After more than five years, the Competition Commission released the final report on its inquiry into private healthcare. The public is said to be paying more for less.
The Competition Commission released the 256-page document on 30 September 2019 in Sandton, Johannesburg. Their investigation consisted of public hearings, written submissions, and meetings with key players in the private health industry.
Lack of competition in private healthcare industry
The new report stated the same thing that the 2018 inquiry found
– that there’s a lack of competition in the private healthcare industry. This
is what fuelled the increasingly unaffordable healthcare costs.
The results of the inquiry will assist with the compilation of the National Health Insurance (NHI) bill. Former Health Minister Aaron Motsoaledi pushed for the inquiry ahead of its 2013 launch.
He wanted to understand why private healthcare was so expensive. This was done before the government could start buying services from the sector under the NHI.
The report found South Africa’s (SA) population had grown by
almost three-million people over the last 10 years. However, public hospital
beds have barely increased.
The private sector saw double the growth in their hospital
beds. Statistics South Africa revealed that fewer than 1 in 5 people were
members of medical aids in 2018.
Three hospital groups lead the health sector
Netcare, LifeHealthcare and Mediclinic are the three groups
that account for 90% of the private hospital market. Independently-owned
facilities hold the remaining 10%.
The Commission stated that the high concentration of power
in this sector made it vulnerable to collusion. They said, in theory, it would
be easy for a few people to engage in price fixing in the market.
The lack of competition allowed the three major hospitals to “all but dictate year-on-year price and cost increases” for medical aids and administrators. The hospitals also benefited from over-treatment.
Hospitals are overtreating patients
Overtreatment occurs due to two factors:
- Monetary incentives for doctors and facilities to admit more patients and supplier-induced demand.
- More beds, doctors, medicine, are used by more people regardless of whether they need them or not.
According to Bhekisisa:
“It’s also incentivising doctors and private health facilities to overtreat patients, sending them to hospital more frequently and for longer without any real medical benefit. This is particularly true in areas like Gauteng and the Western Cape where there are more hospitals and doctors.”
Certain costs passed onto consumers
In the 2018 report, the Commission found that almost a third of claims costs couldn’t be explained by a patient’s age or disease. The charges were carried by consumers by increasing their premiums.
The Commission also found that the pricey hospital
care costs were largely passed onto medical aids and consumers. The Competition
“[Large hospital groups] facilitate and benefit from excessive utilisation of healthcare services, without the need to contain costs, and they continue to invest in new capacity beyond justifiable clinical need without being disciplined by competitive forces.”
The Competition Commission
The unfair advatage held by three hospital groups
The report also discovered that Netcare, LifeHealthcare, and Mediclinic had an unfair advantage which made it hard for new people in the sector. An example of this is how the three used profits from well-performing hospitals to make up for ones that earned poorly.
Plus, they could lure the best doctors to work for them with benefits that smaller hospitals couldn’t afford. Specialists who agreed to admit their patients into certain private health facilities over others were offered preferential financing.
The report recommended that the Health Professions
Council of South Africa investigates the matter. Major hospital groups deny
having a firm hold on the market.
A standard package for all medical schemes
With the recommendation of the Commission, the
Council for Medical Schemes is designing a standard basic package. One day it will
be offered by all medical aid schemes.
The offering will say exactly what it does and doesn’t cover with the council reviewing it every two years. The standard package would allow consumers to be able to compare value for money between medical schemes.
Medical schemes will have to work harder to make
care better and more affordable to bring in new clients. The detailed report
can be found here.