PRESS RELEASE
The Board of Healthcare Funders (BHF) has officially announced that it will support the litigation contemplated by the Council for Medical Schemes and the Department of Health on the questions of charges for medical devices and inhalations gasses should a negotiated settlement not be reached with the private hospital groups.
This is the conclusion which was reached by BHF’s Board of Directors and its membership, which makes up for approximately 90% of medical schemes in Southern Africa.
The contemplated litigation relates to two aspects of private hospital costs:
(1) applying increases of between 8% and 33% to ward and theatre fees to make up for losses brought about by charging medical scheme members at the net acquisition price for surgicals, consumables and medical devices.
(2) charging incorrectly for anaesthetic gasses, resulting in overcharges to medical scheme members.
Following pressure from medical schemes and consumers last year, private hospital groups and manufacturers of medical devices committed themselves to discontinuing the practice of rebates and discounts. But despite this commitment, as at the beginning of January 2008, fewer than 1% of NAPPI coded items had reduced in price. This problem has come about due to the unregulated environment in which the device suppliers operate, and has played a major role in driving healthcare inflation over the years.
To this end, BHF lodged a complaint in August 2007 for consideration by the Harmful Business Practices Committee under the Consumer Affairs Act and await the outcome.
"Obviously, court action is a last resort, but membership of medical schemes has been consistently stagnant for several years now, thanks in part to the on-going increases in contributions which have put them out of reach of most consumers," explained Mr André September, Chairman of BHF. "Most of these increases are due to year-on-year rises in hospital and specialist costs, which have exceeded the rate of inflation. In addition, these costs account for the majority of medical scheme claims, which has resulted in schemes being forced to dip into their reserves to cover claims. As a result, in 2006, with claims exceeding contributions, medical schemes had an operating deficit of R2.1 billion. If this situation is to persist, and be aggravated by yet further increases, the viability of the medical scheme industry in the country could be threatened as fewer and fewer people would be able to afford their medical scheme contributions.”
At a BHF industry meeting on Thursday 10th January, several schemes indicated that they had signed agreements with private hospitals under duress for fear of co-payments being applied to their members when seeking hospital care.
The cavalier attitude of the private hospital industry has been brought about largely by the Competition Commissioner’s ruling in 2004 which put an end to collective tariff negotiations between funders and providers and other collective action by the industry, the result of which is that medical schemes have little bargaining power when it comes to negotiating with the hospital groups, which operate as a virtual oligopoly.
The Registrar, Patrick Masobe has advised private hospital groups that their actions in determining tariff adjustments based on rebates and mark-ups and their billing of anaesthetic gases by the minute instead of by the millimetre were unlawful and that legal action was being considered. The Minister, Dr Tshabalala-Msimang added her voice to the protest in a strongly worded statement calling private hospital groups to reconsider their action.
Says Mr September, “We are hoping that in the light of this united opposition and considering the long-term repercussions of the proposed increases, wiser heads will prevail among the private hospital groups."
Released by The Board of Healthcare Funders of Southern Africa
Contact: Heidi Kruger – Head of Corporate Communications and PCNS
Tel: 011 5370237
Cell: 0829051161
e-mail: heidik@bhfglobal.com