Neesa Moodley: Business Report, 28 September 2006

PRIVATE hospitals showed one of the smallest increases in spending by medical schemes in the past year, although they still made up the lion's share of expenditure, according to the latest annual report of the Council for Medical Schemes. Expenditure on hospital services accounted for 35.3 percent of the total paid to providers. Expenditure on private hospitals increased by 3.9 percent to R15.9 billion, while expenditure on provincial hospitals decreased by 4.9 percent to R242 million.

Kurt Worrall-Clare, the acting chief executive of the Hospital Association of SA, which represents almost all private hospitals, said it was important to note that medical schemes membership had increased in the period. This made the low increase in expenditure on hospitals even more significant. The number of principal medical scheme members for the 2005/06 year grew by 3.5 percent to 2.8 million, excluding members of bargaining councils' medical schemes. Worrall-Clare said that the figures confirmed that the private hospital sector had heeded calls over the past two years for cost reductions, but added that there was "still a lot of work to be done and no room for complacency". Broker fees again rose sharply by 21.5 percent to R855.5 million, which equated to a 16.6 percent increase of R35.50 a member each month. Gross contribution income increased 5.2 percent to R54.2 billion, of which R45.8 billion was paid out in claims, up 12.2 percent on the year. The effects of the medicine pricing rules could be seen in the 8.8 percent decrease in expenditure on medicines from providers other than hospitals.