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FINANCIAL MAIL Lack of commitment to regulatory reform and a constrained economic environment has negatively affected the sector’s growth The consumers of private hospital services are primarily medical scheme beneficiaries. It therefore stands to reason that trends in the medical scheme industry have a direct impact on the private hospital market. The medical scheme market consists of both restricted membership and open medical schemes. Two medical schemes constitute about 70% of the open scheme market, with the dominant one being Discovery Health, which accounts for 55% of the market. The medical scheme administration market is similarly concentrated with two administrators, Discovery Health and Medscheme, accounting for more than 75% of the market. As medical schemes face criticism for rapidly increasing costs, both schemes and administrators say costs are being negatively affected by incomplete regulatory initiatives. Policy uncertainty around the possible impact of the Medical Schemes Amendment Bill, which has been put on hold, has been cited as one of the reasons for high costs of medical schemes. Medical schemes have had limited growth in membership numbers in the past decade. As a result says Antoine van Buuren, Group CEO of Afrocentric Health, there is stiff competition for individuals who can afford medical cover. Low membership growth is worsened by insufficient options for low-income earners. The solution, he says, is to find ways to expand access by developing products for entry-level markets. The increased costs of medical scheme membership requires schemes to ensure that member contributions in a financially con strained economic environment are balanced and that they can evidence value for money, says Michelle David, a director at Norton Rose Fulbright. Another challenge facing schemes is their inability to deal decisively with fraudulent claims due to the legislation relevant to claims processing. She says an estimated 10%-15% of health-care claims are potentially fraudulent. The fact that private health care covers less than 20% of the population is not sustainable in the long term, she says, particularly considering that the private health care sector has experienced stagnant growth over the past few years. But for access to be improved, it needs to be more affordable. Discovery Health CEO Jonathan Broomberg says affordability is due less to the price of services but rather to inefficiencies in the delivery of care, due largely to an intransigent regulatory structure. "Regulation for prescribed minimum benefits (PMBs) sets an expensive minimum level of cover and makes it difficult for schemes and their administrators to keep claims inflation rates from increasing at well above the consumer price index each year. This is worsened by a highly fragmented delivery system, paid largely on a fee for service basis," says Broomberg, adding that this leads to overuse and wasted services. The result, he says, is that medical scheme cover is becoming increasingly unaffordable, leading to the young and healthy staying out of cover and members down grading their plans to buy lower cost plans. These trends aggravate the claims inflation pressure as, on average, schemes receive lower premiums per member for the same or higher claims levels. SA Medical Association chair Angelique Coetzee, however, says managed health care at primary level contracts with schemes on a fixed fee. This, she says, prevents general practitioners from charging any other fee for PMBs. "It's time to look at whether managed health care in its current form adds any real value on outcomes at a primary level, except for keeping fees low for medical schemes: she says. Hospital Association of SA's Dumisani Bomela says: "SA has failed to implement the necessary legislative and regulatory amendments, including medical scheme reforms, which has resulted in a fragmented and inefficient private health-care system." Schemes have been left with higher exposure to the increases in high cost care and have limited scope to cover this exposure.
Created at 2019/03/25 02:38 PM by Mediclinic
Last modified at 2019/03/25 02:38 PM by Mediclinic