Health market inquiry report to be released this week

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The Competition Commission’s health market inquiry’s provisional report is to be released on Thursday of this week. The commission said that details on the period allowed for public comment and engagement on the report will be announced by the panel chair during the media conference. This was after Life Healthcare withdrew its objections regarding confidentiality in relation to the provisional report.

 

A contentious issue that the inquiry will likely make a recommendation on is the role that private hospitals play in driving up healthcare costs, says a Moneyweb report. The inquiry has already said that hospitals are responsible for a big portion of above-inflation increases in expenditure reported by medical schemes for their members.

An extensive analysis of medical schemes claims data by the inquiry revealed that the average private medical scheme spend per member increased by 9.2% per annum for a five-year period from 2010 to 2014. This was nearly four percentage points higher than average consumer price inflation over the five-year period of 5.6%.

The report said after taking into account changes in medical scheme members’ plan type, gender, disease profile and membership movement, there was an unexplained increase in spend per member of more than 2% per annum after adjusting for inflation. “To put this in context, 2% of spending amounts to around R3bn in 2014 terms ie R330 per beneficiary per annum, or a total of R1 650 per beneficiary over the five-year period studied (2010 to 2014),” the analysis read.

The unexplained cost increase appears to be for out-of-hospital care (7.28% cost increase vs 5.6% inflation) while in-hospital care is a far more important driver (a 10.84% increase vs 5.6% inflation). The analysis also revealed that hospital tariffs had not increased much above inflation, but there was a significant increase in the average cost per admission.

The report says defenders of the industry have argued that private healthcare costs have increased due to increased utilisation by members and not price increases.

Dr Mzukisi Grootboom, chair of the South African Medical Association (Sama), said the report should also make recommendations on medical specialists and medical schemes. “The inquiry needs to look at how members [are] affected by medical schemes rules. It needs to examine whether their rules are conducive to the competitive nature of the industry and whether the use of brokers and administrators are responsible for high medical costs.” Sama is SA’s biggest doctor organisation, with members employed by both the public and private sector.

Carl Grillenberger, group CEO of day clinic specialist Advanced Health, said in the report he looked forward to the report’s recommendations on private healthcare patients being informed about the quality of service in relation to cost. This is currently not done by medical schemes, he added. “There must be an environment of transparency. Medical schemes have information on quality at their disposal.”

After the release of the provisional report, the industry and public will have an opportunity to comment on it. After the comment period, the inquiry will produce a final report, which will contain recommendations to the minister of economic development, Ebrahim Patel. “(The recommendations will be) on areas that need to be addressed on the state of competition in the private healthcare sector,” said Clint Oellermann, director of the inquiry.

Administrative fines or even criminal charges might be recommended for parties that are found to be engaging in anti-competitive behaviour or collusion, the report says.

Competition Commission material
Competition Commission material
Moneyweb report


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