Medical aids, hospitals blamed for high costs

INQUIRY: POINTS TO MEDICAL AIDS, HOSPITAL GROUPS

Hospital groups are highly concentrated with big three getting 90% of admissions.

quality of service in relation to costs.

The inquiry recommended that SA’s private healthcare environment should allow patients to compare the quality of service, healthcare specialists, costs and health outcomes – and for this information to be offered by medical schemes.

It further found that the medical scheme market is concentrated, thus restricting competition.

“The market displays consistently rising medical scheme premiums accompanied by increasing out of pocket payments for the insured, almost stagnant growth in covered lives and progressively decreasing range and depth of services covered by medical scheme options, which are numerous and all of which are difficult to understand,” its report reads.

The report concluded that of 22 open medical schemes, two schemes hold about 70% of the market in terms of beneficiary numbers, including Discovery Health Medical Scheme, which holds 55%.

There are 16 medical scheme administrators, but Discovery Health and Medscheme accounted for 76% of the market based on gross contribution income.

Private hospital groups were blamed for a big portion of above-inflation increases in expenditure reported by medical schemes to their members.

“The hospital group market is highly concentrated. The big three hospital groups [Netcare, Mediclinic SA, Life Healthcare] have 90% market share of hospital admissions and 80% of hospital beds offered,” said Ngcobo.

The judge said that although there has been the entrance of day clinic specialists, the market still “lacks dynamism with few entrants”. In practising dominance, he said the groups compete for medical practitioners, who then refer patients to the three hospital groups, resulting in an increase in their admission rates.

The provisional report found that poor service in the public healthcare sector is driving patients to the private sector, thus increasing admission rates for private hospital groups.

The inquiry revealed that the average private medical scheme spend per member increased 9.2% per annum from 2010 to 2014. This was nearly four percentage points higher than average consumer price inflation over the period of 5.6%.

The industry and public can comment on the report until September 7. The final report will be produced on November 30.