Slindile Khanyile: Business Report,
Regis Nyamakanga: Business Day,

LETHIMVULA Investments and Old Mutual South Africa (Omsa) are considering combining their healthcare businesses, a move analysts say is an effort to rescue sinking ships, which poses no threat to rival Discovery. Lethimvula and Omsa announced yesterday that they had signed a memorandum of understanding that aimed to combine the respective administration and managed care businesses of Old Mutual Healthcare, Medscheme and Rowan Angel. Medscheme and Rowan Angel are owned by Lethimvula. Old Mutual Healthcare administers nine schemes, which include Oxygen, Medgroup, Clicks and BHP Billiton. Medscheme has 16 companies including Bonitas, Liberty, Eyethumed, Sasolmed and SABC, while Rowan Angel looks after Spectramed. If the transaction goes through, the new company will service about 2.3 million people. Discovery has just over 2 million members.

Application for exemption from the provisions of the Competition Act - 14 March 2008

The Competition Commissioner’s ruling of 2004 which was aimed at promoting more competition in the private healthcare market and driving costs down has had the opposite effect. Instead, since the ruling, expenditure within this sector has soared.

The Board of Healthcare Funders (BHF) has on behalf of its members, 85% of medical schemes in South Africa, applied for exemption from provisions of the Competition Act No. 89 of 1998 that prohibits the medical scheme industry from working as a collective on matters such as setting tariffs and defining patient benefits.

The application seeks to deal with a host of unintended consequences arising from a ruling by the Competition Commission in 2004 that banned collective bargaining in the sector. This has brought about concerns on the continuity and the productivity of the medical scheme industry as a whole.

The key areas which the Board seeks to promote through the application exemption are: