The bitter pill of medical costs in SA

2014-02-16 10:00

R8 800 for an MRI scan, R304 000 for a heart bypass, R3 800 for an abdominal CT scan. Our medical procedures are some of the most costly in the world

South Africans on medical aid pay more than many First World countries for hi-tech medical procedures.

A magnetic resonance imaging (MRI) scan done in the South African private health sector was the most expensive out of nine countries surveyed by the International Federation of Health Plans. On average, such a scan costs almost R8 800 – R1 200 more than Switzerland and double the average cost in Chile.

The surgery compared the average cost of specific surgical procedures, medicines and doctor’s visits in 2012 internationally.

It showed that the South African private health sector charged the second most out of 10 countries for a heart bypass, at about R304 000, compared with R145 000 in Switzerland and R102 000 in Chile.

An abdominal CT scan in South Africa was the most expensive out of 10 countries. At R3 800 on average, it was four and a half times as much as the cheapest country, Argentina, twice the price Chileans pay, R1?000 more than in New Zealand and almost R300 more expensive than in Switzerland.

The federation represents health insurers in 25 countries and compared five different scans, eight different surgical procedures, visits to six different types of specialists and the prices of six medicines in its member countries.

It took the average cost of such procedures in 2012, converted them to dollars and made no adjustments to reflect differences between different countries’ purchasing power.

The numbers indicate that South Africans pay relatively little for a hospital stay, as well as for fairly routine procedures such as a normal delivery and appendectomy, but they pay among the most in the world for complex procedures requiring hi-tech ­equipment, such as heart bypass surgery, hip replacements and angioplasty.

Out of eight countries surveyed, South Africa was the third cheapest when it came to hospital fees, at R5?460 per day, and the second cheapest out of 10 countries for a normal birth, at R17 000, compared with R21 600 in the UK, R19 500 in New Zealand and R24 500 in Chile.

However, City Press asked economist Mike Schüssler to calculate how the South African prices compared with other countries when the dollar prices were adjusted to reflect ­differences in spending power in the different countries.

His calculations showed that even those procedures shown to be relatively cheap worked out more expensive compared with other countries (see graphic). Daily hospital fees were the second most expensive out of eight countries and a normal delivery the third most expensive out of 10 countries.

Mariné Erasmus, a health economist with consultancy Econex, says such comparisons don’t tell the whole story, as different countries levy different taxes on medical equipment and medical procedures aren’t performed the same way in all countries.

“In one country a normal delivery could be done at a patient’s home, with only a midwife present, and in another country the same procedures would happen in a private hospital room with more than one person assisting.”

She added that different countries paid doctors differently, which could affect the price of a procedure. In South Africa doctors are paid a fee per service, while in other countries doctors were paid for a basket of services. A weakening currency could also make procedures which relied on imported technology more expensive.

Dr Ali Hamdulay, general manager of medical scheme administrator Metropolitan Health’s health provider and policy unit, said the use of technology such as MRI scanners was ­expensive because the practices that owned the machines and did the tests wanted to recoup their investment costs, and the equipment was expensive to purchase in the first place because manufacturers had to recoup their research and development costs.

But he said the use of technology was not the only factor contributing to high prices in the private healthcare sector.

He added that local hospital groups could probably charge more because private hospital ownership was consolidated into three companies, and that the South African healthcare system tended to rather treat serious medical conditions once they occur rather than putting the emphasis on preventing such conditions, which is usually much cheaper.

Tom Sackville of the International Federation of Health Plans said it made a conscious decision not to adjust the dollar prices in its survey to reflect differences in spending power from country to country, because such adjustments left the formulas used open to criticism by other economists.

Last year, the department of health’s deputy director-general for regulation and ­compliance was slated by private hospital groups Netcare and Mediclinic for doing just that with comparative prices from another study.

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