The Health Department's announcement that it will table draft legislation to regulate the private health sector within two months is long overdue some healthcare experts say.
"It is clear that we cannot sustain unregulated private healthcare service delivery in this country and at the same time regulate the medical schemes industry," Health Minister Manto Tshabalala-Msimang told the National Assembly last Wednesday.
"We must therefore regulate the providers and the industry as a whole."
Though some experts agree that the minister's announcement was long overdue, it was met with mixed reaction, particularly from opposition parties.
The reaction ranged from cautious approval to calls for freeing the market, improving the state of public healthcare and implementing the proposed national health insurance system.
Experts say the announcement was long overdue especially in view of the rumbling about funding in the private healthcare sector. Not a day goes by without further indications that private healthcare funding is under severe stress, they say.
Though the funding squabbles have been ongoing it intensified recently in the furore that surrounded the reported 33percent increase in ward and theatre fees by private hospitals.
This infuriated the Board of Healthcare Funders (BHF), which represents 85percent of South Africa's medical schemes.
In retaliation the BHF has asked the Competition Commission to exempt medical schemes from provisions in the Competition Act that stop them from working as a collective on matters such as setting tariffs and defining patient benefits.
The BHF said its application was intended to deal with a host of unintended consequences arising from a ruling by the commission in 2004, which banned collective bargaining in the sector.
The ruling was aimed at fostering competition but was undermining schemes' ability to safeguard their economic future.
Medical schemes were much more tightly regulated than private hospitals, placing them at a distinct disadvantage, said BHF spokesman Heidi Kruger.
She said medical schemes now had almost no power when it came to tariff negotiations.
But, Kruger said, it was not just prices, because medical schemes could not take collective action on fraud, eliminating member churn, or defining member benefits - yet they were the buyers, acting in the best interests of members.
Schemes' limited bargaining power made headlines recently after several schemes told the watchdog Council for Medical Schemes that they had been bullied into accepting tariff increases by private hospital groups.
The private hospital industry is dominated by Netcare, MediClinic and LifeHealthcare, who among them own three quarters of the sector's 28426 beds.
Their fees have come under intense scrutiny from Tshabalala-Msimang, who has reiterated her plans to amend the National Health Act to give the government a greater say in the way tariff negotiations are conducted.
In announcing the draft legislation, Tshabalala-Msimang said it would "enable us to contain costs, prevent bad business practices and protect the consumer".
She said she was shocked to hear at a meeting with the medical schemes industry recently that they were by and large forced by private hospital groups to enter into agreements on tariff increases even though they felt the demands of the hospitals were not justified.
"They reported that the attitude of the hospital groups was: if you don't like the increases, pay us whatever you want and we will recover the rest from your members," Tshabalala-Msimang said.
She said this pitted members against medical aids because the hospital tells the patient that his or her medical aid had refused to pay the tariff and that the hospital therefore had no option but to bill the patient directly.
Tshabalala-Msimang said this showed that the playing fields were not level.
What worries her about the private health sector, which only provides care for 15 percent of the population, is that it is part of the national health system. What happens in this sector affects the entire health sector, she said.
This means that when a person cannot afford private care any longer, they turn to the public sector, thus increasing the number of people that are dependent on the public health sector.
By introducing legislation the government is protecting the interests of all citizens, including those that use the private health sector, Tshabalala-Msimang said.
Though the private health sector provided care for about seven million people or close to 15percent of all South Africans, it consumed more than the total expenditure by the public health sector.
While per capita expenditure in the private sector was about eight times more than in the public sector, the sector spent an estimated 5,5 percent of the gross domestic product. By increasing tariffs the private sector would add to this high level of inequity by making private healthcare services even more inaccessible to insured and self-paying patients.