Tamar Kahn: Business Day,

THE government has signalled its determination to regulate private healthcare prices, publishing a revised version of the controversial National Health Amendment Bill that makes little concession to industry criticism of the version first flighted two months ago. A potentially far-reaching exemption for doctors and specialists, which seemed to acknowledge fear that the original bill might prompt a massive flight of skills, was apparently removed at the eleventh hour. According to the May 26 version of the bill, healthcare providers were to be allowed to charge rates above the industry tariff guide, known as the National Health Reference Price List (NHRPL). The exemption was scrapped by the Health Department before the bill was submitted to the cabinet two days later. A study by the South African Medical Association found two-thirds of its members said they would consider emigrating if their fees were regulated by the government. Private hospitals reacted with dismay to the revised bill published in the Government Gazette and submitted to Parliament. Netcare's head of funder relations, Mark Bishop, said that the changes appeared to be cosmetic and that it was still very much price regulation. He said that of concern was that the proposed facilitator was not independent, and neither the facilitator nor the Health Department accepted any liability should the results of the regulations cause damages to any organisation or individual. He added that this left one with the impression that the department itself had a lack of faith in the proposed legislation. The first version of the bill envisaged annual price negotiations between medical schemes and healthcare providers - healthcare professionals and private hospitals - taking place under supervision of a facilitator appointed by the Minister. They could appeal to a powerful tribunal if they failed to agree on rates. The private healthcare industry criticised the bill for being in conflict with the Competition Act as it allowed collective bargaining. Medi-Clinic CEO Koert Pretorius described the powers it gave Health Minister Manto Tshabalala-Msimang as "Draconian". The bill was said to be vague, impractical and at odds with existing law. The revised bill sets the NHRPL as a price ceiling for the basic basket of care all medical schemes must provide to their members, known as prescribed minimum benefits, but allows parties to negotiate lower rates either as collectives or bilaterally. The NHRPL is already used as a tariff guide when medical schemes and service providers set fees, but it is not legally binding. The bill says the agreed tariffs will apply not just to medical scheme members, but also to people who are uninsured, and foreigners. The new bill says the Minister must call for public nominations for the facilitator who will oversee tariff negotiations, to be aided two to five assistant facilitators. It scraps the tribunal and its inspectors in favour of an arbitration process that will allow aggrieved parties to choose their mediators. Only if the parties cannot agree on a mediator will the Minister step in and appoint one in consultation with the Justice Minister. Kurt Worrall-Clare, CEO of the Hospital Association of SA, said that Hasa had fundamental concerns around the competition consequences of this bill. He asked how it could be reconciled with the Competition Act's prohibition of price collusion. The government also submitted the revised Medicines and Related Substances Control Amendment Bill to Parliament. This provides for the creation of a regulatory body to replace the Medicines Control Council. The bill has not been changed significantly, and retains controversial provisions to allow the Health Minister to turn down a medicine or device on the grounds that it is not in the public interest for the product to be made available in SA.

Tamar Kahn: Business Day,

THE government's plans to allow private healthcare players to negotiate fees collectively would put too much power in the hands of medical schemes, according to the Hospital Association of SA (Hasa). The Health Department is set for talks with private hospitals after it published draft legislation last week paving the way for bargaining between private healthcare providers and medical schemes, which pay the bills on behalf of their members. The draft National Health Amendment Bill envisages annual tariff negotiations overseen by a facilitator, with an appeal tribunal to resolve disputes. The proposed laws come as rising private healthcare costs are making medical scheme membership so expensive that a decreasing proportion of the population can afford cover, increasing the burden on the overstretched public sector. Hasa CEO Kurt Worrall-Clare asked what incentive there would be for medical schemes to negotiate if ultimately the decision was made by a third party. Hasa was concerned about powers accorded to the tribunal, questioning on what basis in law a third party had the right to tell a business how to price their products and services. Hasa was also unhappy with the fact the draft laws contained no mechanism for parties to appeal against the tribunal's decisions. As the bill stood, parties would have to turn to the courts if they were not satisfied with the tribunal's findings. Worrall-Clare also questioned whether the bill's provisions for collective bargaining would be permitted by the competition authorities, which have stepped in to stop price-fixing in industry. He criticised the wording of the draft legislation, saying it was vague and lacked detail. He said Hasa had not been consulted on the bill, and had requested a meeting with Health Department officials to seek clarity, adding that it was imperative to understand their thinking before taking a position. The Democratic Alliance (DA) also criticised the bill, saying proposals for centralised price negotiations could lead to prices so low they would put hospitals out of business. Health spokesman Mike Waters said that the DA proposed that greater transparency in pricing be actively pursued, including establishing a mechanism requiring public hospitals to publish certain details on pricing. He said that the Competition Commission must also continue to act firmly against price collusion and uncompetitive practices in the industry. The DA called for subsidies and VAT exemptions for public-private partnerships involving private hospitals. Parties have until May 16 to submit comments on the bill to the Health Department.

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.

Neesa Moodley: Business Report. 19 September 2006

THE Hospital Association of SA (Hasa), which represents more than 90 percent of private hospitals in the country, has appointed a new board, with 47 percent black representation. Norman Weltman of Netcare will be chairman for two years, replacing Ramesh Bhoola of Joint Medical Holdings, who will retain his seat. Nkaki Matlala of Medi-Clinic is the new vice-chairman. Acting Hasa chief executive Kurt Worrall-Clare said it was the first time a member of the association's nursing subcommittee had been elected to the board to ensure nurses were afforded a significant voice in the management of Hasa

THE private hospital industry's efforts to bring hospital inflation to within the Reserve Bank's target range of 3%-6% have paid off.

According to a study by independent economist Mike Schüssler, commissioned by the Hospital Association of S A (Hasa), the industry achieved an inflation rate of 5,2% for the 2005 financial year.