A cure-all for private healthcare in SA? The market inquiry into the costs associated with private healthcare in South Africa, which has been initiated by the Competition Commission, should hopefully lead to lower costs and improved services.
consumers who have been battered by their medical expenses, having to pay for medicines, visits to hospitals and their medical aid premiums – which rise by more than the inflation rate every year – can expect drastic recommendations by a market inquiry into the private health sector.
And the shareholders of the three large hospital groups – Netcare, Life Healthcare and Mediclinic – and even financial services companies such as Discovery, which get a large chunk of their profits from the administration of medical aids, should also be interested in the findings of the market inquiry.
Whether the companies are making super profits instead of normal profits is part of the investigation, says Boshoff Steenekamp, head of strategic projects at Metropolitan Health Risk Management.
The investigation was started by the Competition Commission to determine why healthcare costs increase by more than the inflation rate every year. The market inquiry panel, under the leadership of the former Chief Justice Sandile Ngcobo, must determine whether competition in the market is distorted, limited or prevented, and whether these factors have an impact on consumers’ access to healthcare.
They must then make recommendations, and the preliminary report, together with the recommendations, must be completed by August and the final report in November.
However, the programme has now been delayed after two sets of public hearings, which should have taken place since end March, and has been postponed.
The market investigation has already been delayed by close on a year.
Steenekamp believes it’s unlikely that the preliminary report will be completed by August as planned. The first series of public hearings started in February and lasted to the second week in March.
By week four of the public hearings it became evident that a lot was wrong with the private healthcare sector and that much of the blame could also be laid at the door of government.
Minister of health, Dr Aaron Motsoaledi, admitted during the public hearings that it was because of problems experienced in the department at the turn of the century that much of the legislation was put on the backburner. “I must confess, there was a decade that the department of health in this country was dysfunctional,” Motsoaledi said. It was during the era of Aids denial – when Manto Tshabalala-Msimang was minister of health, from 1999 to 2008.
Motsoaledi became minister of health in 2009 and has since been plastering over the cracks caused by this decade’s problems.
The market inquiry could have serious consequences for hospital groups. In the UK a similar inquiry, among others, ordered that certain hospital groups should divest from particular hospitals in order to promote competition.
Steenekamp, however, believes it’s unlikely that a similar finding will be made here as there are other ways of addressing the problems faced by the market. “It’s expected that the recommendations will be drastic and that they will be implemented over a period of five years.”
Steenekamp doesn’t think the local market inquiry will come to the same conclusions as the UK market inquiry.
“The British situation is very different, the type of insurance and its scope is relatively much smaller than South Africa’s and there are completely different market dynamics.”
The investigation was started by the Competition Commission to determine why healthcare costs increase by more than the inflation rate every year.