Discovery shares its latest COVID-19 research on outcomes specific to SA

Discovery presents insights on the financial impact of COVID-19 on medical schemes in South Africa, and a COVID-19 Resilience Index outlining the relative risk of being hospitalised due to COVID-19.

Counting the cost of COVID-19

Discovery’s research on the anticipated cost of COVID-19 projects medical schemes to incur additional claims of between R7.3 billion and R31 billion. The detailed analysis of the long-term impact of COVID-19 on the financial position of medical schemes in South Africa, was presented by Dr Ryan Noach, CEO of Discovery Health.

“As the administrator and managed care provider to 19 medical schemes with 3.5 million lives under administration in South Africa, Discovery Health’s large population group enables us to offer unique insights on COVID-19,” says Dr Noach.

As at 18 May, the COVID-19 experience of Discovery Health members reflects:

• 48 851 tests conducted;
• 1 733 members across these medical schemes were diagnosed with COVID-19 – 824 of these diagnoses were recorded in the Western Cape;
• 37 deaths.

Early indications, based on the data from the Discovery Health base, are that people older than 50 are more likely to be hospitalised and from the age of 70, there is a much higher fatality risk.

The average cost for hospital care due to COVID-19 is R84 708. The actual cost for a hospital admission can vary based on the severity of the illness.

• There have been 412 hospital admissions – the cost in a normal ward is R37 091.
• There have been 79 admissions to ICU – the average cost of ICU care is R169 525.
• There were 39 patients on ventilator assistance – the average cost R340 737.

For the remainder of 2020 and the first half of 2021, medical schemes will experience an additional cost of between R816 and R3 561 per beneficiary. When looking at different scenarios and rates of infection and hospitalisation, medical scheme can incur additional claims of between R7.3 billion and R31 billion over 18 months.

Impact of coronavirus 2019 across the medical scheme industry:

• The impact of COVID-19 will vary for every medical scheme based on the demographic profile of the membership base.
• Medical schemes with more members who are older will likely have higher rates of hospitalisation as a proportion of the confirmed COVID-19 diagnoses, and higher costs for these admissions.
• The (additional) costs of COVID-19 will in some cases have to be paid from the funds the medical scheme holds in reserve. Based on a medium outbreak scenario, medical schemes will no longer have the regulated level of funds in reserve to maintain solvency.

“The full financial impact of COVID-19 on medical schemes over the next couple of years is still uncertain and various factors will play a role. There is some offset in claims costs from the lower number of discretionary or elective healthcare procedures, which could lead to a surplus for the first half of 2020. However, medical schemes will need this surplus to pay for COVID-19-related claims during 2021 because member contributions will not be sufficient. Over the next 18 months and as 2021 progresses, we may have a better understanding of the disease to quantify the full financial impact with greater accuracy,” says Dr Noach.

COVID-19 Resilience Index: The relative risk of being hospitalised

Discovery Chief Actuary, Emile Stipp explains how the risk of requiring hospitalisation can be influenced by lifestyle factors. Discovery’s Resilience Index shows that increased physical activity can mitigate some of the risk that age and chronic conditions add to requiring hospitalisation due to COVID-19.

“Discovery has started developing a predictive model to identify the risk of requiring hospitalisation when diagnosed with COVID-19. The model uses the top predictors of possible hospitalisation such as age, gender, and the existence of any underlying health or chronic conditions (the complexity of a patient). We add another component, which is the Vitality Engagement Measure (VEM) of physical activity levels. From this model, age and the complexity of healthcare needs of a patient vastly increase the possible need for hospitalisation. When we add the VE Measure, it drastically reduces the risk for hospitalisation, indicating that physical activity can mitigate some of the risk for hospital admissions associated with age and chronic health problems,” says Stipp.

• Age and chronic health conditions are the greatest influencers:
• Age is the strongest predictor of possible hospitalisation with a 19% higher risk from age 60 and 25% higher risk from age 70.

Having a chronic health condition increases the possibility of hospitalisation by 18% and when someone presents with more than one underlying health condition, there is a 29% higher risk for hospitalisation.

“Through the predictive model, we are looking at how being engaged in physical activity can change the risk of being hospitalised. So far, there is a strong correlation between a high Vitality Age and an increased hospital risk; with a Vitality Age of more than four years over your actual age, the risk increases by as much as 11%. The same is true for Vitality members who do not engage in any of the healthy lifestyle activities,” explains Stipp.

Discovery plans to make the COVID-19 Resilience Index available to all South Africans. It will help people calculate their risk for possible hospitalisation, explain every component of this risk and guide people to understand and reduce the risk with recommended lifestyle interventions.

Both white papers are attached.