Tired of being fleeced, medical aid starts a price war with hospitals

Life Hilton Private Hospital .
Life Hilton Private Hospital .

By refusing to accept a hospital group’s high fees, a medical aid managed to not only get a 30% discount, but also ensured that its clients don’t have to pay an excess when they have to go to one of these hospitals.

The price war that Bonitas, the country’s third largest medical aid, declared on the private hospitals that make up the Life Healthcare group could spread to the entire industry, predicts Gerhard van Emmenis, the fund’s acting principal officer.

According to Bonitas’ fund rules Bonita patients had to pay a 30% excess fee if they made use of one of these 14 hospitals. This included big, popular hospitals such as Rosepark in Bloemfontein, Flora Clinic in the West Rand and Die Wilgers in Pretoria. So the fund excluded 14 of Life Healthcare’s biggest and most popular hospitals from its network for more than 750 000 of its insured lives.

And now, Matthew Prior, head of funder relations and health policy, confirmed that Life has waived the 30% excess payment for patients. In effect, it means that Life now gives Bonitas a 30% discount, because Bonitas will only pay the approved bill, with the 30% excess that the patient is supposed to pay subtracted.

“That’s done to enure that our patients have access to Life Healthcare hospitals without the monetary burden of an excess payment. There is no dispute between Life Healthcare and Bonitas,” said Prior.

Van Emmenis has also declared a victory: “We’re very glad that our members can choose what hospital they want to be treated in and the eventual tariff that we will pay is now even better than that which we negotiated with Life. I think every other medical aid is now standing in front of Life’s door and asking why they are not receiving a 30% discount.”

But Bonitas’ victory has not been cheap or without incident.

City Press’s sister publication, Rapport, has been overwhelmed by questions from annoyed Bonitas members who do not understand the apparent about-turn. First they heard that an excess payment was applicable, then they heard it was gone and now, when they phone the call centre, they hear the hospitals are excluded according to the fund rules.

The call centre does not explain to members that the 30% “discount” comes from Life and that enquiries therefore need to be forwarded to them.

Van Emmenis concedes that communication with members has been poor and said they are working with the administrator, Medscheme, to improve on this front.

On an annual basis, medical schemes negotiate tariff increases with the three big hospital groups and the National Hospital Network, a group of independent private hospitals.

The percentage increase that every fund manages to negotiate is a closely kept secret.

Van Emmenis said the gap between what the biggest insurers – Discovery and the Government Employees Medical Scheme (Gems) – have managed to negotiate and what the rest of the funds have to pay has grown much larger over the years.

A turning point for the Bonitas strategy was the evidence given in the Competition Commission’s market research into the medical industry.

“After the funds, one after the other, said that we are at the mercy of the hospitals and that we are price takers, the answer was that we should stop being cry babies and do something about it. Well, now we are.”

Last year Bonitas informed Life, Mediclinic and Netcare that they were responsible for an additional 100 000 insured lives for 2017 as a result of the mega-amalgamation with Liberty in October 2016. Van Emmenis said they warned all three hospital groups that the one who gave Bonitas the worst deal would have hospitals excluded. That turned out to be Life.

According to Van Emmenis, they used the R360 million in expenditure at the 14 Life hospitals as punching power and it worked.

“Next in our crosshairs is the National Hospital Network. This year we are going to fight their indemnity [from the Competition Commission] to negotiate as a unit. It’s absurd. Myself and Gems can’t team up and say we are now an association that is negotiating with hospitals.”

Scholtz is the news editor of Rapport. He is a member appointed trustee of Naspers Medical Aid which has an administration contract with a Discovery company.

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