Specialists ‘behind rising health costs’

Image courtesy: Thinkstock

Image courtesy: Thinkstock

Medical specialists seem to be the cowboys of medical expenses industry – charging high fees and making expensive referrals – making them of particular interest to health minister, Dr Aaron Motsoaledi.

“Profit-maximising specialists and hospitals are able to exert their dominance through price increases and price discrimination with relative impunity, and currently have no need to compete on either price or quality in order to attract patients,” he states in the Department of Health’s (DoH) submission to the Health Inquiry.

Price drivers

Specialists and private hospitals are viewed as the drivers of price changes as they direct patients to hospitals where treatment is provided.

“Specialists are, therefore, the main drivers of demand for all expensive services, including hospital, medicine, devices and diagnostic services,” said Prof Alex van den Heever, Chair of Social Security at the University of the Witwatersrand, in his Review of Competition in the South African Health System.

Total, monthly healthcare benefits increased by 42% from R623 in 2000 to R882 in 2011. Price hikes are largely driven by the increase in benefits paid for private hospitals (an increase of around 82% since 2000) and medical specialists (an increase of around 74% since 2000).

But submissions from the role-players differ markedly on the reasons for the expenditure. The South African Medical Association (Sama) denies specialists are driving costs. Hospitals, allied health professionals and non-healthcare costs consume together 54% of medical scheme funds.

When radiology and pathology costs are removed, specialists represent 12.7% of medical scheme expenditure and consume R12.2 billion in 2011, which is close to the R12.1 billion spent on non-healthcare expenses by medical schemes.

“Specialists … have only gained 10% market share from 18.3% to 20.3% from 1997 to 2013 (including radiology and pathology costs) thereby disproving these allegations,” Sama argues.

The Board of Healthcare Funders said specialists are charging up to 300% more than medical aid schemes limits, but the South African Private Practitioners Forum (SPPF) said over 80% of specialists charge no more than 120% of scheme rates.

Specialists blame inappropriate pricing guidelines that are not cost-based. The Health Professions Council of South Africa (HPCSA) provides guideline tariffs after a court ruling took this authority from the DoH.

“Medchanism prices must enable doctors to make a living,” said the SPPF.

Perverse incentives

Hospitals compete in a variety of ways to attract doctors to establish practices at their facilities. The DoH said a closer look should be taken at what it calls “perverse provider incentives associated with reimbursement structures”.

Life Healthcare (LHC), Mediclinic and Netcare have shareholding relationships with doctors, controlled by the HPCSA. “HPCSA initially imposed a cap on doctor shareholding but later removed the cap as it found that the shareholding did not function as a perverse incentive,” LHC said.




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