In January 2014 the South African Competition Commission used its newly acquired powers to launch a market inquiry into the private healthcare sector. Unsurprisingly, this has caused concern among industry participants keen to learn what this means for their business.
After suffering an initial setback from a challenge regarding the independence of a third party consultant to the Commission, an expert panel has been appointed and has started its work. The appointment of the panel, which is led by former Chief Justice Sandile Ngcobo, has been widely praised, offering a balance of practical and academic expertise in the healthcare industry.
The inquiry itself aims at understanding the market dynamics causing above-inflation price, cost and expenditure increases in the sector. The focus is specifically on specialists, hospitals and medical aid schemes and administrators.
As with other international reviews and investigations of healthcare markets, the purpose of the inquiry is to understand a sub-optimally performing market. It is not directed at establishing wrongdoing by particular firm or firms, or proving particular conduct. However, if during the inquiry information arises that identifies possible contraventions of the Act, the Commission may proceed with an investigation, or refer the matter directly to the Tribunal for adjudication. In March, the panel gave out a very balanced advance note of its approach, welcoming voluntary participation and seeking to allay fears of a witch hunt.
The overall timetable is ambitious and shows the inquiry will start in earnest in August 2014. The panel hopes to complete and publish provisional findings and recommendations for comment by October 2015. There is potentially a good deal of work to get through if the inquiry is to get to the bottom of the issues raised.
On 30 May 2014, the Panel published a Draft Statement of Issues and Guidelines regarding procedures for comment from interested parties. The Statement of Issues sets out a framework for approaching the investigation in order to assist the panel to focus on issues relevant in answering the questions arising from the Terms of Reference. Initial focus areas are on consumers, providers of healthcare financing and providers of healthcare products and services.
The panel then indicates that it will test several possible interlinked theories of harm in regard to the relationship and interactions between providers of healthcare finance, healthcare facilities, healthcare practitioners and suppliers of consumables as well as seek to understand the current regulatory framework and its effect on the market.
It is still not clear just how much attention will be given to the pharmaceutical industry which is already heavily regulated. One of the Commission’s stated goals is to examine the effectiveness of the applicable regulation. This is of particular interest to the suppliers of medical devices, which appear to be next in line for further regulation.
The Panel invites interested parties to comment on the Statement of Issues and Guidelines by 30 June 2014.