The competition commission has urged the health department to implement the private-sector reforms recommended by the Health Market Inquiry, saying they are vital for the government’s plans for National Health Insurance (NHI).
The HMI spent five years investigating the dynamics in the private healthcare market and determining whether there were barriers to competition that hampered patients’ access to care.
It published its final report in late 2019, but so far none of its recommendations have been implemented. Its report included a detailed assessment of the problems in the private healthcare market and said the state needed the sector to be well regulated if it was to purchase services from private healthcare providers under NHI.
“I struggle to imagine a seamless transition to NHI if we don’t address these challenges,” said the Competition Commission’s divisional manager, Mapato Ramokgopa, who was previously the director of the HMI.
NHI is the government’s policy for universal health coverage, which aims to ensure everyone has access to services that are free at the point of delivery. Its first piece of enabling legislation, the NHI Bill, proposes a central NHI fund that will purchase services for patients from both public- and private-sector providers. The bill is currently before parliament and is expected to be approved by the National Assembly within the next few weeks, after which it will be referred to the National Council of Provinces for concurrence.
Addressing delegates to the 22nd annual Board of Healthcare Funders (BHF) conference, Ramokgopa said many of the HMI’s recommendations did not require legislative reform and could be done within the ambit of the National Health Act, the Medical Schemes Act and the Competition Act.
The competition commission had initiated discussions with the health department and the Council for Medical Schemes about establishing a multilateral tariff setting framework, which would allow medical schemes to negotiate prices with healthcare practitioners, she said. The Competition Commission had received three exemption applications on this issue, including one from the BHF, which represents medical schemes and administrators covering about half of SA’s medical scheme beneficiaries.
“We decided instead of dealing with individual applications, lets rather engage the health department [as] this is a systemic problem highlighted by the HMI,” she said.
“We are working on a price determination framework and hope to have a position paper in the second half of the year,” she said.
The HMI concluded there was a “price vacuum” in the private healthcare sector after the competition commission banned collective bargaining between medical schemes and healthcare providers in 2003. While the decision was in line with the Competition Act, which prohibits collusion on pricing, it created uncertainty and gave bigger schemes more bargaining power than smaller ones.
The BHF applied to the Competition Commission in June 2022 for an exemption to section 10 of the Competition Act, which prohibits collective bargaining. It said at the time that allowing medical schemes and healthcare providers to negotiate prices would boost competition and benefit consumers.
It had failed to obtain exemption to the Act in 2008, but was encouraged to try again in 2022 because trade, industry and competition minister Ebrahim Patel granted the healthcare sector a block exemption from sections 4 and 5 of the act to respond to the coronavirus pandemic.
The BHF’s head of benefit and risk, Rajesh Patel, told Business Day at the time they wanted to see a return to the system that was in play until 2003, when it published tariff guidelines informed by industry-wide negotiations.
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