Board of Healthcare Funders

Medical aid council slams hospital prices - 6 August 2007

Slindile Khanyile

YET another voice has identified hospital companies as one of the main culprits that make private healthcare very expensive in South Africa. The Council for Medical Schemes (CMS) said last week that hospitals and specialists were distorting the market with unjustifiable price increases.

Alex van den Heever, an adviser to the CMS, said healthcare costs were increasing faster than people's incomes. Increases by hospitals and specialists in the past couple of years were unjustifiable. He said that there had been a doubling of costs from hospitals for a period of 10 years, and added that there was also a regulation gap on the supply side and this had distorted the market. The CMS is a statutory body that assesses medical aid schemes' conduct and monitors their financial performance and soundness. Last week the Department of Health said regulations that would enable it to eliminate perverse incentives, unethical business practices and unprofessional conduct from the private healthcare industry were gazetted two weeks ago.

Sibani Mngadi, the Health Ministry spokesperson, said the industry had committed itself to transparency. The regulations would allow the department to obtain information on income and expenditure; agreements with third parties; billing guidelines and rules; and costs of medicines, medical devices and consumables. With these regulations in place, the department would be able to draw up the National Health Reference Price List, which would be available to the public next year. Mngadi said that the list would serve only as a guideline, but the department would be able to probe the industry if there was a big difference between what it was charging and the price on the list. According to the CMS annual report for 2005/06, expenditure on private hospitals rose 3.9 percent to R15.9 billion. Spending on specialists' fees increased by 28 percent to R9.4 billion. Of the benefits, hospitals received the largest share at 30.1 percent, followed by specialists at 17.5 percent. Van den Heever said specialists charged whatever they wanted and hospitals' increases apparently did not reflect any added value. There was no reason why hospitals should cost more next year than they did today. He said that there was an abuse of prices. Chris Josephs who represents private ear, nose and throat specialists in the SA Medical Association, said specialist fees might look expensive, but it was important to look at the service one was getting. He said that specialists supported transparency, but cutting costs should not be at the expense of quality service. Private hospitals' pricing policy has come under scrutiny following allegations that they are overcharging for medical materials, devices and anaesthetic gases.

The Board of Healthcare Funders said the hospitals were submitting inflated invoices. It estimated that these invoices had left medical schemes with a R2 billion bill this year. Jonathan Broomberg, Discovery Health's head of strategy and health policy, said administration fees covered only 10 percent of the total rand benefits, and these were fixed fees. He said that the fastest increases had been the hospitals and that was the problem. He added that drugs and administration fees were controlled, but hospitals had been uncontrolled.


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