{"id":256763,"date":"2018-07-05T10:45:05","date_gmt":"2018-07-05T08:45:05","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=256763"},"modified":"2018-07-05T10:45:05","modified_gmt":"2018-07-05T08:45:05","slug":"discovery-netcare-and-mediclinic-are-too-dominant-in-sas-private-healthcare-market-compcom","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/256763\/discovery-netcare-and-mediclinic-are-too-dominant-in-sas-private-healthcare-market-compcom\/","title":{"rendered":"Discovery, Netcare and Mediclinic are too dominant in SA’s private healthcare market: CompCom"},"content":{"rendered":"

The Competition Commission of South Africa has published<\/a> <\/strong>the provisional findings of its market inquiry into the country’s private healthcare sector.<\/p>\n

The\u00a0Commission said it had initiated the inquiry because it has reason to believe that there are features of the sector that prevent, distort or restrict competition.<\/p>\n

“Overall, the market is characterised by high and rising costs of healthcare and medical scheme cover, highly concentrated funders\u2019 and facilities\u2019 markets, disempowered and uninformed consumers, a general absence of value-based purchasing, ineffective constraints on rising volumes of care, practitioners that are subject to little regulation and failures of accountability at many levels,” the report states.<\/p>\n

It added that the market displays consistently rising medical scheme premiums accompanied by increasing out of pocket payments for the insured, almost stagnant growth in covered lives and a progressively decreasing range and depth of services covered by medical scheme options, which there are numerous – all of which are difficult to understand fully.<\/p>\n

Doctors, medical schemes, and hospitals<\/strong><\/p>\n

One of the main issues is the\u00a0the lack of accountability on the part of practitioners (doctors), the fact that they are not peer-reviewed, the inquiry found.<\/p>\n

It added that doctors are incentivised to ‘over-service’ which include increased admissions to hospitals, increased length of stay, higher levels of care, greater intensity of care or use of more expensive modalities of care than can be explained by the disease burden of the population.<\/p>\n

The inquiry also took issue with the fact that consumers are not able to compare what medical schemes have on offer.<\/p>\n

These include misleading strategies which make products appear more affordable but reduce range of benefits covered over time, and the fact that some schemes are dominant in the market.<\/p>\n

Notably, the Commission found that although there are 22 open medical schemes, the market is concentrated as two medical schemes constitute approximately 70% of total open scheme market as measured by number of beneficiaries.<\/p>\n

“There is, however, one dominant open medical scheme, Discovery Health Medical Scheme (DHMS), that comprises 55% of the open scheme market, and it continues to grow organically and through a series of amalgamations with smaller restricted schemes,” it said.<\/p>\n

“The Government Employees Medical Scheme (GEMS) is the largest restricted scheme and is second only to DHMS as measured by number of beneficiaries.<\/p>\n

It found that while there are 16 medical scheme administrators in the market, Discovery Health and Medscheme account for 76% of the market based on gross contribution income (GCI), which makes the administrator market highly concentrated as well.<\/p>\n

It added that it had observed no meaningful entry in the funders market over at least a decade, and that there were no existing players seriously challenging the dominant players.<\/p>\n

Similar dominance was found at South Africa’s private hospitals, where three hospital groups – Netcare, Mediclinic and Life – have a combined market share of 83% of the national South African private facilities market in terms of number of beds and 90% in terms of total number of admissions.<\/p>\n

“One of the most important consequences of the dominance of the three large hospital groups is that no funder can afford not to contract with any one of the three big facility groups, or to totally exclude one of these groups from any provider networks,” it said.<\/p>\n

“If the market were less concentrated, for example with 6 (still large) providers instead of the current 3 large groups, a funder would likely have the option not to contract with one of the groups, creating a completely different bargaining dynamic, to the benefit of beneficiaries.”<\/p>\n

Interventions<\/strong><\/p>\n

While a separate list of recommendations was published by the Commission, it published a list of three main interventions which it said\u00a0must be seen and implemented as a ‘package’, as\u00a0market failures may persist if a partial approach to the implementation of the recommendations is adopted.<\/p>\n

“Our recommendations aim at improving transparency, accountability and the alignment of interests of consumers and funders,” it said.<\/p>\n

“We also aim to address the absence of measures of value, in particular healthcare outcomes, failures in pooling of funds, improved management of supply induced demand and methods to address concentration in the market.”<\/p>\n

It added that its\u00a0recommendations are aligned with the national policy trajectory towards Universal Health Coverage.<\/p>\n

The three major recommendations are:<\/p>\n