Commission to probe private hospitals

The Competition Commission has finalised terms of reference of an enquiry into the South African private healthcare market in what is likely to send shock waves across the massive industry.

The Commission announced today that it has published in the government gazette, the terms of reference for the market inquiry set to commence on the 6th of January 2014 and for completion on the 30th of November 2015.

The development follows growing level of protest noise about pricing in the private healthcare industry. Protesters have included the health minister Aaron Motsoaledi, medical aid insurance industry and civil society groups. Key to the concerns are suspicions that dominant players, Mediclinic, Netcare and Life Healthcare, may be abusing their positions.

The commission said “the inquiry will probe the private healthcare sector holistically to determine the factors that restrict, prevent or distort competition and underlie increases in private healthcare prices and expenditure in South Africa.”

The enquiry is to be overseen by what promises to be a high powered panel of experts and stakeholders. The Commission said it is currently finalising the appointment of a panel comprising experts that will preside over the hearings, review submissions, examine evidence and draft the inquiry report and recommendations. “The inquiry will gather evidence and insights into private healthcare through public hearings, reviews of secondary material, information requests, consultations and summons, as required.”

All interested and affected parties are also welcome to submit information relevant to the inquiry in accordance with the guidelines for participation to be determined by the Commission.”

Deputy Commissioner Trudi Makhaya said “We look forward to a robust, evidence-based inquiry that will illuminate the competitive dynamics of private healthcare markets to form the basis for sound recommendations”.

Protest from Motsoaledi about high prices forms part of government’s mission to reform the country’s healthcare system. Government is currently piloting the National Health Insurance (NHI) initiative which aims to universalise healthcare. Motsoaledi has stated that the NHI will not work if the private healthcare industry remains as he alleges, an island with exorbitant prices.

The idea is to make the private healthcare sector accessible to many more people while fixing the ailing public sector. South Africa is not alone in this possible shake up of the healthcare industry. In a report published recently, consulting firm PwC noted that the global healthcare industry is grappling with significant socioeconomic, structural and clinical changes which have cast in a period of profound disruption.

A catalyst, said the PwC report, is mainly the rebalancing of private and public sectors in the funding of healthcare. Commenting about the report Etienne Dreyer, an Associate Director within PwC’s Advisory Practice South Africa said “As the healthcare industry adapts to new demands, businesses and governments will have to change the way they deliver and pay for healthcare.”

The dialogue between the public and private sectors is changing, as the global population ages and the prevalence of chronic disease rises in mature and growth countries alike. Both the public and private sectors realise they can’t address these challenges alone.”

With the Commission launching an enquiry all eyes will be on the possible outcomes. The questions are:

What will the commission find? A collusion? Unfair pricing?

Should it find an offense: What will the commission recommend:

A break up of the big industry players? A penalty fee?

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