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Friday, 14 February, 2025
HomeMedical SchemesBlow to BHF over collective pricing and PMBs

Blow to BHF over collective pricing and PMBs

The Board of Healthcare Funders (BHF) has been unsuccessful in attempts to get the Competition Commission to allow its members to collectively negotiate with healthcare service providers on pricing and prescribed minimum benefits (PMBs) in a bid to retard the “decline” of the medical aid sector.

The Commission said it had rejected the BHF’s application to have its members exempted from section 4 of chapter 2 of the Competition Act – which prohibits agreements between competitors that lessen or prevent competition in a market.

However, reports BusinessLIVE, the BHF can still approach the Competition Tribunal to appeal against the decision.

Exemption

The BHF’s argument is that such exemption will result in stopping the decline of the industry, and expand the sector.

The Commission said its investigation found the BHF’s members were competitors in the provision of medical scheme services and the exemption would lessen competition.

“The investigation revealed that the medical schemes industry faces some challenges, such as the reduction in the number of medical schemes, high healthcare costs, health practitioners’ ability to charge any fee they deem appropriate, resulting in patients having to pay out of their pockets when receiving healthcare services; and increase in expenditure on PMBs by medical schemes,” it said.

Bestmed CEO and principal officer Leo Dlamini told Business Day last year that galloping medical inflation saw most schemes announce double-digit premium increases, risks making the industry unaffordable in the long term.

“The only thing that will save the sector is if we … increase the base, and bring in a bigger pool of young people. We are unable to do that because as part of the Medical Schemes Act, we must cover PMBs, which before we add anything else adds about R1 000 a month to cover.”

The Department of Trade, Industry & Competition (DTIC) last year granted small private hospital groups an exemption from certain competition regulations for the next five years as it seeks to level the playing field in an industry dominated by three big hospital groups – Mediclinic, Netcare and Life Healthcare, who control 83% of the national private facilities market in terms of bed numbers.

The DTIC agreed to a request by the National Hospital Network (NHN), a lobby group for small players in the private sector, to ease competition rules for its members, who collectively manage about 12 000 beds.

The exemption kicked in last June and will last until May 2029, with NHN authorised to represent its members in negotiations for global fees with medical schemes, administrators, the state and healthcare providers, and to carry out centralised purchasing on their behalf.

While the exemptions might be seen as anti-competitive, the DTIC said they aligned with the Competition Act’s goal of promoting effective entry and the growth of small and medium businesses.

 

BusinessLIVE article – Competition Commission slams door on medical schemes (Restricted access)

 

See more from MedicalBrief archives:


 

Small hospital groups get further competition rules reprieve

 

Non-profit National Hospital Network gets Competition Commission exemption

 

Ministers deliberately ‘demonise’ medical schemes, claims BHF research

 

Regulator abusing power and hostile towards medical schemes – BHF

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