HASA responds to CMS annual report

Comments about private hospitals made by the Council for Medical Schemes (CMS) in its 2010/2011 annual report are inappropriate and arguably intent on being divisive says the Hospital Association of South Africa (HASA).

Inaccurate and unqualified statements contained in the CMS report regarding the reasons behind an increase in medical scheme hospital expenditure must be clarified,” says Dr Nkaki Matlala, HASA Chairman.  “Yet again, the CMS appears to be confusing the matter of increased hospital expenditure with price.”

The CMS’ 2010/2011 report alleges that medical scheme expenditure on private hospitals during that period accounted for R30.7billion, representative of a 10% increase from 2009. According to the CMS, this increase “…is very high…” and the “only explanation” that can be given is the increase in private hospital tariffs, which, according to the Council, requires urgent regulation.  

“The CMS’ call for the regulation of private hospital fees is misplaced. On the one hand, the CMS states that the medical scheme population is ageing, presenting with a greater burden of disease and increasing length of stay, yet it fails to make the obvious link between the beneficiary profile and consequent demand for more hospitalisation and intensive medical care – all of which costs much more and results in a far higher spend on private hospitalisation which is not price driven,” says Matlala.

Furthermore, publishing a 78% change in spend on hospitals since 2000 but not explainingthat this is equivalent to 7.8% per annum is misleading. In fact, the expenditure on hospital services by medical scheme members has increased by7.5% per beneficiary per annum over 10 years.

This compares to inflation in that same period of 6.8% (using CPIX to 2009). For the year under review [2010], the increase in hospital expenditure per beneficiary - which is adjusted for the increase in utilisation due to the growth in medical scheme members [3.1%] - amounted to only 6.2%. “When comparing these increases to inflation in administered prices or wage inflation, administered prices increased by 10,24% (1) and wages by 8.2% (1),” says Matlala.

It is also important to note that the medical schemes industry had amassed some R32.6 billion in reserves, earning an amount of R3.6 billion in investment and other income in 2010.

This is the 11th consecutive year that the medical schemes industry has been able to bank significant nett surpluses. “By all accounts, the schemes are extremely stable and experiencing excellent growth in both membership and reserves,” says Matlala.

(Press release, HASA, September 2011)

[1]Source: Stanlib

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