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Politicians need to drop hostility to help fix private healthcare

Tamar Kahn: Business Day, 2 October 2019

THE Competition Commission’s Health Market Inquiry, which released its final report on Monday, has told us what many patients who use the private sector already know: prices are rising faster than consumer inflation, expensive tests and investigations are offered at the drop of a hat, and there is no way of finding out ahead of time whether a doctor or hospital provides care that is better or worse than their peers. Patients are buying blind. The five-year inquiry has unsurprisingly concluded that competition in the private healthcare market has largely failed. It spells out in great detail what ails the sector. It has recommended a set of far-reaching and interlinked reforms to fix the problems it identifies, which include interventions on the supply and demand side. Its most significant proposal is the establishment of a new independent regulatory body, the supply-side regulator for health, at arm’s length from the Department of Health. The regulator will have the following functions:

  • Planning and licensing facilities, including hospitals;
  • Pricing health services, which includes overseeing multilateral tariff negotiations between health-care providers and medical schemes, with independent arbitration should talks fail;
  • Monitoring quality; and,
  • Conducting economic value assessments.

However, the regulator will not oversee negotiations between private hospitals and medical schemes, which now negotiate bilaterally. The regulator has a proposed governance structure that stands in sharp contrast to current health regulators, a sign of the inquiry’s effort to protect it from being captured by political appointments. Unlike the proposed National Health Insurance (NHI) fund, which has been criticised for giving
the Health Minister the power to determine every appointment, from board member to CEO, the regulator board is to be appointed by the minister following a transparent public nomination process, and it will have the autonomy to appoint its chair, the CEO and all other executives. On the demand side, the inquiry is proposing that all medical schemes be obliged to offer the same, standardised benefit package with a riskadjustment
mechanism. This will make it easier for consumers to shop around and will force schemes to compete on efficiency rather than on their capacity to attract people who are young and healthy (and therefore at lower risk of poor health, and cheaper to cover). Schemes will be allowed to offer additional coverage, which can be risk-rated. The inquiry says many of the measures it is recommending could have been done long ago by the Department of Health, using the powers it has under the National Health Act of 2003. It also notes that the department has failed to hold regulators such as the Council for Medical Schemes and the Health Professions Council of SA accountable for their failings. Under former Health Minister Aaron Motsoaledi, who was at best indifferent and at worst hostile to the private sector, the department largely neglected its stewardship of the private sector. Though Motsoaledi asked the Competition Commission to initiate the inquiry in 2013, the department was conspicuous in its silence after the publication of its provisional findings in July 2018 and did not make a
submission – a point emphasised by former chief justice Sandile Ngcobo when he released the final report. Ngcobo headed the inquiry, which has made the most rigorous, evidence-based assessment to date of the sector. It has gone to great lengths to show it has considered inputs of stakeholders and the criticisms made against it during the process of information-gathering, and after the release of its preliminary findings in July 2018.

Efficient and well-regulated private healthcare sector is vital 

Healthcare is arguably so high on the political agenda that neither Health Minister Zweli Mkhize nor the Presidency can afford to ignore the health market inquiry report, but given Motsoaledi’s historic antipathy towards the private sector, and trade union federation Cosatu’s outright hostility, the inquiry has had to confront the risk that its work could be brushed aside. Thus, throughout the report, and repeatedly during its release, the inquiry has emphasised that an efficient and well-regulated private healthcare sector is vital for NHI, the government’s plan for universal health coverage. Under NHI the state plans to purchase services from accredited public and private sector providers. If it is to do so effectively and get value for money, it needs a private sector in which there is vigorous competition to prevent spiralling prices, and clear measures of quality and outcomes, the inquiry says. The inquiry has effectively given the Department of Health a blueprint for fixing the private healthcare sector. The big question now is
whether Mkhize has the political will to implement the proposals, or whether he will quietly leave the report to gather dust.

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