Netcare questions Discovery’s role in health market inquiry

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Private hospital group Netcare has raised questions about the independence of the Competition Commission’s health market inquiry, suggesting it may have been influenced by South Africa’s biggest medical scheme administrator, Discovery Health, reports Business Day.

The inquiry is investigating the barriers to effective competition in the private healthcare market and published its interim report in July.

Netcare alleged that the report’s chapter on the theory of supplier-induced demand and its findings were influenced by Discovery Health, the inquiry said. According to the report, supplier-induced demand is a phenomenon in which increased access prompts additional use of a service that would not otherwise have occurred; for example, an increase in the number of hospital beds in an area could trigger a surge in admissions. It is a sensitive issue, because supplier-induced demand leads to over-servicing and drives up costs.

Netcare said it was concerned by the fact that the report’s chapter on supplier-induced demand had been drafted by Neil Soderlund, who heads a joint venture between Discovery Health and Quantium called Quantium Health Outcomes. It said it had been informed of this by Soderlund himself, and the inquiry has confirmed his involvement.

The inquiry should have advised stakeholders of his involvement, given the potential for a conflict of interest, said Netcare’s director for strategy and health policy Melanie da Costa. “Netcare’s submission in response to the provisional report makes it clear that its concerns are not directed at Discovery Health or Dr Soderlund personally, but rather relate to the fairness of the inquiry’s process,” she is quoted in the report as saying.

In response, the panel said that it was independent and impartial and that Discovery Health had had no influence in identifying supplier-induced demand as a top for investigation. Nor had it influenced the methodology adopted by the panel or its findings, it said. Supplier induced demand was well acknowledged in all healthcare markets, was identified by several stakeholders, and was reflected in the inquiry’s terms of reference published in 2013, said the panel.

Discovery Health CEO Jonathan Broomberg said in the report that Soderlund was consulting to the inquiry before his business was acquired by Quantium Health Outcomes, and the transaction was declared immediately to the inquiry. “Discovery Health was entirely uninvolved in the consulting engagement between Dr Soderlund and the (inquiry). Discovery Health made numerous submissions based on its own data and views, including on supplier induced demand. We believe that Dr Soderlund conducted his engagement with the inquiry with the utmost integrity and we have no reason or evidence to doubt the objectivity, fairness and transparency of the inquiry process in relation to this matter,” he said.

According to the report, the inquiry received 67 submissions in response to its provisional report. It plans to release its final report by 29 March, 2019.

Business Day report

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