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  • Financial modelling can help reduce unexpected healthcare 'headaches' on mines, says Deloitte

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

By Ashleigh Theophanides, Director and Healthcare Actuary at Deloitte.


Johannesburg, 22 Apr 2013

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.

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