Londiwe Buthelezi
With less than a week left before the deadline to submit comments on proposed areas of focus in the Competition Commission’s inquiry into private health care, affected parties are expected to recommend that the investigation focus on specific topics rather than broad issues.
The commission is likely to be asked to include the pharmaceutical and emergency service sectors in its inquiry.
The Competition Commission published draft terms of reference for its market inquiry into the private health-care sector on May 15 and has given interested parties until June 25 to comment.
In the draft terms, the commission said the inquiry would look into tariff mechanisms in a bid to understand the pricing regime. This comes after the authority’s rulings in 2003, which prohibited bargaining among players in the industry.
The draft terms show that the key focus of the market inquiry will be the price-setting mechanisms, although there are a number of other issues the commission is concerned about.
It was stated that the inquiry would not focus on emergency services, consumables or pharmaceuticals.
But as the deadline for comments draws closer, some parties have made their stance known on the inquiry’s proposed focus areas.
Netcare chief executive Richard Friedland, whose company has the largest emergency services unit in the form of Netcare 911, said last month that medicine pricing should also be investigated.
But Mariné Erasmus, a health-care economist at Econex, said yesterday that it was no surprise that pharmaceuticals were excluded as an area of focus because the sector was already highly regulated.
Regulations governing the pharmaceuticals sector include a single exit price for medicine. There are already draft policies on international benchmarking methodology and pharmaco-economic evaluation.
“So we thought it was fine to exclude pharmaceuticals but the problem with that [is] you might miss the important linkages that might have an adverse effect on the downstream industries and patients. The inquiry should be holistic in nature,” Erasmus said.
Leana Engelbrecht, an associate in the competition practice at law firm Cliffe Dekker Hofmeyr, said the commission did not directly state that the price-setting mechanisms would be the primary focus of its investigation. But it was clear it wanted to make policy and regulatory recommendations that would, in its view, improve competition in the private health-care market.
She pointed out that not as much emphasis had been placed on the commission prosecuting any anti-competitive conduct that it might uncover in the process of the inquiry.
In the draft terms, the commission said it would assess how providers set tariffs and the role played by industry reference price lists.
It would also examine the extent to which co-payments were applied by players.
The inquiry would look at referral processes, relationships with hospitals, the outcomes of managed care and cost-saving initiatives such as designated service provider arrangements of medical schemes.
There would be an analysis of the costs and profitability of hospitals as well as a review of consolidation trends and how they influenced the profits of hospitals.
On medical schemes, the inquiry would assess how fees, including member contributions and administration fees, were determined.
It would evaluate the nature of incentives in the relationships among medical schemes, their brokers and administrators of medical schemes.
Erasmus said many of the industry players thought that the inquiry should look at more specific topics.
Engelbrecht said the commission had been empowered with wide and focused investigatory powers.
As a result, it would be able to extract the information it deemed necessary to conduct its inquiry on any topic without needing to have reasonable grounds to believe that anti-competitive conduct was taking place.