Hearings in the Healthcare Market Inquiry resumed in Cape Town yesterday (01 March 2016), and much was made of potential conflicts of interest facing the Board of Healthcare Funders. Today, (02 March 2016) Discovery Health is front and centre and is making its submissions to the panel. Criticisms of the private healthcare industry, and especially medical schemes, have focused on the complexity of medical schemes and high prices. The 1st two weeks of hearings took place in Pretoria and also raised questions about compliance with prescribed minimum benefit requirements and delays in payment for services rendered and admission rights to hospitals.
The Inquiry is running concurrently with the battle between the South African Medical Association and the Council for Medical Schemes in the Competition Tribunal. At the end of December 2015 the Competition Appeal Court overruled the stay of the complaint proceedings granted by the Competition Tribunal pending the outcome of review proceedings brought in the High Court. The Council for Medical Schemes lodged a complaint with the Competition Commission against SAMA, the South African Paediatric Association and the Society for Cardiothoracic Surgeons alleging that their fee guidelines amount to price fixing. The Competition Commission decided not to refer the complaint for hearing by the Competition Tribunal because the Healthcare Market Inquiry is specifically considering the issue of prices in the healthcare market. In its judgment, the Competition Appeal Court notes that the Competition Commission considered that the complaint "gave rise to a likely contravention of section 4(1)(b)(i)” of the Competition Act, the section which prohibits price fixing. Presumably encouraged by the Commission's view of the merits of its complaint, the Council for Medical Schemes referred the complaint directly to the Competition Tribunal for hearing and that is where the matter stalled. SAMA successfully applied to the Competition Tribunal for a stay of proceedings pending a review in the High Court about whether the Council for Medical Schemes is able to engage in antitrust litigation. That stay decision has now been overturned and the complaint proceedings can now resume. Those proceedings will run in parallel with the Healthcare Market Inquiry and it's going to be interesting comparing the respective outcomes.
The private healthcare industry is clearly very big business. While patients actually consume healthcare services, medical schemes drive many buying decisions and have enormous influence over healthcare practitioners. Anyone faced with a decision about medical care not only has to deal with the stress inherent in that situation but with the fact that patients very often simply don’t have enough information to make informed decisions about choice of care and, of course, related costs. Medical schemes legitimately try to prevent abuse of benefits but it is clear from the submissions at the Inquiry that the often complicated administrative processes used by medical schemes to prevent abuse are also minefields for patients. While there appears to be strong support for price regulation in the private healthcare market, interfering in this way with markets can have unintended consequences. Regulation of medicine pricing has made the South African market less attractive to global pharmaceutical companies which may simply choose not to sell into South Africa, reducing consumer choice. The Competition authorities have always resisted becoming price regulators because they’ve recognized the dangers of that kind of interference in markets. Let’s hope the Inquiry is similarly cautious.