The inquiry, conducted between 2015 and 2019, found that an unregulated supply side, lack of transparency in pricing, and exclusive contracts have contributed to rising healthcare costs and limited competition.

Deputy Director-General for National Health Insurance (NHI) at the Department of Health, Dr Nicholas Crisp, stated that private healthcare pricing has long been a concern. “Way back in the early 2000s, there was a feeling that the way in which prices were being set in the private sector was collusive and anti-competitive,” he said. “That led to a vacuum, which has now finally been addressed.”

Crisp explained that the sector's pricing structure is complex, involving multiple players such as hospitals, general practitioners, and optometrists. The new draft regulations, published by the Minister of Trade, Industry and Competition, aim to establish a more competitive and transparent tariff negotiation process. “This will allow for a different, non-anti-competitive way of negotiating tariffs, which will then be set for the private sector,” he noted.

Private healthcare costs in South Africa remain exorbitant, impacting affordability. Crisp acknowledged that without regulation, healthcare providers have been able to set their own prices. “Healthcare is extremely expensive, especially in the private sector. Practitioners and other providers have been allowed to charge whatever they like, and that has made it unaffordable for many,” he said. While medical aid schemes cover some costs, many patients still face substantial out-of-pocket expenses or require additional gap cover.

The Competition Commission recommended a multi-faceted approach to improving competition in the sector. However, Crisp admitted that simultaneous implementation of all recommendations has proven difficult. “The nature of public service makes it challenging to implement everything at once,” he explained.

One of the key measures is strengthening the Department of Health’s role in central planning, including licensing of health establishments. While the HMI initially recommended a separate public entity to oversee this, financial constraints have made that unfeasible. Instead, the department has refocused its efforts on these responsibilities.

Additionally, there is an emphasis on improving data management in the health sector. “The digital infrastructure is now in place, and with the National Health Insurance Act in effect, we are empowered to fully implement this system,” Crisp said.

Another crucial shift is the move away from the fee-for-service model, which allows providers to charge for each individual procedure, driving up costs. “The HMI recommended alternative reimbursement mechanisms, and these are now provided for in the National Health Insurance Act,” Crisp explained. The aim is to transition towards a capitation model, where healthcare providers receive a set fee per patient, rather than billing per service.

Further measures include reforming the practice number system, developing a master health facility list, and establishing a provider registry. Additionally, work is underway to create a Health Technology Assessment Agency, which will guide the evaluation of medical technologies and treatments. The government is also working towards standardising a benefits package to ensure primary healthcare is accessible without additional fees.

Despite these efforts, Crisp made it clear that no legal action would be taken against private healthcare providers who previously engaged in anti-competitive practices. “None of it has been illegal up till now. It’s just that the system was unregulated, leading to rising costs,” he stated. “The Competition Commission has stepped in, and we are working closely with them and the Council for Medical Schemes to implement solutions without requiring new legislation.”

--ChannelAfrica--