Private healthcare in South Africa faces government invervention

 ·14 Mar 2016

Health Minister Dr Aaron Motsoaledi says the cost of private health care in South Africa needs to be regulated to improve access for the majority of South Africans.

The Minister said this when he made a submission to the Competition Commission’s Healthcare Market Inquiry in Cape Town on Friday.

The Minister is one of several stakeholders who has been consistent in expressing concern on high private health care costs.

“The solution … is [to build] a single fund to ensure access to good quality, affordable health care for the entire population, not for a select group of people. Such a system should be dictated to by the health needs of the population, not by uncontrolled commercialisation.

“Also, as mentioned in Chapter 6 of the White Paper [on NHI], we need to massively reorganise the health care system, both public and private. But the heartbeat of the system must be primary health care. That means it must be based on the promotion of health and the prevention of diseases,” said Minister Motsoaledi.

He said many developed countries are regulating health care costs.

“We need to move towards a fairer, more efficient health system for all South Africans, not sections of South Africa, based on the values of justice, fairness and social solidarity.”

The Minister made his presentation after other hospital groups, including Netcare, made their submissions earlier in the day.

While hospital groups called for regulation to be the last resort and opted for a public-private partnership to be explored, Motsoaledi said such a partnership, which is being done in Lesotho, was affecting the Basotho Kingdom’s financial resources.

“Intervention in a market through regulation is justified when the absence of regulation would result in the market failing to achieve an efficient allocation of commodities. Additionally, where the market fails to achieve outcomes in line with social justice, interventions may be justified.”

The Minister said Section 27 of the Constitution places an obligation on him to implement measures that would achieve the progressive realisation of accessing health care.

Supply-side regulation would include regulation of prices and reimbursement mechanisms, including alternative reimbursement mechanisms, the Minister said.

He said in the absence of regulation, and due to the saturation of the sector in the late 90s, the costs of health care in South Africa have been surging over the years.

The Minister said a lot of money paid to the private health care sector was mostly used for administrative purposes and brokers. According to the Medical Scheme Expenditure of 2010, of the R84.7 billion that was spent on health, R30.8 billion was spent in private hospitals. R11.6 billion went to non-health care services like administration and brokers, while actual health practitioners received less.

Dr Anban Pillay, the Deputy Director General for Regulation and Compliance in the Department of Health, said three of the largest hospital groups in the country are listed on the stock exchange.

He said companies on the stock exchange must consistently maximise profits in line with investor expectation, which he said is “often in conflict with the ethical responsibility of service delivery in health care, where the health of patients is primary irrespective of their ability to pay”.

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