Competition Commission slams high cost of private healthcare and medical scheme cover
A hard-hitting report by the Competition Commission has stopped short of accusing the private healthcare industry of exploiting unsuspecting clients while offering little value for money.
The Health Market Inquiry Report, published on Monday, found that consumers were at the receiving end of high costs in private healthcare and medical scheme cover while there was no evidence that these increases resulted in improvements in health outcomes.
The report also lamented that the healthcare sector was awash with uninformed and disempowered consumers while practitioners were subjected to little regulation and failures of accountability at many levels.
"In our review of the South African private healthcare market we found that it is characterised by high and rising costs of healthcare and medical scheme cover, and significant overutilisation without stakeholders having been able to demonstrate associated improvements in health outcomes.
"The market is characterised by highly concentrated funders and facilities markets, disempowered and uninformed consumers, a general absence of value-based purchasing, practitioners who are subject to little regulation and failures of accountability at many levels," read the report.
The report was also scathing on government, accusing the department of health's leadership of the private healthcare sector to be in a state of paralysis.
"We have found there has been inadequate stewardship of the private sector with failures that include the department of health not using existing legislated powers to manage the private healthcare market, failing to ensure regular reviews as required by law, and failing to hold regulators sufficiently accountable.
"As a consequence, the private sector is neither efficient nor competitive."
The commission asserted that a more competitive private healthcare market would translate into lower costs and prices, more value for money for consumers and should promote innovation in the delivery and funding of healthcare.
"As the state becomes a purchaser of services (from the private sector as indicated by the National Health Insurance Bill), it will be able to enter a market where interventions like the establishment of a supply side regulator, a standardised single obligatory benefit package, risk adjustment mechanism, and a system to increase transparency on health outcomes have already led to greater competition and efficiency," said the commission.
In addition, the report found that three large hospital groups, both individually and collectively, made it "very hard for newcomers and fringe-players to grow and to compete on merit".
"The three groups are able to distort and prevent competition by binding the best medical specialists to their hospitals with lucrative inducement programmes, with associated exclusionary effects on innovative newcomers.
"Further, the three largest groups all but dictate year-on-year price and costs increases for funders. They 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."
Mediclinic SA Southern Africa disputed that the three hospital groups were exploiting the market, also arguing that the Competition Competition had used archaic data.
The (commission's report) states erroneously that the three leading private hospital groups are able to distort and prevent competition by binding the best medical specialists to their hospitals with lucrative inducement programs," said Koert Pretorius, the chief executive of Mediclinic Southern Africa.
"Mediclinic supports cost-effective quality care and does not condone any treatment that is not in the best interests of the patient. In addition, Mediclinic does not condone any relationships between hospitals and doctors that does not meet our high ethical code of conduct.
“It is important to note that the market context has moved on since 2014; the end date for the majority of data used. Current data must be used to find current best solutions for the unique South African healthcare market, especially as South Africa prepares itself for the introduction of the NHI,” said Pretorius.