Is pri­vate health­care too ex­pen­sive in SA?


Finweek English Edition - - COVER -

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

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