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Johannesburg - Mediclinic Southern Africa has rejected Health Minister Aaron Motsoaledi reported claims that the private hospital sector is arbitrarily and unfairly expensive.
In a statement on Friday, the group said comparing the cost of a circumcision in the public sector (R400) to that in the private sector (R6 000 to R15 000) and using this as the basis for making generalised statements about all private hospitals was "unfortunate".
It said public hospitals were heavily subsidised by taxpayers, whereas in private hospitals the full cost of providing the service was charged.
"The private hospital sector has published a great deal of research and statistics over the past few years to expose the myths that private hospitals charge inflated fees in order to make excessive profits, and are thus responsible for driving the increase in healthcare costs.
"Unfortunately, the minister's most recent comments perpetuated such incorrect perceptions. In recent times, such statements and the use of unsubstantiated numbers have been the justification for a call for regulation."
Mediclinic said it negotiated prices annually with every medical scheme and was bound by these agreed rates.
It was thus clearly incorrect to assert prices were "arbitrarily and unfairly expensive" and "no limits on fees" apply.
It said there were other factors that precluded the comparison of financial costs of health services provided in the public and private sector.
"Private hospitals do not receive drugs at the substantially lower state tender prices as the public hospitals do; private hospitals pay VAT and have to recoup the cost of debt and equity required to maintain high quality infrastructure.
"It is therefore important to first assume a level playing field by considering all of the above, before comparing costs between public and private hospitals."
At the Hospital Association of SA's 2008 conference, PricewaterhouseCoopers's Corporate Finance Division had presented results that showed the then two listed private hospital groups' economic profits were significantly below the average on the JSE Securities Exchange.
This should be viewed with the understanding that they competed for capital with all companies on the JSE.
The unsubstantiated assertions of excessive profits were therefore refuted by facts.
Mediclinic supported the principle of a scientifically-based pricing structure, as this would avert a potentially detrimental situation in the capital-intensive private hospital industry.
The group said Motsoaledi was reported as saying - in The Times - that medical aids were suffering severely at the hands of private hospitals, and running the risk of not being able to meet commitments due to being in the red by R2.5bn during 2009.
"On the contrary, the fact is that by 2009 the medical schemes industry accumulated R28bn in reserves, earning medical schemes nearly R2.8bn in investment and other income in 2009."
They had a net surplus of R2.4bn.
The disproportional focus on price as the primary problem in private healthcare took the focus away from the most important outstanding private healthcare reforms - the introduction of risk equalisation and mandatory membership for those who could afford medical scheme cover.
"This would significantly lower the cost of medical scheme cover by improving the health profile of the covered population, and, more importantly, improving access to lower-income workers through increased income cross-subsidies."
Motsoaledi's spokesperson was not immediately available for comment.
In a statement on Friday, the group said comparing the cost of a circumcision in the public sector (R400) to that in the private sector (R6 000 to R15 000) and using this as the basis for making generalised statements about all private hospitals was "unfortunate".
It said public hospitals were heavily subsidised by taxpayers, whereas in private hospitals the full cost of providing the service was charged.
"The private hospital sector has published a great deal of research and statistics over the past few years to expose the myths that private hospitals charge inflated fees in order to make excessive profits, and are thus responsible for driving the increase in healthcare costs.
"Unfortunately, the minister's most recent comments perpetuated such incorrect perceptions. In recent times, such statements and the use of unsubstantiated numbers have been the justification for a call for regulation."
Mediclinic said it negotiated prices annually with every medical scheme and was bound by these agreed rates.
It was thus clearly incorrect to assert prices were "arbitrarily and unfairly expensive" and "no limits on fees" apply.
It said there were other factors that precluded the comparison of financial costs of health services provided in the public and private sector.
"Private hospitals do not receive drugs at the substantially lower state tender prices as the public hospitals do; private hospitals pay VAT and have to recoup the cost of debt and equity required to maintain high quality infrastructure.
"It is therefore important to first assume a level playing field by considering all of the above, before comparing costs between public and private hospitals."
At the Hospital Association of SA's 2008 conference, PricewaterhouseCoopers's Corporate Finance Division had presented results that showed the then two listed private hospital groups' economic profits were significantly below the average on the JSE Securities Exchange.
This should be viewed with the understanding that they competed for capital with all companies on the JSE.
The unsubstantiated assertions of excessive profits were therefore refuted by facts.
Mediclinic supported the principle of a scientifically-based pricing structure, as this would avert a potentially detrimental situation in the capital-intensive private hospital industry.
The group said Motsoaledi was reported as saying - in The Times - that medical aids were suffering severely at the hands of private hospitals, and running the risk of not being able to meet commitments due to being in the red by R2.5bn during 2009.
"On the contrary, the fact is that by 2009 the medical schemes industry accumulated R28bn in reserves, earning medical schemes nearly R2.8bn in investment and other income in 2009."
They had a net surplus of R2.4bn.
The disproportional focus on price as the primary problem in private healthcare took the focus away from the most important outstanding private healthcare reforms - the introduction of risk equalisation and mandatory membership for those who could afford medical scheme cover.
"This would significantly lower the cost of medical scheme cover by improving the health profile of the covered population, and, more importantly, improving access to lower-income workers through increased income cross-subsidies."
Motsoaledi's spokesperson was not immediately available for comment.
