Health probe confirms what we already know: we're getting a bad deal
The Healthcare Market Inquiry finds consumers are deliberately disempowered over healthcare options
Consumers are spending more and more on medical aids, while getting less and less in return. At the same time, competition, which usually drives down prices, is lacking in the private health sector.
These are some of the findings of the four-year extensive investigation in the private health sector by a senior panel appointed Competition Commission. The Healthcare Market Inquiry released its preliminary report on Thursday at a lengthy press conference in Johannesburg.
Interested parties have until September 7 to respond to the report.
In the executive summary of the 800-page report consumers were described as “confused and disempowered”.
The inquiry was set up to see if there were factors that distorted competition in the sector as prices keep rising. The head of the panel, former chief justice Sandile Ngcobo, described the difficulty in getting information as “long and cynical delays in the submission of data by stakeholders that involved long engagements with lawyers”.The commission also had to deal with a court case by Netcare – which delayed its start in 2013 – while complaints by the main hospital groups and Discovery Health further delayed the release of the report. It was initially due for release in November last year.
But it has now released detailed recommendations to make the private sector more affordable and sustainable.
It found that consumers were getting a bad deal: “The market displays consistently rising medical scheme premiums accompanied by increasing out of pocket payments for the insured … and a progressively decreasing range of services covered by medical scheme options.”
Other findings include:
There were about 270 medical aid options, too many for consumers to compare.
Incomplete laws regulating the medical aid sector and the government were to blame for declining medical benefits.
The “incomplete regulation” of the sector was described as “inadequate stewardship by the Department of Health”.
It also criticised the regulator of doctors, the Health Professions Council of SA, and said its “rules” stopped doctors working together as teams and charging as teams, thus offering cheaper options.
Provincial health departments, which license hospitals, were criticised as having “inconsistent licensing” procedures and allowing too many hospitals in the same region.
Hospital admission had increased significantly from 2010, driving up spend on healthcare – but this was also linked to increasing supply of hospitals.
It found South Africans in the private sector are over-treated, with our ICU rate of admission per person double that of USA and more than seven times that of European countries.The panel subpoenaed and accepted submissions from any interested parties. The number of submissions from doctors, NGOs, hospital groups, medical aids, administrators, policy institutes and therapists, totalled more than 15,000 pages.
The report explained that it believed the medical aid sector deliberately confused consumers so they couldn’t compare different plans and different medical aids.
“With approximately 270 plans on offer, consumers cannot compare these, nor can they choose scheme and plan options on the basis of value for money.”
The report panel said: “The deliberate manner in which these offerings are bundled and packaged allows medical schemes to weaken, even avoid, outright price competition.”
It suggested that every medical aid should have the same base option with the same coverage.
“The new schemes would include a standard basket of goods and services and will thus be easily comparable across schemes.”The base package would include benefits for care outside of hospitals, to remove the incentive to admit a patient to hospital for treatment as is currently the case.
The commission also found the three main private hospital groups, Life Healthcare, Mediclinic and Netcare, dominated the market with 90% of all admissions. They however didn’t compete well with each other so medical aids largely didn’t have power to drive down prices.
It called for a reduction in hospital licences granted, saying data showed too many private hospitals drove overtreatment.
Discovery Health CEO Jonathan Broomberg said: “We support the recommendation that there be more careful evaluation of need and evidence to be applied in the licensing of hospital.”
In response to the frequent criticism of poor government regulation and a call to enact laws to regulate medical aids, Health Minister Aaron Motsoaledi said: “Stakeholders don’t like to be regulated.”
He also said he always gets hauled to court by the private sector. Now, with the report to back him up, he would try to regulate the private sector better, he said. “Now I have evidence for court.”