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What to expect from Health Market Inquiry findings being published 5 July 2018

The seriously delayed Health Market Inquiry, which is tasked with probing the cost drivers of SA’s private healthcare market, is now set to publish its provisional findings and recommendations in a report on July 5. A contentious issue that the inquiry will likely make a recommendation on is the role that private hospitals play in driving up healthcare costs. The inquiry has already said that hospitals are responsible for a big portion of above-inflation increases in expenditure reported by medical schemes for their members. An extensive analysis of medical schemes claims data by the inquiry revealed that the average private medical scheme spend per member increased by 9.2 percent per annum for a five-year period from 2010 to 2014. This was nearly four percentage points higher than average consumer price inflation over the five-yearperiod of 5.6 percent.

Unexplained increase

After taking into account changes in medical scheme members’ plan type, gender, disease profile and membership movement, there was an unexplained increase in spend per member of more than two percent per annum after adjusting for inflation. The analysis said that to put this in context, two percent of spending amounts to around R3- billion in 2014 terms, ie R330 per beneficiary per annum, or a total of R1 650 per beneficiary over the five-year period studied [2010 to 2014]. The unexplained cost increase appears to be for out-of-hospital care (7.28 percent cost increase vs 5.6 percent inflation) while in-hospital care is a far more important driver (a 10.84 percentincrease vs 5.6 percent inflation). The analysis also revealed that hospital tariffs had not increased much above inflation, but there was a significant increase in the average cost per admission. Defenders of the industry have argued that private healthcare costs have increased due to increased utilisation by members and not price increases.

An environment of transparency

Dr Mzukisi Grootboom, chairman of the South African Medical Association (Sama), said the report should also make recommendations on medical specialists and medical schemes. He said the inquiry needs to look at how members are affected by medical schemes rules. It needs to examine whether their rules are conducive to the competitive nature of the industry and whether the use of brokers and administrators are responsible for high medical costs. Carl Grillenberger, group CEO of day clinic specialist Advanced Health, said he looked forward to the report’s recommendations on private healthcare patients being informed about the quality of service in relation to cost. This is currently not done by medical schemes, he added. There must, he said, be an environment of transparency. Medical schemes have information on quality at their disposal. After the release of the provisional report, the industry and public will have an opportunity to comment on it. After the comment period, the inquiry will produce a final report, which will contain recommendations to the Minister of Economic Development, Ebrahim Patel. The recommendations will be on areas that need to be addressed on the state of competition in the private healthcare sector, said Clint Oellermann, director of the inquiry. Administrative fines or even criminal charges might be recommended for parties that are found to be engaging in anti-competitivebehaviour or collusion.

Ray Mahlaka: MoneyWeb, 27 June 2018

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