Curbing medical inflation is bad for business
Big businesses drive medical admin, thus high increases
DSTV airs a programme called American Greed, which portrays individuals perpetrating all types of financial crimes against fellow citizens.
The programme mostly targets a few unsuspecting people.
It conjures up all types of emotions and delivers good viewing.
In South Africa, we do it on a massive scale that affects every citizen, yet we make no programmes on it nor do we (our authorities) do anything about it; and we conjure up no emotions over it.
With us, two economic sectors are wrecking our budgets: the construction and the medical industries. Because we build once or twice in our lives, the effects of construction inflation are not as severe on our budgets; however, medical costs are a daily matter – they affect us all.
If we were to look at the effects medical expenses have on our income and, in particular, our retirement today, they may affect only the readers who consulted with me to assist with their retirement planning, but tomorrow they will affect all if not attended to, es- pecially if no one does anything to curb the greed of the big players – the medical aid administrators.
Simple mathematics will prove that a growth in income of about 14 percent is far better in asset value than a mere 5 percent.
The first will double my company every six years and the latter only in 14 years.
Medical administration is driven by big businesses and they prefer the high increase. This feeds the greed factor better when it drives up asset value and improves share prices.
There is no incentive to curb medical inflation because the simple mathematics teaches me that it is bad for business. That is presumably why we appoint regulators.
The Council for Medical Schemes is one such regulator and yet does nothing to stop this.
It rather assists these large players to protect their interests with all types of intended legislation, becoming participants in perpetrating crimes against the nation.
Let me illustrate. There are sev- eral players entering the market (like the wallet doctors). They will often do some downward negotiations to keep a patient at a private facility. Guess what? They succeed and this well illustrates that medical expenses are not there for acceptance, but can be negotiated.
If I, as a big business, turn away from my self-serving greed, I can assist my serving subscribers to reduce costs of medical aid over time. Yet, why should I?
Let us take a look at what is going to happen in the lives of our readers. Their medical aid contribution will surpass their partner’s pension in three years, and will double in seven. Yet their income will have only shown an increase of 30 percent. This makes no mathematical sense.
Our readers are only breaking even on expenses now. What can and must they do? They may have to significantly reduce living expenses to create some excess in income. This may mean a very strong study of the budget or could entail the sale of some assets and banking the profit for later use.
All of this would be unnecessary if we could get the medical administrators to use their powers to negotiate with suppliers, or get the mighty regulators to perform their true functions in earnest.
This is how they are not doing it: Our son went for a 30-minute procedure, but had to stay overnight (a trick to get a hospital stay profit, and get the medical aid to pay). The cost came to a staggering R30 000, that is R900 000 for the month. The doctor does five procedures a day, thus generating R4.5 million a month. You do the maths and let me know how that makes any sense.
The costs were purist and without errors. A punctured lung has, however, cost a further R70 000. Guess who is paying without questioning? The kind medical aid will.
If it was a car service gone wrong, the mechanic would have to fund repairing his own mistakes, yet not when it comes to “true professionals” like doctors.
Look at alternatives and start doing some negotiation for yourself. I have, and doctors are willing as their budgets are under as much strain as yours and mine.
Deon Hattingh is a financial and retirement planner who focuses on finding methods and solutions to make money last as long as possible. He may be contacted on deon@ howtomakesense.co.za.