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BACKGROUND: In South Africa, private hospitals absorb a high proportion of the total health expenditure on private health care. Between 2008-2010 private hospital expenditure which includes ward fees, theatre fees, consumables, medicines and per diem arrangements consumed between 40.5% and 40.9% of the total benefits paid by medical schemes from the risk pool, whilst in-hospital managed care fees ranged between 1.8% and 2.8% for the equivalent years.OBJECTIVE: The aim of this paper is to highlight key factors contributing to utilisation of hospital services within the medical schemes population and to recommend “appropriate” and cost effective strategies on hospital utilisation management.METHODS: A cross sectional survey informed by retrospective analysis of quantitative data was used. Researchers also triangulated quantitative data with systematic review of literature.RESULTS: The results show that demographic indicators such as age profile, dependency ratio, pensioner ratio and prevalence of chronic conditions are not the only key factors influencing hospital admissions, but rather the effectiveness of each medical scheme in containing hospital admissions is also influenced by available technical capacity on utilisation review and audit as well as the managed care methodology including the philosophy underpinning benefit option design.CONCLUSION: This study highlights the importance of “value based” managed care programs linked to benefit option design in health care utilisation management. The choice of one managed care program over the other often leads to tradeoffs whereby unintended consequences emanate. Medical schemes are therefore encouraged to continuously review their managed care programs to ensure value for money as well as better access and health outcomes.

What are key determinants of hospital admissions, readmission rate and day case rate within the South African medical schemes population?