South Africans paying too much for private healthcare

On 6 January 2014, the Competition Commission began a market inquiry and investigation into South Africa’s private health sector.

The Competition Commission, in its findings on a four-year investigation into South Africa’s private healthcare sector, etitled the Healthcare Market Inquiry.

The Healthcare Market Inquiry found that new interventions are needed because the current system is not competitive, medical aids are making huge profits and consumers are not getting fair value for their money.

READ:Healthcare Funders Board say private healthcare report exposes escalating costs

To unpack the inquiry, Eusebius McKaiser spoke to Professor of Public Health at the University of the Witwatersrand Sharon Fonn.

Fonn says the Competition Commission's point of departure is to ascertain the experience of the consumer and whether the market provides the consumer with something that is the product of a competitive market.

And then in a perfectly working competitive market, you are going to have competition between providers and ultimately driving down the price.

Professor Sharon Fonn, Professor of Public Health at the University of the Witwatersrand

So it is important to understand that a Health Market Inquiry is not interested in finding the boogyman and shooting him down, the Health Market Inquiry mechanism is there to try to say does the market work efficiently?

Professor Sharon Fonn, Professor of Public Health at the University of the Witwatersrand

And to make it digestible, we basically tried to come up with four areas that we looked at that we think are very important.

Professor Sharon Fonn, Professor of Public Health at the University of the Witwatersrand

She says on the one side, they talk about the funder market and she says there is an assumption that it is medical schemes.

Also read:Consumers disadvantaged in private healthcare - Competition Comm

The funder market is...to give our money to a medical scheme. The medical schemes are not for profit and they pull our money. So if you get sick on a Monday you can use my money and if I am sick on Friday, I can use your money. That kind of system.

Professor Sharon Fonn, Professor of Public Health at the University of the Witwatersrand

And the rich cross-subsidise the poor and the sick are cross-subsidised by the well. And over time that evens out. So that we all put in and hopefully we all get out.

Professor Sharon Fonn, Professor of Public Health at the University of the Witwatersrand

She adds that schemes sometimes self-administer, but often farm out the administration to administrators and she says there are also managed care organisations who will organise providers.

She says that fundamentally they think that the market could be restructured.

By forcing all schemes to produce one comparable package, a basic benefits package. And then you know it doesn't matter who gives this to me, I am getting the same thing. What I can compare between them is how much it costs me and how efficient and effective they are.

Professor Sharon Fonn, Professor of Public Health at the University of the Witwatersrand

McKaiser also spoke to CEO of Discovery Health Jonathan Broomberg who says he has read the report in detail.

I have to tell you in a general manager at Discovery, we are highly impressed. I think that this is a huge amount of work that has been done.

Jonathan Broomberg, CEO of Discovery Health

I think the HMI panel here has created for the first time in 20 years a solid evidence base to really debate health policy.

Jonathan Broomberg, CEO of Discovery Health

Listen below to hear how pundits unpacked the Healthcare Inquiry...


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