Is private healthcare too expensive in SA?
BY SHOKS MZOLO
We’ve all been there: you pay your medical aid premiums every month, go to t he dentist/doctor/specialist, and all of a sudden you face a huge bill the medical aid won’t cover. Who determines doctors’ rates and the proportion the medical aid will pay?
Firstly, South Africa does not have uniform tariffs. Similar to other i ndustries without price controls, medical practitioners and hospitals are allowed to bill any amount for services rendered. ( Medical a i d schemes negotiate better rates with individual service providers, according to Bonitas.) Medical schemes, or their commerciallyrun administrators, determine the maximum payable for consultation (or specific treatment). These are medical aid rates. The difference, if any, is for the patient’s pocket.
“There is currently no guide to what a provider may charge. Schemes come up with their own tariffs based on their own budgets, but providers do not have to comply with these,” says Humphrey Zokufa, CEO of the Board of Healthcare Funders (BHF). “This means that where there is a shortfall between a scheme’s tariff and a provider’s fee, the scheme member is liable for the difference, something [we find] unacceptable. We would like to see a scenario whereby all providers charge the same, reasonable fee that all schemes will reimburse in full.”
Until that happens, the question is whether practitioners and private hospitals overcharge, or do medical schemes unilaterally under-budget when it comes to healthcare costs? In a nutshell: is private healthcare too expensive i n SA? This is t he main question that the Competition Commission is trying to answer with its market enquiry into the private healthcare sector.
Purists would prefer the commission to leave the market to determine prices. But the private healthcare sector in SA is highly concentrated – the three largest schemes, Discovery, the Government Employees Medical Scheme (Gems) and Bonitas, and the three biggest hospital groups (Life, Mediclinic and Netcare), claim a combined share of around 70% in their respective markets.
While there is a National Healthcare Reference Price List, it is not enforced by law and serves only as a guide for professional rates, says Nicola Theron, managing director at Econex, a Stellenbosch-based consultancy.
“Many critics allege that the previous system of centralised bargaining was successful in preventing price increases for medical services. Prior to 2004, medical services tariffs were determined by central negotiations, with all the hospitals [through the i ndustr y representative, Hospital Association of SA] bargaining as one, and all the medical aid funds [via the BHF] participating collectively,” she s a y s . “However, this was stopped in 20 04 after t he Competition Commission found this practice to be c ol l usive a nd i n contravention of the Competition Act.”
In addition to t he commission’s enquiry, the Council for Medical Schemes (CMS) is refining the broker reimbursement model and probing cost drivers in non-healthcare s er v i c e s ( i ncluding t r ustee a nd principal officer salaries). According to the regulator, non-healthcare services account for a huge R14.4bn out of the R130bn forked out by members per annum.
While medical service providers can effectively charge what t hey want for services, government exerts more control over t he pricing of pharmaceutical products, notably through the setting of a single exit