Costs drive regulation threat

By Staff Writer

The health department is determined to intervene in the health-care industry crisis by way of regulation, says Dr James Arens, clinical operations executive of Pro Sano Medical Scheme.

“It is not yet clear which sectors are targets for regulation. However, the health minister, Dr Manto Tshabalala-Msimang, has singled out private hospitals and specialists as the main drivers of cost in SA’s private health-care industry.”

He says in her recent briefing to the portfolio committee on health she mentioned SA’s spiralling health-care costs as a major concern, apparently fuelled by:

nNon-transparent billing practices by private hospitals; and

nA disturbing pattern of collusion among some pharmaceutical companies.

“All of these, in my opinion, bring to bear the unjustifiably high costs ultimately imposed on the consumer of health care,” said Tshabalala-Msimang.

Arens says SA’s private health care is less than ideal for market forces to operate efficiently because:

nHealth-care services are not always demanded by the consumer but often by an intermediary in the form of the health care provider, who often bears no risk in the funding arrangement;

nThere is an imbalance of information between most providers of health care and patients whereby providers get away without having to justify their choices of investigation or treatment options, or even discuss or agree on service fees with the patient.

nThe medical schemes sector is excessively regulated in relation to its health-care industry counterparts, such as private hospitals and providers; and

nThe position of private hospitals is strengthened by the almost monopolistic dominance they wield in the industry.

“Medical schemes are rendered awkwardly helpless and vulnerable in the health-care industry, often left with no strategic options but to increase contributions to survive the next year.”

He says demand for health care is inherently insensitive to price — which is an international phenomenon — meaning that price hikes are a poor deterrent for demand as physicians are significant drivers of health-care demand.

“Excessive demand, especially when driven by health-care providers, fuels medical inflation and hence the CPIX, which is not good for the general economy and the medical-schemes sector in particular.

“With the unfavourable conditions that schemes operate in, no market forces will ever balance the price of health care to a fair and acceptable point.

“The industry has entered a vicious cycle of upwardly spiralling health-care costs. It is a pity we had to be threatened by the prospect of further regulation before we can come to our senses as participants in the industry.”

Recent Articles

Featured Rating agencies may come knocking

It is only the middle of February, but the rand has already made two big moves. The first was the rand moving from R14.60 to R 13.20 at the beginning of the year, as emerging markets (EM) became fashionable again. The second was where the rand gave away nearly 90 cents in 2 weeks as the EM rally ran out of steam, and local events started to hit the headlines.

Read more

The cost of sending money home to neighbouring countries

Transferring money home within the Southern African Development Community (SADC) provides vital financial support for many households in neighbouring countries.

Read more

Student bank accounts: Which come out on top?

Being a student signals budgeting and not having a lot of money at your disposal. This means streamlining expenses such as your grocery costs and entertainment budget. But what if your bank account is in fact costing you more than you can afford?

Read more

Can you afford an ambulance in South Africa?

When a loved one is straddling the line between life and death, you won’t hesitate to call an ambulance. This week, Justmoney found out how much an ambulance ride costs in South Africa, whether you can refuse to get into an ambulance, and who pays the bill if you’re unconscious. 

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

President Hotel Easter Special

Price: From R1,500
When: 15 March to 30 April
Where: Cape Town

Kulula-Preskil Island Resort Special

Price: R16,999
When: 11 May -14 September
Where: Mauritius

A Touch Of Madness Tuck In Tuesday Special

Price: R70
When: Tuesdays
Where: Cape Town