Containing costs in the era of National Health Insurance--the need for and importance of demand management in laboratory medicine.
Subject: Cost control (Economic aspects)
Cost control (Study and teaching)
Medical laboratories (Economic aspects)
Medical laboratories (Study and teaching)
National health insurance (Economic aspects)
National health insurance (Study and teaching)
Author: Pillay, T.S.
Pub Date: 01/01/2013
Publication: Name: South African Medical Journal Publisher: South African Medical Association Audience: Academic Format: Magazine/Journal Subject: Health Copyright: COPYRIGHT 2013 South African Medical Association ISSN: 0256-9574
Issue: Date: Jan, 2013 Source Volume: 103 Source Issue: 1
Topic: Event Code: 250 Financial management; 200 Management dynamics Computer Subject: Cost reduction; Company financing; Company business management
Product: Product Code: 9915140 Cost Control Techniques; 7397030 Biomedical Testing Labs; 9105216 National Health Insurance NAICS Code: 54138 Testing Laboratories; 92312 Administration of Public Health Programs SIC Code: 8071 Medical laboratories; 8731 Commercial physical research
Accession Number: 312828766
Full Text: The implementation of the National Health Insurance (NHI) scheme will place pathology services under increased pressure. Improvement of access to healthcare will increase demand for diagnostic testing, both for clinical diagnosis in disease states and for screening of healthy people. It is unlikely that the publicly funded budgets for pathology diagnostic services under the National Health Laboratory Service (NHLS) will increase to keep up with the demand. Furthermore, developments in new tests and the introduction of new technology in laboratory medicine will increase the overall costs. Coupled with the progressive decline in the teaching of pathology and laboratory medicine in the undergraduate curriculum, there is likely to be a tendency towards inappropriate usage of laboratory tests in clinical management.

In South Africa, approximately 3.5% of provincial budgets are directed towards meeting the costs of pathology services in the public sector. In the 2011/2012 budget, R121 billion was spent on healthcare by the government. Pathology services received approximately R4.2 billion. In the UK, the National Health Service budget is currently at approximately 106 billion [pounds sterling] and laboratory testing costs approximately 2.5 billion [pounds sterling] (2.3%). The review of the UK pathology services by the Carter Commission estimated that approximately 500 million [pounds sterling] could be saved by more efficient use of pathology services, i.e. 20% of the expenditure could be saved despite a projected increase of 8 - 10% in laboratory testing. Extrapolating these figures to South Africa, potentially R800 million could be saved. In Canada there are similar pressures on pathology laboratory services within a publicly funded national healthcare system. Laboratories are being asked to perform increased numbers of tests without a comparable increase in laboratory budgets. Will this also become a feature of the era of NHI in South Africa?

Given the aforementioned scenarios, the need for demand management of laboratory testing becomes paramount. Pathology services will have to formulate strategies to address both under-and overutilisation of laboratory tests and ensure that the proper use of clinical laboratory testing contributes to improved patient care. Increasingly laboratories will have to monitor test usage for cost-effectiveness and appropriateness, in the best interests of clinical care and in the spirit of evidence-based laboratory medicine. (1-3) This may appear counterintuitive for a service in which volume determines income and ultimately financial viability. It is not only the publicly-funded pathology services that will be facing the issue. Under NHI, it is likely that the private sector pathology services will also be utilised by patients funded by the NHI scheme, especially if the tests that are needed are not offered in the public sector, as sometimes happens.

There are a number of recommendations for demand management protocols that should be developed in preparation for NHI. (1-2) Key among them is the need for a coherent national strategy within the NHLS to review laboratory workload figures in all regions, and the development of an audit schedule that includes assessment of inappropriate diagnostic testing. Laboratory services should also provide feedback on costs and volumes and data on inappropriate requesting to primary care. Links should be developed with all key specialties and primary care, beyond what is currently available, so that suitable educational forums can be developed and to ensure that educational interventions are supported by clinicians. The national data should be used to achieve benchmarking, and testing should be standardised, in line with the benchmarks. This will obviously require harmonisation of clinical laboratory practices and clinician-directed testing behaviour between the various regions, but should go a long way towards achieving the goal of more efficient laboratory testing in what is likely to be a constrained economic environment in the era of NHI.

S Afr Med J 2013;103(1):23. DOI: 10.7196/SAMJ.6383

(1.) Fryer AA, Smellie WS. Managing demand for laboratory tests: a laboratory toolkit. J Clin Pathol 2012 (in press). []

(2.) Smellie WS. Demand management and test request rationalization. Ann Clin Biochem 2012; 49(4):323-336. []

(3.) Trenti T, Canali C, Scognamiglio A. Clinical governance and evidence-based laboratory medicine. Clin Chem Lab Med 2006;44(6):724-732. []

T S Pillay

Honorary Professor of Chemical Pathology

University of Cape Town

Corresponding author: T S Pillay (
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