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Perceptions about private-hospital fees in certain circles are definitely flawed and are based on incorrect information. One of the great challenges facing the private-hospital sector is in fact to correct this misperception. In conjunction with the Hospital Association of Southern Africa (HASA), the matter is now a priority.
That’s according to Mediclinic Southern Africa CEO Koert Pretorius.
He says there is a degree of uncertainty among the role players, including the Department of Health (DoH), the Parliamentary Portfolio Committee on Health, the Council of Medical Schemes (CMS) and the Board of Healthcare Funders (BHF). He says the problem is that a relationship of trust had not developed among all these role players.
He believes that tariff fixing will not reduce private-hospital costs.
“The problem with price regulation is that the regulator usually does not know how to fix the price. If it’s too low, newcomers to the industry are put off, role players then abandon the industry and doctors increasingly leave the country. On the other hand, if it’s too high, it could lead to an oversupply of services.
“The correct solution is to let tariffs be determined by market forces. Unlike the perception in certain circles that private hospitals have bargaining power, there is in fact a good balance since there are quite a number of medical scheme administrators negotiating on behalf of the medical schemes.”
Pretorius admits that the provision of private-hospital services is expensive, but that is because of the underlying cost of providing the service. “Luckily, however, the facts support private hospitals, and this can easily be independently confirmed.”
He also has his reservations about public hospital costs. “We are currently unable to compare the cost of service delivery between the public and the private sector. That information is not available.”
Also, since the public sector is funded by taxpayers’ money, the sector doesn’t have to pay VAT, and pharmaceutical products are bought at State tender prices, which are subsidised by the private sector, which means they are considerably lower than in the private sector, Pretorius emphasises.
In addition, nowhere in the world is medical inflation lower than consumer inflation, he adds. “It’s always 2 to 3 percentage points higher. And in SA the problem is that the cost inflation is put under further pressure by the salary increases granted in the public sector, together with the implementation of job-specific remuneration for health workers, which forces the private sector to grant similar increases in order to retain staff,” he explains.
He says the greatest misperception is that private hospitals make above-average profits. Despite increasing pressure for tariff regulation, Pretorius is positive that slowly but surely there is a greater understanding among the health authorities regarding the costs of private hospitals.
“Though the media largely gave negative accounts of the Parliamentary portfolio committee session at the end of July, where the question of private-hospital costs was examined, role players in the private-hospital industry itself are considerably more optimistic. It was definitely not a one-sided discussion by the portfolio committee, but rather an effort to obtain a more objective perspective of private hospitals and their fees,” he emphasises.
In addition, Mediclinic twice met Minister of Health Aaron Motsoaledi last year, while another meeting is planned for this year. “It’s an ongoing process of communication and lobbying in order to reach the right people so that we can provide the correct information. Discussions like those held in July with the health portfolio committee should help to place the correct perspectives before the public.”
A positive development concerning tariff regulation was the court ruling last year when the Government’s approach to price fixing was rejected, but the court said that a transparent and scientific process of price fixing must be followed. “If the regulation route is followed and these principles are applied, it should lead to a reasonable conclusion,” Pretorius says.
That’s according to Mediclinic Southern Africa CEO Koert Pretorius.
He says there is a degree of uncertainty among the role players, including the Department of Health (DoH), the Parliamentary Portfolio Committee on Health, the Council of Medical Schemes (CMS) and the Board of Healthcare Funders (BHF). He says the problem is that a relationship of trust had not developed among all these role players.
He believes that tariff fixing will not reduce private-hospital costs.
“The problem with price regulation is that the regulator usually does not know how to fix the price. If it’s too low, newcomers to the industry are put off, role players then abandon the industry and doctors increasingly leave the country. On the other hand, if it’s too high, it could lead to an oversupply of services.
“The correct solution is to let tariffs be determined by market forces. Unlike the perception in certain circles that private hospitals have bargaining power, there is in fact a good balance since there are quite a number of medical scheme administrators negotiating on behalf of the medical schemes.”
Pretorius admits that the provision of private-hospital services is expensive, but that is because of the underlying cost of providing the service. “Luckily, however, the facts support private hospitals, and this can easily be independently confirmed.”
He also has his reservations about public hospital costs. “We are currently unable to compare the cost of service delivery between the public and the private sector. That information is not available.”
Also, since the public sector is funded by taxpayers’ money, the sector doesn’t have to pay VAT, and pharmaceutical products are bought at State tender prices, which are subsidised by the private sector, which means they are considerably lower than in the private sector, Pretorius emphasises.
In addition, nowhere in the world is medical inflation lower than consumer inflation, he adds. “It’s always 2 to 3 percentage points higher. And in SA the problem is that the cost inflation is put under further pressure by the salary increases granted in the public sector, together with the implementation of job-specific remuneration for health workers, which forces the private sector to grant similar increases in order to retain staff,” he explains.
He says the greatest misperception is that private hospitals make above-average profits. Despite increasing pressure for tariff regulation, Pretorius is positive that slowly but surely there is a greater understanding among the health authorities regarding the costs of private hospitals.
“Though the media largely gave negative accounts of the Parliamentary portfolio committee session at the end of July, where the question of private-hospital costs was examined, role players in the private-hospital industry itself are considerably more optimistic. It was definitely not a one-sided discussion by the portfolio committee, but rather an effort to obtain a more objective perspective of private hospitals and their fees,” he emphasises.
In addition, Mediclinic twice met Minister of Health Aaron Motsoaledi last year, while another meeting is planned for this year. “It’s an ongoing process of communication and lobbying in order to reach the right people so that we can provide the correct information. Discussions like those held in July with the health portfolio committee should help to place the correct perspectives before the public.”
A positive development concerning tariff regulation was the court ruling last year when the Government’s approach to price fixing was rejected, but the court said that a transparent and scientific process of price fixing must be followed. “If the regulation route is followed and these principles are applied, it should lead to a reasonable conclusion,” Pretorius says.
