{"id":148933,"date":"2019-11-01T06:47:42","date_gmt":"2019-11-01T04:47:42","guid":{"rendered":"https:\/\/www.myza.co.za\/how-a-lack-of-competition-in-south-africas-private-health-sector-hurts-consumers-the-conversation\/"},"modified":"2019-11-01T06:47:42","modified_gmt":"2019-11-01T04:47:42","slug":"how-a-lack-of-competition-in-south-africas-private-health-sector-hurts-consumers-the-conversation","status":"publish","type":"post","link":"https:\/\/www.myza.co.za\/press\/how-a-lack-of-competition-in-south-africas-private-health-sector-hurts-consumers-the-conversation\/","title":{"rendered":"How a lack of competition in South Africa’s private health sector hurts consumers | The Conversation"},"content":{"rendered":"

How a lack of competition in South Africa’s private health sector hurts consumers<\/a>: <\/p>\n

Netcare is one of three hospital groups found to dominated the facilities market.<\/span> Shutterstock<\/span><\/span><\/figcaption><\/figure>\n

An extensive inquiry into South Africa\u2019s health market was recently concluded \u2013 the first ever process in the country that involved gathering evidence and then studying the private healthcare market from the perspective of competition and competition law. <\/p>\n

The investigation ran over five years and included over 43 million individual patient records, 11 million admissions, specifically commissioned studies, written submissions, public hearings and seminars. The investigation focused on hospitals, doctors, and funders. Funders include the medical schemes who purchase healthcare on behalf of members, and the administrators and managed care organisations that medical schemes contract with.<\/p>\n

South Africa\u2019s Competition Commission set up the inquiry in response to prices in the private healthcare sector which, it said, only a minority of South Africans could afford. The country has a two-tiered health system. About 71% of the population uses public sector, while the private sector serves around 27%. <\/p>\n

Ideally competition should translate into lower costs and prices, better quality, and generally more value for money for consumers. In its final report, which was released recently, the inquiry found that competition wasn\u2019t working as it should in private healthcare. The sector was characterised by high and rising costs, significant overuse, and no discernible improvements in health outcome. <\/p>\n

Lack of competition<\/h2>\n

There were a number of factors that \u2013 alone or in combination \u2013 led to a lack of competition in the sector. <\/p>\n

One factor is that three hospital groups dominated the facilities market: Netcare, Mediclinic and Life. They accounted for more than 80% of the hospital beds and 90% of all the admissions. These three hospital groups, both individually and collectively, were able to secure steady and significant profits year-on-year. A few firms owning the majority of the market is an indication that competition may not be working effectively. <\/p>\n

Hospitals don\u2019t attract patients, they compete for doctors who admit patients. Most doctors had contracts with the big three. Successful entry by new hospital owners is very difficult as they cannot attract doctors as easily. <\/p>\n

Hospital groups are also able to build additional hospitals where they aren\u2019t needed, resulting in an oversupply of beds and ultimately overuse of services. <\/p>\n

In South Africa more people are admitted to ICU compared to eight other countries with comparable published data. The inquiry panel estimated that the country could save more than R2.7 billion \u2013 or 2% of its current private health care spend \u2013 if it halved the number of people admitted to ICUs and improved the care for patients in wards. Only the critically ill should be admitted to ICU. But the inquiry found that some of the patients who were in ICU could have been treated in wards.<\/p>\n

There are no measures of quality of care in the public domain. This means that members of medical schemes and funders (who purchase healthcare on behalf of medical scheme members) weren\u2019t able to judge if the care provided by doctors and specialists was effective.<\/p>\n

The entire premise of effective competition is that purchasing healthcare services should be based on value \u2013 a combination of price and quality. This isn\u2019t possible in South Africa. <\/p>\n

There\u2019s no way to assess if the care provided was improving health outcome. This is particularly problematic as the inquiry found significant over-servicing by doctors which cannot be explained by their patients\u2019 level of illness. Doctors use a fee-for-service billing model. This means they bill patients for each service they perform during a consultation. In this system, the more you do the more you earn. This is called a perverse incentive and without knowing the impact of health outcomes neither doctors nor patients know if the extra tests or interventions are worth the cost. They also don\u2019t know if it is improving health outcomes.<\/p>\n

The inquiry also found doctors and specialists worked as individuals -\u2013 not as a team. There is growing evidence and acceptance internationally that team-based care is better and more cost effective. <\/p>\n

Medical schemes compete for younger and healthier individuals. To do this, schemes have created numerous benefit packages. But these packages aren\u2019t comparable. Medical schemes have done this in response to the absence of a mechanism for equalising risk between medical schemes. Medical scheme members do not know what they are paying for. Neither are they able to judge the quality of care. <\/p>\n

Recommendations<\/h2>\n

The recommendations are aimed at creating greater competition, transparency, and accountability on how medical scheme member\u2019s money is spent. They also aim to increase competition on the supply side (hospitals, doctors, and specialists) and on the demand side where funders represent the consumer. <\/p>\n

Recommendations include a supply side regulator, whose job will be to:<\/p>\n