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SUB CATEGORIES General  |  HIV |  Medical Schemes | 

Market inquiry into healthcare sector crucial to cap escalating prices

18 March 2013 Graham Anderson, Principal Officer at Profmed
Graham Anderson, Principal Officer at Profmed

Graham Anderson, Principal Officer at Profmed

News that the Competition Commission may soon launch an inquiry into South Africa’s healthcare sector should be broadly welcomed by all stakeholders as a means of finally controlling escalating costs in the industry. This is according to Graham Anderso

The Competition Commission confirmed earlier this week that the ‘market inquiry’ provision of the Competition Amendment Act will come into effect on April 1 after a three-year delay, meaning that the commission will now be able to look at behaviour in inter-related markets and across value chains.

Anderson notes that in the past there was a cap on the level of increases that role players in the healthcare industry could charge. “The fact that there are no longer tariffs in the healthcare industry means that theoretically role players can charge whatever they like for services. By having set tariffs in place, the industry is able to reduce the risk of possible collusion in the industry as price increases are then decided at a regulatory level.”

He notes that prices have been rising steadily over the last 10 years, since the tariff price list for healthcare services was scrapped in 2004 after the Competition Commission ruled that the Board of Healthcare Funders (BHF) had contravened the Competition Act by negotiating tariffs with doctors, specialists and hospitals on behalf of the medical scheme industry.

“Following this ruling, all schemes had to negotiate tariffs independently with the result that smaller schemes - that range in size from about 6 000 to 20000 members - did not have the necessary clout to negotiate with an oligopoly of private hospitals, doctors and specialists,” says Anderson.

“Once the amendment comes into force, the Competition Commission will be able to launch a legally-backed inquiry into the healthcare sector to investigate any suspicion of anti-competitive behaviour,” says Anderson.

“While this market inquiry should look at the ability of all medical schemes to negotiate with other players in the healthcare industry, we also hope that it will reconsider the BHF’s ability to negotiate with industry role players as this is the most viable solution to contain the cost of healthcare pricing.”

“A further development which could also benefit the industry would be the establishment of a central bargaining council or forum between funders and providers to negotiate healthcare costs and agree on reasonable price increases that balance the needs of the providers with the sustainability of the funders,” concludes Anderson.

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