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Financial modelling can help reduce unexpected healthcare ‘headaches’ on mines, says Deloitte

By Ashleigh Theophanides, Director and Healthcare Actuary at Deloitte.

Although the South African mining sector has been at the forefront of managing the impact of HIV/Aids and tuberculosis in its workforce, many mines launch healthcare initiatives without planning for changes that could occur, and have no solutions in place to mitigate potential impacts on their systems, says Deloitte.

“Typically,” says Ashleigh Theophanides, Director and Healthcare Actuary at Deloitte, “interventions that include the establishment of onsite clinics or hospitals, voluntary counselling and testing programmes, disease management programmes, access to medical schemes and direct provision of treatment are initiated by mines, without giving particular attention to the individual requirements of a mine or its workforce.”

This ‘one size fits all’ approach can leave operators vulnerable when the health profile of workers in a mine changes, leaving a mine with the financial burden of modifying budgets to help mitigate the impact of health challenges that have not been foreseen or planned for.

“Understanding the extent of the impact of healthcare challenges is the first step to determining the types of action to pursue. Unfortunately, quantifying the extent of the healthcare challenge and how investment in healthcare can produce a better outcome for mines is a key question that is often unanswered at an executive level,” says Theophanides.

“Often, the key to coping with changed healthcare demands on mines is the use of analysis and predictive modelling using actual experience data as a base.

“Knowing the drivers of the healthcare challenges on a particular site and how these are expected to change over time is vital. This knowledge can spell the difference between reacting to secondary workforce trends versus proactively implementing solutions to mitigate potential impacts.”

“In the case of HIV and TB, which are significant causes of illness, detailed actuarial modelling can be used to illustrate the drivers of the disease and the expected future infection rates. Once the organisation has an intimate knowledge of the current healthcare concerns, as well as the expected impact on the business, ways of managing the impact can be assessed.”

Effectively determining the financial impact of healthcare decisions such as wellness programmes, taking into account the indirect and intangible benefits, which are often difficult to quantify, need to be taken into account when building an accurate financial model.

“Financial modelling can determine the feasibility of health wellness options, such as the construction of hospitals or clinics, and provide an understanding of the impact of diseases on medical scheme claims, healthcare costs and the corresponding benefits of interventions.

“At the base of developing financial models designed to meet specific criteria is analysis aimed at producing information that can help improve recruitment, retention, productivity and risk by management,” says Theophanides. 

Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms.

“Deloitte” is the brand under which tens of thousands of dedicated professionals in independent firms throughout the world collaborate to provide auditconsultingfinancial advisoryrisk management, and tax services to selected clients. These firms are members of Deloitte Touche Tohmatsu (DTTL), a UK private company limited by guarantee. Each member firm provides services in a particular geographic area and is subject to the laws and professional regulations of the particular country or countries in which it operates. DTTL does not itself provide services to clients. DTTL and each DTTL member firm are separate and distinct legal entities, which cannot obligate each other. DTTL and each DTTL member firm are liable only for their own acts or omissions and not those of each other. Each DTTL member firm is structured differently in accordance with national laws, regulations, customary practice, and other factors, and may secure the provision of professional services in its territory through subsidiaries, affiliates, and/or other entities.

© 2013 Deloitte & Touche. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

 

Editorial contacts

Deloitte
Ashleigh Theophanides
Director and Healthcare Actuary
(+27) 11 209 8112
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Magna-Carta PR
Kerri Lurie
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