Smaller private hospitals granted permission to work together

The Department of Trade, Industry and Competition has granted the National Hospital Network (NHN) a conditional exemption, which will last five years. The exemption allows for collective bargaining between members of the NHN and individual medical schemes and/or administrators.

According to the Competition Commission, the Netcare, Mediclinic and Life Hospital groups have a combined market share of 83% of South Africa’s private facilities market in terms of the number of beds and 90% in terms of total number of admissions.

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What is the National Hospital Network?

The NHN is an organisation which unites independently owned private hospitals and medical facilities under one umbrella. The organisation was formed in 1996 and aims to gain synergy and cost-effectiveness, as well as collaborate on best practice patient care. These hospitals do not include private hospitals ‘owned’ or controlled by Mediclinic South Africa, the Netcare Hospital Group and Life Healthcare.

The organisation’s website boasts that its hospitals are consistently ranked among the top 20 in South Africa on the Discovery Health Patient Experience Survey (PaSS) rankings and the group’s members are continually striving to improve.

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Same pricing to be implemented according to exemption

The conditions only apply for the purpose and duration of the exemption which started on 1 June 2024 and ends on 31 May 2029. The conditions set out and granted by the Competition Commission include the members of the NHN agreeing to collectively implement the prices negotiated and agreed on their behalf by the NHN, with medical schemes and/or medical scheme administrators.

The NHN must also engage on behalf of its members in global fee negotiations with medical schemes, administrators, the state, and healthcare providers (professional associations) and undertake collective or centralised procurement on behalf of its members.

In addition, the NHN must promote the interests of its members, market their services and provide a base for benchmarking which would help NHN members increase efficiency. 

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Reduced operating costs

Neil Nair, CEO at NHN says the exemption will also cover central procurement as a mechanism to reduce operating costs. The group is made up of 212 independent hospitals and constitutes one of the largest hospital groups with over 12,000 beds nationally. The organisation’s hospitals are scattered to a larger extent in locations remote from metropolitan areas.

“The structural barriers to accessing healthcare must be addressed and it is through this exemption that we can begin the important task of breaking down apartheid spatial planning and monopoly capital dominance in private healthcare,” says Nair.

He says the exemption has, amongst others, bridged the gap created by the widely spread location of NHN members.

The exemption has also increased the ability of the NHN to compete by enabling NHN members to contract nationally under a single structure in the NHN. In this way, the NHN is also able to geographically assert itself and compete against the three big hospital groups, and to ensure that private hospital costs are affordable and sustainable.