Private hospitals must reform ‘or new scheme will not work’

After five years of investigations, the Competition Commission yesterday argued for much-needed reform in the private healthcare sector, if the planned National Health Insurance were to succeed.

At the release of their final report on its health market inquiry (HMI) in Johannesburg, the commission has identified three hospital groups – Netcare, Life Healthcare and Mediclinic – that dominate the health facilities market profit.

The head of the five-member-panel, former chief justice Sandile Ngcobo, said the commission concluded its work in a time when the country debates the implementation of the National Health Insurance (NHI), which gave the commission more reasons to formulate recommendations that will provide a better environment in which the NHI can function.

The commission’s recommendations aim to ensure that all South Africans have access to comprehensive quality healthcare services, which can only be possible with fair competition in the private sector.

Ngcobo said a competitive private healthcare market will translate into lower costs and prices.

“It is envisioned that the NHI will create a unified health system by improving equity in financing, reduce fragmentation in funding pools, and by making healthcare delivery more affordable and accessible, eliminate out-of-pocket payments when individuals need to access healthcare service and ensure that all South Africans have access to comprehensive quality healthcare service,” Ngcobo said.

The major hospital groups were able to secure steady and significant profit for years without opening competitive space for newcomers.

“The hospital groups make it very hard for newcomers and fringe players to grow and compete on merit. The three groups can distort and prevent competition by binding the best medical specialists to their hospitals with lucrative inducement programmes,” said Ngcobo.

Competition Commission head Tembinkosi Bonakele said private health consumers may not accept the implementation of the NHI as they don’t even understand how the private health system works.

“It was shocking to discover that the private health patients are not empowered with information to make choices. It is hard for the patient to even recognise that prices are extremely high. The average private medical aid user does not know that medical brokers charge monthly fees, hidden in the premium, and are supposed to offer continual service,” Bonakele said.

The commission recommended that practitioners who do not want to engage in fee-for-service contracts will be encouraged to enter bilateral negotiations with funders.

“We recommend that scheme Boards of Trustees and Principal Officers should be trained and incentivised to ensure that schemes receive value for money from both administrators and healthcare providers and the introduction of a single, comprehensive, standardised base benefit option, offered by all schemes.”

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