Oversupply of non-essential technologies contributes to high private healthcare costs‚ market inquiry finds

A key problem underlying high and rising costs of care and medical scheme contributions is not primarily prices as such‚ but overcapacity and over-investment in technology‚ as well as complex‚ intensive and expensive treatment methods.

This is one of the preliminary findings by the Health Market Inquiry in the private healthcare sector which was released on Thursday.

The Competition Commission decided to conduct an inquiry in 2013 into the sector after observing increases in prices in the private healthcare sector and which only a minority of medical aid scheme members could afford. The inquiry is a general investigation into the state‚ nature and form of competition in the market‚ rather than a narrow investigation of a specific conduct by any particular firm.

The commission initiated the inquiry because it had reason to believe that there were features of the sector that prevented‚ distorted or restricted competition.

"There is no measure of cost-effectiveness in the private healthcare sector‚" Thursday's executive summary noted.

The preliminary report noted that there was no public data available regarding the cost-effectiveness of technologies and no guidance on what benefits may benefit health outcomes.

It said one result was that this allowed hospitals to purchase any and all technology and promote its use by making it available to practitioners‚ which inappropriately drives up costs where such technology does not provide value for money.

"Currently‚ there is no way to judge if technologies being used and promoted offer such value‚ but they have to be used to derive return on investment‚" the report said.

The report also said there were approximately 270 medical plans on offer‚ but consumers cannot compare these nor can they choose scheme and plan options on the basis of value for money.

The report said this complexity of medical plans did not reflect innovation as administrators of open medical schemes claimed‚ but was designed and priced to allow medical schemes to weaken‚ and even avoid‚ outright price competition.

Among its recommendations‚ the panel recommended changes to the way scheme options are structured to increase comparability between schemes and increase competition in that market.

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