Because of their market dominance, there was little incentive on the part of the Big Three medical schemes to drop prices, the health market inquiry found.
Discovery Health, which administers 18 medical aid schemes, makes profit that is “multiples” of its competitors. The Times reports that this is according to the 69-month long health market inquiry, which found that Discovery, Medscheme and Metropolitan dominated the administrator market, administering 80% of medical aids.
Ngcobo said: “They have substantial market share, over a consistently prolonged period. They have a high degree of market power and ability to control processes and maximise fees.”
Trustees of medical aids were supposed to look after medical aid members’ best interests, hold administrators to account and ensure they hire the most efficient administrators. But this was not what happened.
Because trustees are paid regardless of their performance, he said “there was little incentive for them to ensure the medical aid grows (which can bring down costs) and that non-healthcare costs (such as administration) are appropriately maintained”.The Times report