South Africans paying too much for private healthcare

Recommendations from the Competition Commission of South Africa’s market enquiry into the local private healthcare sector will materially influence the continued debate regarding the future regulatory structure of both the private and public health care sectors in South Africa.

According to the provisional findings and recommendations of the Competition Commission of South Africa’s market enquiry into the local private healthcare sector, South Africans are paying too much for healthcare.

Once finalised, the Commission’s recommendations are expected to have far reaching implications for health care practitioners, health care establishments, businesses in the pharmaceutical and medical devices industries, health care funders, medical scheme customers as well as industry and statutory bodies.

The provisional findings include:

  • Fee for service models of remuneration tend to stimulate oversupply, which incentivises practitioners to provide more services than may be required. Some patients are being prescribed treatment they do not really need.
  • Incentives have promoted over-servicing by medical practitioners, including increased admissions to hospitals, increased lengths of stay, higher levels of care, greater intensity of care or use of more expensive modalities of care than can be explained with reference to the disease burden of the population.
  • There is a lack of competition among specialists. Most practitioners go into private practice on their own and don’t form practices with a multidisciplinary approach, which would translate into better value for money for consumers. Practitioners are also rarely required to report on the outcomes of their patients or on the quality of service provided. This makes it difficult to measure their services against a benchmark or best practice.
  • There are only three major hospital groups in South Africa and these groups dominate the private healthcare sector. Mediclinic International, Life Healthcare and Netcare hold a combined market share of 83%, in terms of the total number of beds, and 90%, in terms of the total number of admissions.
  • There is little direct competition between the groups, but there are incentives between specific practitioners and hospitals for patient referrals, to maintain or increase hospital admission.
  • There is no publicly available data regarding the cost effectiveness of various technologies, and no guidance on what technologies may benefit health outcomes.

The Commission’s key recommendations include:

  • The implementation of a standardised coding system, to be used across the health care sector to allow meaningful sharing of information.
  • A review of the Ethical Rules to the extent that the rules have an adverse effect on competition.
  • The adoption of a new national licensing framework for all health care facilities, to replace the current fragmented provincial licensing framework.
  • New regulations in respect of health care capacity planning, economic value assessments, payment mechanisms and various assessments (outcome measurement, registration, and reporting).
  • The establishment of a dedicated health care regulatory authority, the Supply Side Regulator of Healthcare to manage practice code numbering and adopt set tariffs. Tariffs for prescribed minimum benefits to be binding, and the rest will be reference tariffs.

The Commission says that many of its recommendations are already provided for in current legislation, but have not been implemented and/or enforced.