Netcare 'stalling probe'

South Africans will probably have to wait years to find out why they pay so much for healthcare.

Netcare, a private hospital giant, has been accused of deliberately delaying the Competition Commission inquiry into what is driving up hospital and doctors' fees.

About 8.7million South Africans spend R120-billion a year on private healthcare - almost the same as the government spends on 80% of the population at state facilities.

The commission, which was scheduled to start work on January 6, has set aside two years for its investigation into why medical costs rise at above the inflation rate every year.

But the inquiry has been delayed by Netcare's legal challenge that consultancy KPMG says is aimed at derailing the commission. In papers before the Johannesburg High Court, the commission accuses Netcare of trying to hide information - which the commission can subpoena - because it fears that it will be referred to the Competition Tribunal for anti-competitive behaviour.

KPMG was appointed by the commission in October to provide legal and administrative expertise. But Netcare went to court on December 23 to prevent KPMG from working for the commission, saying that if it were to do so it would result in a conflict of interest because the firm had previously worked for the commission.

Netcare spokesman Melanie da Costa said: "Netcare has instituted court proceedings to protect the confidentiality of its communications with its former adviser, KPMG ... For more than three years KPMG provided consultancy services to Netcare with unrestricted access to financial, strategic business information, and several strategic projects."

KPMG's head of legal services, Olaff Abraham van Niekerk, said in an affidavit that Netcare went to court as part of "Operation Kotov". "Project Kotov seems a very apt name ... Kotov is a Russian surname, the most famous bearer of which was one Alexander Kotov.

"He was a famous chess grandmaster ... He describes a situation when a player thinks very hard for a long time [about] a complicated position but does not find a clear path, then, running low on time, quickly makes a poor move, often a blunder."

Van Niekerk claimed: "Netcare's broad strategy is to force the commission to delay the inquiry for as long as possible and, because of the long delay, cause the commission to move quickly."

KPMG maintains that the work its staff did for Netcare was technical in nature. Da Costa said KPMG's claims about "Project Kotov" were "baseless and without foundation".

The commission believes Netcare is hiding something.

"Netcare also fears that information provided to the inquiry may lead the commission to initiate a complaint against it or refer it to the tribunal," says the commission in its court papers.

The tribunal has the power to fine companies 10% of their annual turnover for price-fixing or illegal anti-competitive behaviour.

Section 27's Mark Heywood said: "All the commission is trying to do is find evidence for spiralling costs. It is totally legitimate. The cost of healthcare puts people into catastrophic poverty."