Medical schemes respond to 'anti-competitive' findings of private healthcare inquiry

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Fixing South Africa's private healthcare system will require the introduction of more regulation, according to Dr Guni Goolab, principal officer of the Government Employees Medical Scheme (GEMS).

Goolab spoke to Fin24 by phone on Friday, in the wake of the release Thursday of the Competition Commission’s Health Market Inquiry provisional report.

The inquiry, which started in January 2014, was set up to investigate rising costs in South Africa's private healthcare sector.

It's provisional report concluded that private healthcare was characterised by ‘disempowered and uninformed’ consumers, confusing medical aid schemes, and a lack of competition.

Goolab said these issues could not simply be addressed by competition. "To change the healthcare sector, you need regulation. Competition is but a small part of the issues to be addressed in healthcare," he said.

Michelle David, a director at law firm Norton Rose Fulbright, commended the report for being "consumer facing", saying it left none of the major industry players untouched. She said the findings reflected government’s view that consumers were spending far too much on private care.

In the provisional report, the commission highlighted the complexity of medical aid schemes for private healthcare, saying this made it difficult for consumers to understand or compare schemes.

"With approximately 270 plans on offer, consumers cannot compare these, nor can they choose schemes and plan options on the basis of value-for-money," the report read.

The report's authors noted consistently rising medical scheme premiums and increasing out of pocket payments, while medical aid schemes were decreasing the range and depth of services offered.

Among its recommendations was to have the structure of schemes changed to increase transparency and comparability, and the establishment of a state supply-side regulator.

The commission also noted a lack of competition in the medical aid market, saying it was too concentrated. 

Discovery Health Medical Scheme comprises 55% of the open scheme market. The other dominant scheme, which is the largest restricted scheme, is GEMS.

Medical aid schemes respond

Discovery Health’s CEO, Dr Jonathan Broomberg said in a statement on Friday that the group's profitability was a result of its competitive advantage, not a market advantage. 

"Our growth has been totally organic," he said in the statement. He argued that the group's profitability was not caused by charging higher prices than competitors, but "continuous innovation and greater operational efficiency".

Discovery intends to provide a comprehensive response to the provisional findings before the September 7, 2018 deadline. 

Gerhard van Emmenis, principal officer of Bonitas Medical Fund, said the findings would help improve service offerings of medical schemes.  

"Insofar as the report pertains to medical schemes, we are quite pleased with the recommendations made… We are also in full support of the recommendations around transparency and simplification of things for consumers and to improve ease of access to information for them,” said Van Emmenis.

Patrick Masobe, chief executive officer of Agility Health, which provides administration services to medical schemes, said the complexity of healthcare scheme was not the only explanation for high healthcare costs. 

"There are a number of systemic issues that cause these exploding costs, including utilisation of services by a progressively ageing membership, mismatches on the supply side, and lack of regulation of pricing.

"It is not helpful to place the blame on providers alone," said Masobe.

He argued that legislation such as the Medical Schemes Amendment Bill should take the market in a direction of greater transparency, as opposed to centralising control in a single institution. 

"Core to this issue of transparency is to put consumer protection at the centre of any regulatory changes," he said.

Masobe said the private sector in its entirety was not anti-competitive.

"The issue for me is what is the root cause of lack of competition in specific subsets of the market, and how do we solve it?” he said.

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