The Board of Healthcare Funders (BHF) has failed in its bid to get the Competition Commission to allow its members to collectively negotiate with healthcare service providers on pricing and prescribed minimum benefits (PMBs), among others, in a bid to arrest the “decline” of the medical aid sector.
The BHF’s more than 30 members include Bonitas, the Government Employees Medical Scheme and Medshield.
The commission said on Friday in a government gazette that it had rejected the BHF’s application to have its members exempted from section 4 of chapter 2 of the Competition Act — an instrument that prohibits agreements between competitors that lessen or prevent competition in a market. The BHF can still approach the Competition Tribunal to appeal against the commission’s decision.
The organisation had asked the competition watchdog to enable its members to make collective submissions to regulators and government bodies and to collectively negotiate with healthcare service providers with respect to PMBs — a collection of specified healthcare benefits that medical schemes must cover by law.
Exemption
The BHF’s argument is that such exemption will result in stopping the decline of the industry, and expand the sector.
The commission was not convinced by the arguments put forward by the sector, saying its investigation found the BHF’s members were competitors in the provision of medical scheme services and the exemption sought would lessen competition.
“The investigation revealed that the medical schemes industry faces some challenges, such as the reduction in the number of medical schemes, high healthcare costs, health practitioners’ ability to charge any fee they deem appropriate, resulting in patients having to pay out of their pockets when receiving healthcare services; and increase in expenditure on PMBs by medical schemes,” it said.
“Nevertheless, there are positive industry trends that suggest that the medical schemes may be relatively stable. These include an increased number of beneficiaries covered by medical schemes, a stable age profile and the industry’s ability to adhere to the 25% solvency requirements.
“The commission found that there is not sufficient evidence submitted by the BHF and/or gathered by the commission to demonstrate that the medical schemes industry is in decline. The commission found that there was no clear evidence demonstrating how the sought practices would contribute to the promotion of employment and/or industrial expansion.”
Bestmed CEO and principal officer Leo Dlamini told Business Day last year that runaway medical inflation saw most medical schemes announce double-digit premium increases, risks making the industry unaffordable in the long term.
“The only thing that will save the industry is if we are able to increase the base, and bring in a bigger pool of young people. We are unable to do that because as part of the Medical Schemes Act, we must cover PMBs, which on average before we add anything else add about R1,000 a month to cover. This is why we have been pushing for exemptions from providing PMBs.”
Bestmed is a member of the BHF.
The department of trade, industry & competition last year granted small private hospital groups an exemption from certain competition regulations for the next five years as it seeks to level the playing field in an industry dominated by three big hospital groups — Mediclinic, Netcare and Life Healthcare, who control 83% of the national SA private healthcare facilities market in terms of number of beds.
The department agreed to a request by the National Hospital Network (NHN), a lobby group for small players in the private healthcare sector, to relax competition rules for its members, who collectively manage about 12,000 beds.
The exemption came into effect in June and will last until May 2029. The decision means NHN’s members, which include Busamed, Nelson Mandela Children’s Hospital and Raslouw Private Hospital, are allowed to collectively implement the prices negotiated and agreed on their behalf by the NHN, “with medical schemes and/or medical scheme administrators”.
The department authorised NHN to represent its members in negotiations for global fees with medical schemes, administrators, the state and healthcare providers, and to carry out centralised purchasing on their behalf. The exemption allows the NHN to establish a benchmarking system to help its members to improve efficiency.
The department noted that while the exemptions might be seen as anticompetitive, they aligned with the Competition Act’s goal of promoting effective entry and the growth of small and medium businesses.
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