Health-market inquiry blames private hospitals for ‘driving up costs’

JOHANNESBURG – The Competition Commission’s health-market inquiry has put the spotlight on the role that private hospitals play in driving up healthcare costs, saying they are responsible for a significant portion of the inflation increases in expenditure reported by medical schemes.

The inquiry was established as a means to investigate the dynamics at play in the private healthcare market as well as to determine whether there are barriers to effective competition and patient access.

Players in the industry have consistently argued that private healthcare expenditure costs have risen largely as a result of increased utilisation, rather than price hikes.

On Friday, the inquiry published six diagnostic reports on its website, including an extensive analysis of the most comprehensive data set yet compiled for the medical scheme industry.

Medical scheme expenditure rose by an average of 9.24% a year between 2010 and 2014, about 4 percentage points more than consumer price inflation, which was on average 5.6% per years for the period under review.

“To put this in context, 2% of spending amounts to about R3 billion in 2014 terms- R330 per beneficiary per annum or a total of R1 650 per beneficiary over the five year period,” the inquiry said in its report on claims data.

 

“Little of the unexplained cost increase appears to be for out-of-hospital care. In-hospital care is a far more important driver,” it said.

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