Thursday, 11 August, 2022
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Healthcare Funders Board in fresh bid to negotiate prices

The Board of Healthcare Funders (BHF) is once again seeking an exemption from the Competition Act’s prohibition on collective bargaining, arguing that allowing medical schemes and healthcare providers to negotiate prices will boost competition and benefit consumers.

However, Wits governance expert Alex van den Heever said its application should be opposed because it focused on scheme tariffs, or the maximum that schemes would be prepared to pay, leaving consumers to foot the balance if providers charged more than this threshold. It was also weakened by the fact that it was voluntary, so parties seeing no value in it could walk away.

The BHF represents medical schemes and their administrators, and covers half of SA’s medical scheme beneficiaries. Its 2008 attempt to obtain an exemption from section 10 of the Competition Act failed, reports Business Day.

Encouraged by the 2020 decision by Trade, Industry & Competition Minister Ebrahim Patel to grant the healthcare sector a block exemption from sections 4 and 5 of the Competition Act to respond to the coronavirus pandemic, the BHF wants the Competition Commission to consider a new exemption application, saying the industry has changed since its first application, and medical schemes and their beneficiaries are struggling with high healthcare costs.

BHF believes “regulatory failures and inadequate levels of stewardship over the private healthcare sector for the past 15-20 years have created runaway prices on the supply side”, it said in its exemption application, provided to Business Day by the Competition Commission.

“Medical schemes are disadvantaged by the strict, inflexible regulatory approach of the Council for Medical Schemes … severely hampered in their ability to exert downward pressure on the prices of healthcare services, keep contribution increases to a minimum and devise innovative cost-effective benefit packages promoting competition between them and appealing to a wider audience,” it said.

BHF’s head of benefit and risk, Rajesh Patel, said it wanted to return to a system that had been in play until 2003, when it published tariff guidelines informed by industry-wide negotiations.

The system was scrapped by the Competition Commission 2004, after it found the BHF, the SA Medical Association and the Hospital Association of SA had breached the Competition Act, and fined all three parties. Since then, service providers have had to enter into direct negotiations with medical schemes. Smaller medical schemes did not have the necessary bargaining power to negotiate fair prices on behalf of their members, said the BHF

Now, the BHF proposes that medical schemes share competitive information with each other and BHF, enter into collective agreements, and publish a “scale of benefits” serving as a reference price list for schemes, providers and consumers.

The Competition Commission published notice of the BHF’s exemption application in the Government Gazette on 6 May and invited public input, with a 3 June deadline that was extended to 30 June. So far it has received seven submissions, one in support and six against, and anticipates input from 20 stakeholders.


Business Day article – Board of Healthcare Funders wants green light to negotiate prices (Open access)


See more from MedicalBrief archives:


Medical aids seek Competition Act exemption on sharing prices, costs


Motsoaledi’s uniform tariffs will cause ‘untold damage’ to medical profession – SAPPF


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