International healthcare accreditation

SA healthcare is on the move

Siyabulela Qoza of Sowetan Business spoke to Dr Penny Tlhabi, managing director of the Board of Healthcare Funders of Southern Africa, 25 August 2003. How has the industry transformed over the years? The healthcare industry generates about R40 billion a year with about half of that going to the private side of the business. In terms of consumption, this constitutes about 8,5% of gross domestic product. Most of the transformation has happened at the level of people served. People who earn more than R5 000 a month are well served and there are opportunities in the market of people who earn less money than that. Only about 10% of people in the market belong to medical aid schemes. White men still mainly control the schemes but there is movement taking place. Whether this movement is enough, or fast enough, is another question. Women are opting out of the industry because the working hours are not flexible. The training programme for specialists is not friendly to women. What are the opportunities for black economic empowerment within the industry? There are limited opportunities at the medical aid schemes level except for the administrators. At the moment 10% of total healthcare spend goes to administrators. Private hospitals and pharmaceutical companies attract 33% each. Neither of these industries is within our jurisdiction. But we are interested in their transformation and are aware of what is happening. The Government is planning to put all its employees into one scheme. There is huge interest in the transformation of the administrators because the Government will enter into contracts with administrators to serve its 800 000-strong workforce. Is there a need for government intervention? The private healthcare industry can emulate the financial services charter. The initiative is driven by the private sector. Besides, people are likely to commit to it more if they feel they were championing the cause. Is there room for growth in the industry? There is a perception that the quality of care in public facilities is deteriorating. The result has been that people who would not think of buying private healthcare are joining medical aid schemes because of the higher standard of healthcare. There is a lot going for the private healthcare industry. We need to make sure people who can afford private care are on medical aid. What is the effect of HIV/AIDS on healthcare provision and what do you expect going forward? There is pressure on public facilities. They will struggle because there are estimates that 30% of bed occupancy will be taken up by AIDS-related illnesses. The effect is expected to peak between 20 10 and 2015. This pressure may burst schemes because people would be claiming more than they put in. Schemes have been coming up with innovative ways of dealing with this. Are industry regulations moving in the right direction? We can understand that the government had to transform the industry primarily because access to healthcare was skewed. But we differ with the government on the social health insurance route it has taken because of huge income disparities in our country. The government needs to ensure that there is enough space for the private healthcare to operate profitably. Based on earlier proposals, the Government seems to want to play a bigger role in the provision and financing of healthcare. If you look at the unemployed, there is a need for the Government's role but there should be room for the private sector to cater for everybody else. How solvent are the medical aid schemes? We will know that at the end of the month when we get a report on the industry report on solvency. Is healthcare affordable in South Africa? About 16% of the population has medical aid cover, meaning 84% of South Africans cannot afford healthcare cover.

Healthcare costs

The Competition Commission has been better known for high-profile merger investigations in the three and a half years of its existence than it has for its other job - that of probing anticompetitive practices. As most folk will know, many doctors and hospitals charge a lot more than the tariff guidelines, but the tariff is what the medical scheme pays - with members footing the rest of the (often substantial) bill. The commission found publishing the tariff and benefit guidelines constituted price-fixing and was therefore illegal in terms of SA's competition legislation. It will recommend to the competition tribunal that the BHF, Sama and Hasa be prosecuted. The tribunal is empowered to prohibit the practice and levy penalties. However, it may well be that a settlement of some sort will be reached before the case goes to the tribunal. The commission's view is that stopping the practice will be good for consumers and will help to bring down healthcare costs. Its theory is that some doctors and hospitals run at lower costs than others, and removing the tariff guidelines will encourage them to compete on price, giving consumers more choice. In theory, this should help to curb healthcare costs. But the healthcare cost issue is a bit more complicated than the tariff issue. For one thing, the tariffs and scales of benefits have in the past few years tended to be so out of line with what doctors and hospitals actually charge that they are little more than an imagined price that the medical schemes agree to pay for specified benefits. Indeed, the main use of the agreed scale of benefits seems to be to provide healthcare providers with a set of codes that they have to use in invoicing patients, to enable medical aid claims. There is nothing to prevent doctors and hospitals charging more - and they do. But equally, there are some doctors that charge less, particularly where they run practices (in townships, for examples) where most patients are not medical aid members. In any event, not all doctors are members of Sama. The commission's more assertive approach to price-fixing could prove a useful wake-up call to various professions and industries that use tariff guidelines to shut out competitors and abuse consumers. And there is no doubt there are plenty of abuses going on in the healthcare industry that are helping to drive up costs. But the issues in healthcare are complex. And if it wants to make its mark on healthcare costs, the commission should look at broadening the scope of its investigations. (Source: Business Day, 21 July 2003)