Adele Shevel, The Times

WHILE the battle continues over the real drivers of healthcare spend, the Council for Medical Schemes is positioning brokers' independence as the next target in the fight against rising healthcare costs. The view of the Council for Medical Schemes is that the way the relationship between brokers and some medical scheme administrators is structured leads to lack of independence on the part of brokers. This impacts on consumers in that they are not provided unbiased information. Alex van den Heever, senior adviser to the council, said that some schemes had contracts that prevented brokers from speaking negatively about any particular scheme or administrator. The intention is to facilitate a significant paradigm shift. The document, which is set to be released later this month by the council, will be available to the public. One issue is that it is often not clear whether a broker is offering advice about a range of products, or is marketing a particular product. Selling a particular product should not be the same as offering independent advice. The council intends to resolve this problem this year. There were many "grimy" arrangements, according to Van den Heever, who said that for instance, there were administrators who had subcontracting arrangements with third parties. In some cases administrators did this to buy an independent broker's loyalty, Van den Heever said.

He added that legally, brokers' remuneration must be fixed at 3% of contributions, but some found ways of supplementing this. Also prohibited are upfront commissions which are often done through co-selling a product with insurance and linked products and sales. But this is also done at times. Van den Heever said that the systemic issue was not the level of the fees, but the nature of the advice. He said that council was working through each major component of medical scheme costs to look at whether there was a systemic problem and how these could be addressed. Last week the council released a report pinpointing the major cost drivers that are responsible for rising healthcare costs. It puts private hospitals at the top of the list, followed by medicines and specialists. The Hospital Association of South Africa (Hasa) came out with a statement questioning the accuracy and methodology of the research, and said it did not concur with its findings, for various reasons. Kurt Worrall-Clare, CEO of Hasa, said the research claimed that market consolidation had led to higher prices - but no alternative pricing methodology had been made regarding what the costs would have been had there been no consolidation. Also, the state-imposed moratorium on private health establishments that came into effect in 1996 "had the unfortunate consequence of barring new entrants from the market", said Worrall-Clare.