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The Competition Commission’s investigation into the cost of private health care has received a mixed reaction from the industry, with some sceptical and others warning the probe could be flawed.

The commission released its long-awaited findings on a four-year investigation into private health care, the Healthcare Market Inquiry.

The inquiry, chaired by former chief justice Sandile Ngcobo, looked into the high cost of private health care, covering the work of doctors and specialists as well as the role of schemes and new technologies.

A major finding was that most of the unexplained expenditure derived from in-hospital rather than out-of-hospital care.

It was also determined that the soaring costs in private health care were not driven primarily by the cost of medical aid cover but by over-capacity and over-investment in technology.

Higher treatment volumes and longer hospital stays also drove up costs.

While the South African Medical Association (Sama) “welcomed” the provisional findings and recommendations of the comission, one of the three major hospital groups, Netcare, said certain aspects of the investigation “appear flawed and unsupported by the evidence”.

Melanie Da Costa, director of strategy and health policy at Netcare, said the hospital group would need to study the document in detail before providing substantive comment.

“However, there are certain aspects of the provisional findings which appear flawed and unsupported by the evidence which has been made available to Netcare or its experts.

“Netcare intends making further submissions to address a number of these issues in the interests of the panel reaching evidence-based conclusions,” said Da Costa.

The chairperson of Sama, Dr Mzukisi Grootboom, said the high concentration of hospitals in some areas meant that medical schemes could not negotiate.

“There’s no question that the hospital sector is one of the key cost drivers because of the dominant hospital groups.”

Grootboom conceded oversight and the regulation of medical schemes were in contention.

“You have medical scheme employees, trustees and principals who run the schemes. Then you have the administrators, who manage the day to day processing.

The commission found that new interventions were needed in the private sector as the current system was not competitive and medical schemes were making excessive profits while consumers were not getting value for their money.

Discovery Health in particular was singled out, with the commission saying it made up 55% of the open scheme market and continued to grow through mergers with smaller schemes.

The commission noted that of the 22 open medical schemes two held about 70% of the market.

The Competition Commission found that, with 270 plans on offer, consumers were not able to compare offerings; nor could they choose scheme and plan options on the basis of value-for-money.

Shrey Viranna, Life Healthcare Group chief executive, said: “Our initial review of the draft report and recommendations leads us to believe they have been well considered and have the potential to address the broader challenges the industry faces. We look forward to ongoing participation in the process.”

MediClinic Southern Africa said it believed the findings and recommendations should be based on and rationally related to accurate and reliable data.

Discovery Health’s chief executive, Dr Jonathan Broomberg, welcomed a number of the recommendations and noted references to their sustained profitability and strong market position”.

“Discovery Health has worked hard to ensure maximum transparency on both the fees we charge our medical scheme clients and on the profits we earn as a result.

“It is critical to note that Discovery Health’s profitability is not due to the scheme charging higher fees than its competitors but to a number of business factors, including continuous innovation and greater operational efficiency and by large investments in advanced systems and customer service technologies,” said Broomberg.

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