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HMI recommendations bode well for a robust and sustainable private health sector

The Health Funders Association (“HFA”) welcomes the Competition Commission’s release of the Health Market Inquiry (“HMI”) provisional report and supports the HMI’s objective of strengthening the sector through enabling efficiencies and constructive competition.

The HMI, established to investigate factors which restrict or prevent competition in the private healthcare sector and that push up costs within the sector, has released recommendations to address these issues and to promote appropriate competition to the benefit of consumers and the sustainability of the sector.

“Although we have yet to study the report in detail, it would seem that the panel has taken cognisance of the systemic problems within the private healthcare sector, including those relating to legislation and has made its recommendations based on rigorous evaluation and analysis”, said the CEO of the Health Funders Association, Lerato Mosiah.

Mosiah added that it was clear that the HMI panel had recognised the need for regulatory changes that would enable efficient contracting and progressive care models. She also applauded the panel for recognising that certain provisions within existing legislation, such as risk equalisation, a tariff framework and hospital licensing arrangements, had not been implemented thus negatively affecting affordability for consumers and the sustainability of the funding industry.

The provisional report recommends that a core, standardised benefit package, which includes catastrophic cover, primary and preventative care, is available to all members across all medical schemes options.  To this end, the HFA (together with other stakeholders) has already been working with the Council for Medical Schemes to ensure that the current Prescribed Minimum Benefits (PMB) with the addition of base benefits are re-structured in a way that addresses key health needs but also take account of the affordability constraints of members pressured by hikes in VAT, fuel and municipal services.

The report includes a set of recommendations for funders which, the HFA believes, will enhance equity and will ensure more transparency within the environment. 

“We fully concur with the recommendations made around improving scheme governance and promoting a more member-centric environment.  We also support the measures proposed to make quality information available to consumers and look forward to working with providers and hospital groupings to enable consumers to make informed decisions with regards to their healthcare”, said Mosiah.

The provisional report identifies several interventions common to other health systems which are lacking in South Africa and which, if implemented, would increase affordability and make for a more sustainable sector.   These include a mechanism for arriving at set tariffs for PMBs; a set of reference prices for non-PMB conditions; and, a Risk Adjustment Mechanism (RAM).  HFA also welcomes the fact that the HMI has proposed a revised tax benefit in relation to the RAM that will favour low income earners. RAM is a system that funders use to ensure that the fit, healthy and rich subsidise the frail, sick and impoverished. 

The report also emphasises the need for alternative reimbursement models which include risk sharing arrangements and team-based care.

Mosiah added that the measures proposed with respect to information sharing and contracting will assist in ensuring that providers can be partners in delivering quality affordable care since it will allow for the alignment of interests of all. 

“We believe that if the recommendations contained in the report are taken forward by government and role players within the sector, we will have a private health sector which is more cohesive, robust and better able to play a meaningful role in making quality healthcare accessible to all South Africans” concluded Mosiah.