The Competition Commission of South Africa has published the provisional findings of its market inquiry into the country’s private healthcare sector.
As part of the inquiry, the Commission included a number of ‘recommendations’ aimed at addressing the competition concerns identified, but also at introducing changes that will promote competition to the benefit of consumers and the long-term sustainability of the market.
Interested stakeholders have now been requested to provide submissions in respect of the proposed recommendations, focusing on the stakeholder’s view of the recommendations, the proposed manner of implementation, the proposed entity responsible for implementing the recommendation, and the proposed timelines.
BusinessTech summarised 12 of the biggest proposed changes below.
Overall, the inquiry found that competition in the funders market is neither as vigorous nor as effective as it could, or should, be. This is true of both administration services and medical schemes, it said.
One large player (Discovery Health in administration and DHMS in open schemes) leads the market, especially in terms of growth, innovation and profitability. Other players largely follow its lead.
As a result, there is limited competition between schemes on factors that increase the value of medical scheme cover (in terms of both cost and quality) and limited evidence of efforts to design and implement alternative reimbursement models to contain expenditure and encourage value-based contracting.
To remedy this, its recommendations are:
- To strengthen governance to ensure that schemes place greater pressure on administrators to deliver value to members, that members place greater pressure on schemes to improve value for money, and introduce measures that enable the regulator (the CMS) to exercise more effective oversight over funders.
- Promoting alternative models of care that lower healthcare expenditure.
- The introduction of a stand-alone, standardised, obligatory ‘base’ benefit package that all schemes must offer. The package must include cover for catastrophic expenditure, i.e. the current Prescribed Minimum Benefits (including making provision for treating PMBs out of hospital) and; additionally, include, primary and preventative care. Supplementary cover can be provided for care not included in the base package.
- That the remuneration packages of employees of schemes, particularly that of trustees and principal officers, be linked more explicitly to the performance of schemes.
- That the broker system is an active opt-in system so that the interests of brokers and scheme members are more closely aligned.
- The mandated cover for Prescribed Minimum Benefits must be revised to make provision for out-of-hospital and cost-effective care for PMBs.
- The PMB package must also be expanded to include primary and preventative care. This revised PMB package should make hospital plans obsolete and will be replaced by the obligatory standard package.
Recommendations on cost of healthcare providers
The provider side of private healthcare markets suffers from several structural, behavioural and regulatory imperfections that harm competition and undermine access to healthcare, the Commission said.
“The highly concentrated structure of the facilities market. At a national level, the three largest hospital groups have a market share of approximately 90% based on hospital admissions and 83% based on registered beds,” it said.
“Also, in the majority of local markets, concentration levels are alarmingly high according to several recognised metrics commonly used to screen for concentrated markets. One of the challenges of this, from a competition perspective, is that it affords the three biggest hospital groups ‘must-have’ status in bargaining for contracts with funders which reduces funders’ countervailing power.”
To remedy this the Commission said that changes need to be made on everything from licensing, monitoring of facilities, practicing numbering and how fees should be determined.
These recommendations include:
- Improved facility licensing – including regular monitoring, inspection, reporting, and a stricter two-stage approach when applying for a licence.
- Economic value assessments aimed at assessing the appropriateness of certain courses of treatment and to evaluate quality of care and value for money in the healthcare sector.
- A standard system should be developed to monitor the quality and outcomes of healthcare services. This requires the development of standard metrics that can be used to analyse the performance of a wide range of facilities and practices.
- Changes to how health service pricing is determined, including a new independent regulator which will act as a go between medical schemes, patients, and hospitals.
- A new national measurement system focused on patients – allowing patients and funders to meaningfully compare costs and quality on value for money when contracting with providers.
The full recommendations can be found below: