The Competition Commission’s health market inquiry has finalised its investigation into the private health-care market, delivering a hard-hitting assessment of its failures and proposing reforms that place the ball firmly in the court of the department of health.
It is now up to health minister Zweli Mkhize to determine the extent to which the inquiry’s far-reaching recommendations are implemented. These measures, the inquiry says, are vital for the implementation of National Health Insurance (NHI), SA’s policy for achieving universal health-care coverage. Under NHI, the state plans to purchase services from both public and private sector providers on behalf of the population.
In its final report, released on Monday, the inquiry says that the state needs a well-regulated private health-care sector in order to be an effective and strategic purchaser of services from providers ranging from hospitals to doctors.
It proposes the establishment of an independent "supply-side regulator for health care" that will oversee multilateral tariff negotiations between health-care practitioners and medical schemes, which will be referred to an independent arbitrator if talks fail.
This regulator will also advise on best practice; issue facility licences and practice numbers; and liaise with a new body that is to be established to monitor the quality of care, called the Outcomes Monitoring and Reporting Organisation.
"The health market inquiry provides mechanisms to make NHI possible and to make it a success. That’s the big message," said Wits professor Sharon Fonn, a member of the panel that conducted the five-year inquiry.
The inquiry began work in January 2014 and was tasked with investigating whether there were barriers to competition in the private health-care market that drive up prices and hamper patients’ access to care. The final recommendations have potentially far-reaching implications for private health-care providers ranging from hospital groups to
doctors, as well as the medical schemes industry.
The final report is broadly consistent with the panel’s provisional findings. It still finds that a range of features distort and prevent competition and recommends regulatory measures to manage costs and quality.
However, it is no longer calling for SA’s biggest private hospital groups to sell off some of their assets in order to enhance competition.
Panel member Cees van Gent said divestiture would have been likely to trigger litigation, as it had done in the UK.
Instead, the inquiry has called on the Competition Commission to step up scrutiny of what it terms "creeping mergers", and says it and the supply-side regulator for health care should be notified of the transfer or sale of licences between hospitals.
In its interim report, the inquiry said competition in the private hospital market has largely failed, partly because it is such a highly concentrated market, dominated by the three JSE-listed groups. It recommends divestiture and a moratorium on new licences for the three largest firms — Netcare, Life Healthcare and Mediclinic International, which together account for 83% of private hospital beds. A moratorium on new licences would have meant the hospital groups could not open new facilities, or increase the number of beds in existing ones.
Mediclinic Southern Africa CEO Koert Pretorius welcomed the revised stance, but said the firm still disputes the inquiry’s conclusion that the market is highly concentrated.
He said the inquiry has not found any evidence of market abuse, such as excessive pricing and profits, and welcomed the inquiry’s recommendation that private hospitals and medical schemes be allowed to continue with bilateral tariff negotiations outside the supply-side regulator for health care.
The inquiry recommends that all medical schemes should offer a single, standardised benefit package that will allow consumers to compare products, and the introduction of a risk-adjustment mechanism to force schemes to compete on price and quality rather than on their ability to attract young and healthy lives.
The department of health’s deputy director-general for NHI, Anban Pillay, said it will study the report, and consider how its recommendations align with the work it is doing to implement the policy.
The report will also inform work on the Medical Schemes Amendment Bill, which is being delayed pending the outcome of the inquiry, Pillay said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.