Calls to leave inquiry to professionals

At the heart of the investigation are the skyrocketing costs of private health care, which have deprived the majority of South Africans of access to a quality of service government can't give.

Now that the rules of the game have been laid down, lawyers are appealing for politicians to step back and let the professionals conduct the process to give it legitimacy.

The Board of Healthcare Funders (BHF), which represents 85% of medical schemes, has been eager for the inquiry to begin. "There is no transparency in the pricing of health care services, and no scientific approach in arriving at tariffs. These and other cost drivers need to be curtailed through reform," says BHF's managing director Humphrey Zokufa

The inquiry has so far appeared to be politically driven, causing anxiety that the outcomes may not be fair. On the same day that the commission released the terms of reference, health minister Aaron Motsoaledi reportedly told parliament there was a need to regulate prices in private health care, a statement consistent with his views that tariffs are too high.

In March, government took an unusual step by gazetting for implementation in April the only provision relating to market inquiries in the Competition Amendment Act, leaving behind the controversial clauses about complex monopolies and criminal liability for directors of companies found guilty of anti-competitive behaviour. Some lawyers have frowned upon this piecemeal implementation.

Competition might be hampered

The act now allows the commission to conduct an inquiry into sectors where it believes there might be practices hampering competition even if it doesn't have evidence of the offence. It empowers the watchdog to summon relevant parties to testify. Previously, it relied on parties to voluntarily give information, as was the case with the banking inquiry in 2006.

Chris Charter, director of competition at law firm Cliffe Dekker Hofmeyr, says it would be in everyone's best interest for the politicians to now take a back seat.

"The terms of reference are carefully crafted, but there's a risk that the inquiry may be slightly antagonistic. One hopes it will be a worthwhile exercise," he says.

In public, leaders of health care groups say they welcome the inquiry if it's going to be open and fair. In private, however, they're upset that the commission didn't trust them to voluntarily submit themselves to the investigation, as was allowed in the banking inquiry.

The health inquiry is going to be wide-ranging, involving private hospital groups, medical professionals and medical schemes and their administrators and brokers. The spotlight is likely to be on the country's top three private hospital groups, Mediclinic, Life Healthcare and Netcare, which are very profitable in a sector that some believe shouldn't be making a lot of money. Hospitals receive 36% of medical aid spending.

High costs

Various explanations have been given for the costs in private health care, including the scarcity of specialist doctors, the growing disease burden and improvements in medical technology.

The BHF believes one factor is the commission's 2004 decision outlawing collective bargaining in private health care. Providers and funders used to discuss and agree on tariffs. This was deemed to be collusion. The inquiry will probe the effects of that decision.

The department of health, the Health Professions Council of SA and the Council for Medical Schemes will also participate. The inquiry is intended to last for between 18 and 24 months, though some believe the time is too limited for an industry so complex. The probe will be led by a panel of three people and its terms will be reviewed when necessary.

Charter says this probe will test the commission's ability to conduct complex investigations in the public eye.

Neil Kirby, director of health care at Werksmans Attorneys, is concerned that the inquiry wants to investigate the affordability of private health care, which is a competence of the health department. "My understanding is [the competition commission has] to worry about competition, not affordability," he says.

Source: Financial Mail via I-Net Bridge