CAPE TOWN — The chairman of Parliament’s health portfolio committee, Bevan Goqwana, is lobbying for a new, statutory body to oversee private hospitals, described yesterday as bordering on oligopolies.
Members of his committee grilled the Hospital Association of SA (Hasa) yesterday on the prices charged by its members, which include more than 95% of private hospitals. The Council for Medical Schemes’ strategic project specialist, Boshoff Steenekamp, said a lack of competition was partly to blame for rising private hospital fees.
"In 1996 half the hospitals in metropolitan areas were independent. By 2006 this figure had fallen to 12,3%. We think the massive per capita (rise) in expenditure is aligned with the market concentration that took place in this period," Dr Steenekamp said.
"This clearly had a negative impact on competition because it could effectively start operating like an oligopoly, or like a monopoly."
Private hospitals and healthcare professionals have faced constant criticism from Health Minister Aaron Motsoaledi for the role he perceives them to be playing in driving up the cost of healthcare.
Last year he published a discussion document proposing a voluntary price-negotiating system for funders and providers, overseen by an independent arbiter, but met resistance from private hospitals which say participating in such a scheme would amount to price collusion and breach competition law.
Now it appears Dr Motsoaledi is considering a stronger approach, and is exploring the options for regulating all hospitals.
"Certainly the minister is looking at some kind of regulatory environment for hospitals (both public and private)," his spokesman, Fidel Hadebe, said yesterday.
"As to the exact architecture, I’m not aware of any decisions yet, (but) there would be a new regime."
Dr Goqwana said he would scrutinise the legislation that governed the private hospital industry and assess whether existing laws could be amended, or whether a new act of Parliament would be required to regulate them. He said the only sector of health provision that is not regulated in SA is hospitals. "Professionals are regulated by the Health Professions Council of SA, medical schemes are regulated by the Council for Medical Schemes," he said in an interview after his committee’s meeting yesterday.
Private hospital fees constituted 37% of medical scheme claims’ costs in 2009, according to the Council for Medical Schemes’ annual report.
Specialists took 22% of the pie, and medicines 17%.
Briefing the committee yesterday, Hasa chairman Nkaki Matlala said it was not true that hospitals dominated price negotiations with funders, as five medical scheme administrators negotiated collectively for more than 70% of medical scheme members.
"There is a balance of power," he said. "It’s not the profit hospitals make that makes them expensive, it’s the inputs we have."
About 40% of the average hospital bill generated no profits, as it was constituted of items such as medicines, surgical items and consumables which were provided at cost price.
"It is said (by the Council for Medical Schemes) that payments to private hospitals made up 33% of medical schemes’ gross contribution income of R848m.
"If private hospitals stripped out all profits, payments to private hospitals would decrease to about 27,9% of medical schemes’ gross contribution income. If there was a commensurate reduction in medical scheme contributions, a person who paid R890 a month would pay only R63 less."
Increased utilisation was partially responsible for the rise in medical schemes’ spending on private hospitals, and accounted for 40% of the increase in hospital claims between 1998 and 2006, Dr Matlala said. "It is not right to compare the costs in the private and public sector … the playing field is not level. Private hospitals pay VAT and drug prices that are 50%- 70% higher," he said.
Dr Steenekamp warned of an international medical "arms race" also pushing up costs. "The easiest way to attract specialists (who attract patients) is to ensure lots of technology and spare capacity. We have more CAT scans, PET scans and MRI scans per patient than countries like the UK and … obviously the more capacity you have, the higher the unit costs," he said. With Sapa