Health Minister Aaron Motsoaledi stated that no act had been passed to regulate providers of healthcare services. As a result, tariff setting has not been structured, leading to numerous differing tariffs that change over time.

In a joint press briefing held on Monday by Motsoaledi and the Minister of Trade, Industry, and Competition, Parks Tau, Motsoaledi highlighted the inefficiencies in the healthcare sector, asserting that it has become an “uncontrollable expense".

He argued that many blame the State for not taking action to control these runaway costs.

“Let us start this history by stating that Private Health Care was never structurally planned, and no Act of Parliament was ever passed to establish it. It just evolved on its own as time went on. Only later was a Statute passed in this regard, but this Statute controlled only one aspect of Private Health, including the financing of health but not the provisioning of healthcare.

“An Act of Parliament, the Medical Schemes Act, was passed in 1967 and amended in 1998 (Act No. 131 of 1998) to establish the Council for Medical Schemes (CMS).

“The Representative Association of Medical Schemes (RAMS) was set up out of necessity by Medical Schemes. They had a responsibility to negotiate service tariffs.”

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He explained that the then Medical Association of South Africa (MASA), now the South African Medical Association (SAMA), introduced the ‘Doctors’ Billing Manual’, which competed with the RAMS prices, with fees that exceeded the RAMS guideline prices. Schemes decided to pay whatever amount they considered appropriate, leaving patients to pay the difference between the reimbursed amount and the price charged.

“At the same time, the Hospital Association of South Africa (HASA), representing private hospitals, received permission from the competition authorities to publish a ‘Benchmark Guide to Fees for Medical Services'.

“In 2004, a Competition Commission found a collusion in how prices were agreed upon and passed a ruling prohibiting any collective negotiation of prices.

“The commission was of the view that fee guidelines, including the scale of benefits, used by the Board of Healthcare Funders (BHF), the fee guideline of HASA and SAMA Tariff Book, respectively, are fixing the prices of medical aid reimbursements, hospitals and doctors,” said Motsoaledi.

He added that in December 2006, his department published regulations relating to the process of determining RPL for comments. However, there were disagreements with the submissions made by the private healthcare sector as they provided incorrect cost data submitted by practitioners, including private hospitals unwilling to share detailed cost information.

On interventions intended to correct this, Motsoaledi said that the Department of Health and the Competition Commission decided to set up a Health Market Inquiry (HMI) to conduct a market-wide investigation into price-setting and competition in the private sector.

The HMI, chaired by former Chief Justice Sandile Ngcobo, found, among other things, that the Private Health Care Market is subject to distortions that adversely affect competition and is characterised by high and increasing expenditure.

Motsoaledi recommended the establishment of a series of totally new entities to regulate the Healthcare sector including licensing establishment and a temporary stop-gap measure, which he said would be progressively upgraded to the envisaged levels.

He said they were doing this because, naturally, the phased-in implementation of NHI is going to take longer, and the department needs an interim solution to relieve the pressure people experience when seeking healthcare services.

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