Why medical aid is so expensive

Cape Town - Discovery Health CEO Jonathan Broomberg has put the blame for costly premiums on private hospitals, inexperienced emergency room doctors who admitted patients for specialists to check the next day, and younger members who only joined schemes when they were about to start families, thus using more funds than they contributed.

In  an interview with Fin24's sister publication City Press, he insisted that price inflation on healthcare services and products was not the problem; rather, it was medical scheme members who overused services.

Last year City Press reported that medical aid contributions had increased at a pace 50% higher than the inflation rate between 2005 and 2014. In 2014, for instance, the inflation rate was 6.1%, but medical aid schemes (including Discovery Health) increased their premiums by at least 9%.

Broomberg said the premium increases were due to patients being admitted to private hospitals more often, costing medical schemes R46.4bn in 2014 alone.

City Press put Broomberg’s views to the Hospital Association of SA (Hasa), which represents the private hospital industry. “Hasa is, unfortunately, unable to respond to your query accurately as the association is not involved in the operations and business of its members.” It will present its case before the inquiry next week.

Dr Mzukisi Grootboom, chairperson of the SA Medical Association, acknowledged instances of doctors admitting patients overnight, only for them to be discharged the following day, but said “this is part of observation and the decision is often taken to protect the patient and the doctor”.

Broomberg said that in some of the newer hospitals, doctors were direct shareholders and increasing admissions was in their interest.

However, he was reluctant to elaborate: “There are some financial relationships between hospitals and doctors, but our concern is that we only have anecdotal evidence on this. What we have seen is that when a new hospital opens in an area where there are already existing hospitals, admission rates usually increase overall in the region."

Grootboom challenged Broomberg to report such activities: “No doctor would admit a patient unnecessarily just because they want to increase the bed-occupancy rate. Insinuating that private doctors are in cahoots with hospital managers is highly problematic.”

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