Karl Gernetzky: Business Day

GREATER competition is necessary to contain private healthcare costs, while consolidation in the sector may leave room for only a few large providers. Kevin Aron, MD of Medscheme warned yesterday that private hospital costs were unsustainable. He also said perceptions that medical aid schemes were offering less value for money were gaining ground. Health Minister Aaron Motsoaledi last year described the cost of private healthcare as "predatory", and warned there would be further regulation unless costs were managed. Aron said the industry was under pressure over high costs and private healthcare needed to reposition itself for sustainability. This was corroborated by the Council for Medical Schemes annual report last year, which showed the inflation-adjusted cost per beneficiary for private hospital care had risen from R172,80 in 2000 to R308,30 in 2010 - a 78,4 percent increase. This was despite a drop in the number of beneficiaries admitted to private hospitals, from 193,2 per 1 000 in 2009 to 184,6 per 1 000 in 2010. But Aron said regulation of the industry needed to be handled sensitively to ensure continued investment in private healthcare, and preserve consumer choice. More competition among providers was also needed to drive down costs amid the consolidation of a sector that might have room for only a few large providers. This consolidation would be accelerated by the National Health scheme, he said. Aron said the scheme would undoubtedly lead to a loss of customers who were unwilling or unable to contribute to both the scheme and a medical aid. But there would still be benefits for medical aid schemes, provided there was a better relationship between public and private health systems. Aron said the National Health Insurance scheme offered "commercial opportunities" and the public sector should take advantage of the private sector's robust information technology management systems, and experience in managing costs. There would be "little point" rolling out the expensive NHI programme unless management - in a system notorious for its inefficiency - was improved drastically, he said. This comes as Gauteng Premier Nomvula Mokonyane acknowledged at the opening of the provincial legislature yesterday that the provincial healthcare system faced challenges in financial management and had "operational weaknesses". The quality of management in the provincial health department had been under intense scrutiny after many hospitals failed to pay service providers on time as well as media reports of newborn deaths due to staff shortages. Mokonyane said this year would see a revision of the funding model to better address pressures on the system, and that an MEC dedicated "solely to health" would be appointed in April.