FANews
FANews
RELATED CATEGORIES
Category Healthcare
SUB CATEGORIES General  |  HIV |  Medical Schemes | 

Can you trust doctors with your money?

09 November 2008 Otto Wypkema, Chief Executive Officer, National Hospital Network

‘The Health Professions Council of South Africa must have a jaundiced view of their members’, says Otto Wypkema, CEO of the National Hospital Network.

He was responding to the Health Professions Council of South Africa submission to the Competitions Commissioner to limit doctor shareholding in hospitals to a joint maximum of 26%.

National Hospital Network’s members include 74 independent private hospitals, day clinics and psychiatric clinics and ophthalmic clinics and is the fourth largest private hospital group. The group has a comprehensive footprint with solid representation in South Africa’s major cities and represents almost 18% of the private sector beds.

‘This ruling raises many issues. For starters, it discriminates against independently owned hospitals. Listed companies are not specifically addressed in the application. The ownership structure and viability of listed hospital groups is therefore not affected by this ruling and individual doctors and other professionals, as well as their families can buy shares of listed hospitals on the Johannesburg Stock Exchange.

‘Secondly there are practical questions which the HPSA fails to consider such as who would be willing to buy the 74% excess equity in a clinic or hospital. Independent hospitals are already vulnerable to take-overs from the larger groups,’ says Wypkema.

‘It has been repeatedly demonstrated that hospitals and clinics make less profits than many other investments listed on the Johannesburg Stock Exchange, even before taking the excessive business risk and regulatory compliance issues into account. Looking ahead, with regulatory uncertainty surrounding the hospital sector, it is possible that potential investors may well choose to invest elsewhere. I am not quite sure if the HPCSA has thought though these issues,’ he said.

‘But the central issue that concerns us is that this ruling shows that in the view of the National Hospital Network, doctors and medical professionals can be trusted with people’s lives but not their money.

‘The proposal that seeks to limit shareholding to 26% expresses a concern that doctors would generate excess returns through self-referral and over-servicing in doctor-owned facilities. But if these are concerns, there are other ways to address them. Medical schemes have designed very sophisticated pre and ongoing authorization processes.

‘It is infuriating for doctors that they stand accused of over-servicing or profiting from hospital ownership when there is no evidence to substantiate this view. In fact in our experience the opposite is true, doctors who own hospitals tend to go the extra mile to ensure that their establishments have reputations for good clinical outcomes.

‘Furthermore, South African health policy makers have identified the shortage of viable alternatives to hospitals as one of the main factors leading to the increase of proportional spend in hospitals over the last ten years.

How is it that health policy makers can identify a need for independent hospitals and alternative facilities on one hand, and seek to destroy their viability on the other? In our view, the regulatory bodies should work together on this issue,’ said Wypkema.

Quick Polls

QUESTION

South Africa went to Davos to pitch itself as an investor-friendly destination, then signed an Expropriation Act. What message does this send to global investors?

ANSWER

Invest at your peril
SA is open for business
Two steps forward, one land grab back
Welcome to Hotel California
fanews magazine
FAnews February 2025 Get the latest issue of FAnews

This month's headlines

Unseen risks: insuring against the impact of AI gone wrong
Machine vs human: finding the balance
Is embedded insurance the end of traditional broker channels?
Client aspirations take centre stage as advisers rethink retirement planning
Maximise TFSA contributions before year-end
Subscribe now