Healthcare costs rise
HOSPITALS AND SPECIALISTS: KEY PRICE DRIVERS IN SECTOR
Medical inflation has exceeded South Africa’s inflation rate for decades now, but solving what is driving prices ever higher is no easy task.
Private healthcare costs are accelerating, with doctors’ and specialists’ fees in the crucible. But does the fault lie with inflation, medical schemes skimping on payouts or a legal vacuum in which regulators are deaf to industry’s concerns and battling consumers?
South Africa’s high prices and expenditure raised concerns, says SA Medical Association (Sama) senior legal advisor Julian Botha. That sparked a Competition Commission health market inquiry (HMI) into costs, price increases and the market’s competitive dynamics.
Doctors’ fees
Doctors and specialists set their fees independently without regulatory or enforcement guidelines, says Dr Rajesh Patel, the Board of Healthcare Funders’ (BHF) head of benefit and risk.
Currently only single-exit-price and dispensing fees are regulated, with no upper limit to doctors’ charges, says Jill Larkan, GTC healthcare consulting head.
Business surveyed 15 GPs, gynaecologists, counselling psychologists and oncologists from SA on their consultation fees.
We found first consultations with a GP ranging from R406 to R600, between R600 to R2 100 for a gynaecologist, R790 to R997 for psychologists and R600 to R2 800 (depending on diagnosis) for oncologists.
The shortage of doctors adds fat to the fire. The Hospital Association of South Africa says there are just 60 doctors per 100 000 people in SA and population growth keeps outstripping the rate at which doctors are produced.
“Therefore, they may charge at whatever rate they wish, without any obvious end in sight.”
Sama publishes a non-binding coding/tariff schedule. It advises doctors to consider experience level, procedure complexity, medical legal insurance, practice overheads and costs in setting fees, says chair Mzukisi Grootboom.
Medical schemes
Schemes approached wouldn’t reveal their rates, saying rates are variable as they’re negotiated with service providers; doctors on networks have different fees; other cited regulatory and competition concerns.
Ann Streak, Alexander Forbes Health senior consultant, says the Competition Commission outlawed the previous regime based on an industry-negotiated tariff, deeming it collusive.
But now smaller schemes can’t negotiate the same discounts as their bigger peers and have become “price takers”, says Streak.
Schemes generally don’t liaise with Sama or medical associations but directly with providers or provider groups, Patel adds.
The CompCom’s HMI says per [medical scheme] beneficiary claims costs have increased by around 4% above CPI on a consistent basis in South Africa.
“Half of this can be explained by changes in risk profile of members and their choice of plan and movement between plans.”
Informed Healthcare Solutions’ David Narun says medical aids try to tie service providers into service agreements but providers don’t see the point and continue to charge higher rates.