File picture: Pexels
File picture: Pexels

Private health care ‘needs a watchdog’

By Kailene Pillay Time of article published Oct 1, 2019

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Durban - An official inquiry into the private health-care sector has recommended the creation of a regulator to watch the entire industry, its quality and prices.

The Competition Commission’s Health Market Inquiry also found that the private health sector was “neither efficient nor competitive”.

The inquiry provided the most detailed insight yet into the industry.

It found further that the sector was governed by “little” regulation, and was characterised by “disempowered and uninformed consumers”, with a general absence of value-based services.

A further critical finding was that private health care was incentivising doctors and private health facilities to “over-treat” patients. This was done by sending them to hospital more frequently and for longer than necessary without any real medical benefit.

The chairperson of the inquiry, former chief justice Sandile Ngcobo, delivered the inquiry’s findings and recommendations in a 256-page document in Joburg yesterday.

It had taken the body five years to research and compile, which included public hearings, written submissions and meetings with key players.

Opposition parties welcomed the report, saying it showed how the National Department of Health had failed in its mandate.

The DA’s spokesperson on health, Siviwe Gwarube, said it was a “clear display of how the department is guilty of gross negligence in exercising oversight of the private health industry and protecting South Africans from the rising cost of medical care, over-servicing and anti-competitive behaviour that has led to people being vulnerable to exploitation”.

“The reality is that the department has had the legislative mandate to be the custodian of health care for all South Africans, whether they rely on the public or private health care.

“However, they have over the past 25 years failed to do so,” he said.

IFP national spokesperson Mkhuleko Hlengwa said it was critical to find a balance in providing affordable and efficient health care for all South Africans.

The inquiry found that three hospital groups - Netcare, Mediclinic and Life Healthcare - dominated the market.

Ngcobo said they had found that the three were able to secure steady and significant profits year on year.

The groups had also made it very hard for newcomers and fringe players to grow and to compete on merit.

“The three groups are able to distort and prevent competition by binding the best medical specialists to their hospitals with lucrative inducement programmes, with associated exclusionary effects on innovative newcomers.

“Facilities operate without any scrutiny of the quality of their services and the clinical outcomes that they deliver because there are no standardised, publicly shared measures of quality and health-care outcomes to compare one against the other,” Ngcobo said.

This meant it was impossible for patients, funders or practitioners to exercise choice based on value for money and quality of services, Ngcobo added.

He said they had found that the market was highly concentrated among these three groups, resulting in no drive to innovate or compete vigorously.

“Public hospitals are not able to compete with private hospitals, since they do not consistently provide the quality of care required to compete against the large hospital groups,” the report read.

Ngcobo said that a more competitive private health-care market would translate into lower costs and prices, and more value for money for consumers.

“Competition should occur on price, cost and quality, not on risk avoidance.”

The body found that the supply side of the market was largely unregulated, with negative consequences for competition and for the consumer.

Regulation was therefore essential. Ngcobo said this would be ideally administered through a new regulatory authority that the commission had called a Supply-Side Regulator for Health (SSRH).

Its role would include the regulation of suppliers of health-care services, including health facilities and practitioners. The SSRH would have four main functions: health-care facility planning (including licensing); economic value assessments; health services monitoring; and health services pricing.

On the pricing, Ngcobo said one of the most frequent complaints to the inquiry was that there was currently a “tariff vacuum” in private health.

This made it very difficult for schemes and members to estimate and compare the costs of care.

It recommended that the supply-side regulator would set tariffs. Tariffs for prescribed medical benefits should be binding, and tariffs for non-prescribed medical benefit conditions would have reference tariffs.

The regulator would also be responsible for health services monitoring, measuring the performance of providers, and monitoring the quality and outcomes of health-care services.

The Mercury

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