DOH ADVISED TO ‘CAPSIZE’ PRIVATE HEALTHCARE BOAT

HPCSA registrar, Adv Boyce Mkhize, dropped a bombshell at last week’s health indaba by urging government to take drastic steps against the private healthcare sector in a bid to address escalating healthcare costs and to ensure affordability and transparency.

Calling on health minister, Manto Tshabalala-Msimang not to merrily ‘rock the private healthcare boat but to capsize it’, Adv Mkhize said self-regulation in the private sector has failed and that government must now take the leadership role and regulate the industry in order to create a system that is coherent and synergised and bring together all the regulatory frameworks into one basket.
 
"Health professionals, private hospitals, medical schemes, and administrators need to be regulated.  We can’t have a fragmented, regulatory system.  We need an integrated regulatory system that works for the betterment of the whole society," Adv Mkhize said.

The indaba was convened after serious issues relating to escalating costs in the private sector, including allegations of major rip-off practices in the industry, were raised at the recent conference of the Board of Healthcare Funders.

Some of the main objectives of the indaba were to identify how the private sector sets prices and to which extent this price setting was transparent; and to discuss strategies and recommendations aimed at reducing the cost of private healthcare services to patients to ensure affordability and accessibility.

With the health department seemingly set on the further regulation of the sector, participants were also requested to recommend to the minister which aspects of the sector should be regulated or legislated to decrease healthcare costs. 

"If we don’t intervene now, it is quite possible that the private healthcare sector will shrink and perhaps collapse," the minister warned in her opening address. 

Saying that she doesn’t believe patients are adequately protected against exploitation, Tshablala-Msimang pointed out that the fee-for-service environment in which private health providers operate was not in the best interests of patients and the sector as it encourages over-servicing.

"The model has been recognized internationally as unsustainable, unaffordable, and frankly not ethically justifiable," the minister said.

She also called for more diversity of ownership and competition within the sector to reduce costs.  "The sector is largely driven by the profit imperative as many companies in the sector are listed, which is not contributing to the health status of all South Africans.  Where we have services rendered or products made available for the survival and common good of human kind, it may be inappropriate to have a huge profit motive overriding decisions and behaviour without adequate government intervention and regulation," the minister said. 

She also hit out at medical schemes, saying that not all schemes are abiding by the legal requirements that they should operate as non-profit organizations and voiced concern about the rise in non-healthcare costs relating to administration and managed care services and broker fees.

She pointed out that in the past seven years, administration fees have increased by 195% from R2bn in 1999 to R5.9bn in 2006/7 while the cost of managed care initiatives increased from R887m in 2000 to R1.4bn in 2006/7. Broker fees increased by 326% from R230m in 2000 to R980m in the past year.

"This is despite the fact that broker services have not increased the number of people joining medical schemes. They just move the same pool of people from one scheme to the next at a fee, thus adding questionable value at high cost," Tshabalala-Msimang said.

In his presentation on behalf of the private hospital sector, Hospital Association of SA CEO, Adv Kurt Worrall-Clare, said although there is a need for regulation, it won’t be enough to bring down costs.
 
"When hospitals are asked to consider price, little consideration is given to the cost of delivering healthcare services," he pointed out.

According to Worrall-Clare, more research should be done about the impact of increased utilization of hospital services on expenditure. Other issues that need to be considered are staff costs due to the skills shortage in the health sector, the aging population, and the country’s growing disease burden due to an increase in lifestyle diseases and HIV/AIDS.
 
"It is essential that the sector understands how private hospitals work and how cost, price and utilization are interrelated.  It does not help if these are seen or commented on in isolation," Worrall-Clare added.

Although conceding that there were no short-term solutions to the challenges, Worrall-Clare said there could be immediate interventions.  He called on all stakeholders to address the skills shortage as a collective, saying it is not a private or public sector responsibility alone.

"We need to collate our resources, combine our academic programmes, and utilize our capacities more effectively.  If we are not successful in increasing the pool of professional nurses in the private and public health sector and training more doctors and retaining them, we will not have the capacity to significantly expand the number of medical scheme beneficiaries," Worrall-Clare warned.

After presentations from representatives of all sectors in the private healthcare industry, participants in the indaba attended group discussions that were closed to the media in which recommendations and possible interventions to reduce costs were discussed.

Closing the indaba, Tshabalala-Msimang called it a ‘very useful interaction’, saying that all the recommendations and submissions made by the various stakeholders will be collated in a report for her consideration.

She said there is agreement that self-regulation has not been effective and that the regulatory and legislative framework should be strengthened. "We have all agreed that costs in the private sector are spiraling and that this should not be allowed to continue," the minister said.

She gave the assurance that the inputs of all stakeholders will be taken into consideration when decisions are made on the way forward. "While Adv Mkhize advised me to not just rock the boat but capsize it, I would not want anyone to drown," the minister concluded.