 anaesthetic units per hour this
would disadvantage those anaesthesiologists who are involved in complex cases.should
they only be billing 8 time units per unit
4. Base units. Each surgical procedure has an allocated base unit value that is reflective of
complexity. The lowest base unit is 3 and increases to 15. The majority of surgical
procedures have less than 6 allocated base units
5. Modifier units. Orthopaedic procedures have bone modifiers. The base unit for all
orthopaedic procedures is 3 ARVU’s and to this a modifier unit is attached dependent on the site of the surgical procedure (minor bones 1 unit to spine 5 units)
6. Procedure units. The placement of arterial lines, central venous catheters, nerve blocks
etc. have an additional procedure fee. These procedure fees are standard across all
surgical disciplines and to enable the comparison to hourly Anaesthetic value units all of
these procedure items have been converted to ARVU’s in the model
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Report Date: 2010/01/26
PROPOSAL FOR ANAESTHESIOLOGY TARIFFS
Attached hereto is the spreadsheet model, that contains summaries of the data that was
obtained as well as an application of the principles that have been set out in the regulations to
he National Health Act to the fee structure for anaesthesiology.
In the model we have applied the public sector benchmarked expected annual professional
remuneration of R1 2000 000 and a productivity factor of 75%. In terms of this model the Rand
Conversion Factor (RCF) per Anaesthetic Relative Value Unit (ARVU), should be R120.522
(incl. VAT). The 7.9% CPIX factor for 2009 results in RCF of R130.04 and the 2010 CPIX would
need to be added to this reported RCF for 2011.
SIMPLIFIED ANAESTHETIC MODEL
To highlight the inadequacy of anaesthesiologists current remuneration, the following is relevant:
For an 8 hour working day at 75% productivity equates to 6 billable hours per day. The public
sector employee is granted a half-day per week to recover from on-call responsibilities or
research activities, therefore the monthly billable hours are 21 working days, less 2 off-days = 19
days at 6 billable hours that equates to 114 hrs per month.
In simplified anaesthetic coding the time units for the hour is 8 units plus the average base unit
of 5 units that totals 13 units. At the current 2010 RPL rate of R52.624 this equates to an hourly
income of R684.124 or R77,990 per month.
If one then subtracts VAT payments and practice costs associated with private practice (and
excludes return on investment) and uses the average practice cost value of R357,646 per
annum. This results in a monthly earning of R77,990 less VAT R10,918 less practice cost of
R29,803 = R37,268pm
Benchmarked public sector earnings based on OSD for a principal specialist of:
R1.2 million = R100,000pm
The RPL rate for anaesthesiology needs to increase by 265%
These increases correspond to the increases proposed by the RPL submission and model:
Current RCF for anaesthesia R52.624
Calculated RCF for 2010 based on proposed OCD R132.332 or a 251%
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Report Date: 2010/01/26
CONCLUSION
To address the RPL rate for anaesthesiologists is a matter of urgency. The American Society of
Anaesthesiologists (who uses a similar coding structure to SA) has conceded that the work
relativities for anaesthesia under-estimate the post-induction relative work units and this is
currently been assessed by the US federal government during their five year review.
http://www.medlawblog.com/archives/medicare-reimbursement-2008-medicare-rvurefinements.html
The anaesthetic model does not even begin to address this or the productivity issue but serves
as a starting point to begin to correct the remuneration structure of private anaesthesiologists.
SASA proposes the following for 2011:
The clinical/procedure and consultation units are derived by:
In the anaesthetic model Clinical units were converted into anaesthetic units, CVP/Arterial and
nerve block is 25 clinical units = 3.99 ARVU, to convert back multiply by the ARCF and divide by
the clinical unit value for the procedure,
Likewise for consultations, the Consult units of 16 (premed) = 4.11 ARVU
ASA CPT™ reports the procedure code for CVP lines at 4 ARVU and the premed consult unit as
4. As not to confuse the relativities for anaesthesia it is recommended that these be utilised to
convert back to the clinical units and consult units used by anaesthesiologists
Anaesthetic Rand conversion factor (ARCF) of R130,04 (plus 2010 CPI rate for 2011 RCF)
Anaesthetic clinical unit of R20.81 (plus 2010 CPI rate)
Anaesthetic consult unit of R32.51 (plus 2010 CPI rate)
RPL MODEL 2010
ARVU
Clinical Unit
Consult unit
SASA
300% current RPL Discovery
health
2010
rate Classic plan
R157.874
R128.061
R25.201
R16.329
R40.616
R28.923
R130.04
R20.81
R32.51
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