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MED BRIEF AFRICA The private healthcare market, as it is running currently, is not sustainable in the long term and anyone who doesn’t admit to that is kidding themselves. This is according to Prof Sharon Fonn, one of the Panel members of the Health Market Inquiry (HMI) into the private healthcare sector and professor at the School of Public Health at Wits. Reflecting on aspects of the HMI’s findings and recommendations in its Provisional Report at the HASA conference in Johannesburg, Prof Fonn said in its analysis of the original submissions and public presentations, the inquiry found that the private healthcare market was “replete with failures of every possible kind”. “It is incredibly costly, and the costs are increasing, affordability is a real factor, and the stagnancy in the growth of people with insurance because it has become too expensive, is worrying. The short-termism in the market is unbelievable with people only focusing on what they can get now or in the next five years with some people even admitting that they are going to milk this cow until it drops,” Prof Fonn noted. Specifically focusing on the hospital market, she emphasised the HMI’s finding of the concentration of three main hospital groups, Life Healthcare, Netcare and Mediclinic, saying it has led to a situation where there is not much competition on price but fierce competition for doctors to have rooms and operate from their facilities. This, Prof Fonn said, could lead to the misallocation of scarce resource and driving up costs. Referring to the HMI’s findings around supply-induced demand, Prof Fonn stressed that the inquiry found a positive correlation between the risk of admission, and the number of beds and doctors in geographies with a high concentration of hospitals. This was found to be particularly true for ICU admissions where a significant relationship was shown between the number of admissions and the number of available beds with the rate of these admissions found to be considerably higher than that of the 17 OECD countries they were compared against. “This suggests that utilisation is driven in part by the supply of doctors and facilities rather than patient needs,” Prof Fonn said, adding that if ICU admission rates could be halved in South Africa, they will still be on par with those in most of the comparable countries, leading to a saving of up to almost R3bn per year. “The current rate of ICU admissions in private hospitals suggests that patients admitted to these facilities are either incredibly sick or something is done to them in the hospital that makes them sick,” Prof Fonn said. She noted that while supply-induced demand occurs in healthcare markets everywhere, it is much bigger in South Africa, which could be in part blamed on funders allowing for fee-for-service remuneration that incentivises providers to do more in order to charge more. She urged providers to give their input on how to deal with hospital concentration, conceding that divestiture by the three dominant hospital groups as recommended in the HMI report is “only the end of the road” and need to be carefully considered to prevent unintended consequences. According to the HMI findings, there is also a need for the competition authorities to review their processes and decisions that have played a role in causing the concentration. “We think they are looking too narrowly, that they define the market incorrectly and that they don’t give proper attention to issues such as creeping mergers,” Prof Fonn said, calling for the improvement of routine validated data on issues such as the real number of available beds, where they are and bed occupancy rates. Concluding her presentation Prof Fonn assured stakeholders that the HMI was not set up to target anybody in the industry but to look at how accessibility, affordability and healthcare quality can be improved to ensure the long-term survival of the private healthcare sector. “What we have realized is that the market is in trouble and if we don’t do something very significantly to change it, it is in danger of digging its own grave,” she warned.
Created at 2018/10/24 12:01 PM by Mediclinic
Last modified at 2018/10/24 12:01 PM by Mediclinic