The seriously delayed Health Market Inquiry (HMI), which is
tasked with probing the cost drivers of SA’s private healthcare market, is now
set to publish its provisional findings and recommendations in a report on
Thursday, 5 July.

The deadline to publish the provisional report on the four-year
probe has been delayed four times since November 2017 due to obtaining and
analysing complex information supplied by medical schemes and private

It is expected that the HMI will likely make a
recommendation on is the role that private hospitals play in driving up
healthcare costs. The inquiry has already said that hospitals are responsible
for a big portion of above-inflation increases in expenditure reported by
medical schemes for their members.

An extensive analysis of medical schemes claims data by the
inquiry revealed that the average private medical scheme spend per member
increased by 9.2% per annum for a five-year period from 2010 to 2014. This was
nearly four percentage points higher than average consumer price inflation over
the five-year period of 5.6%.

After taking into account changes in medical scheme members’
plan type, gender, disease profile and membership movement, there was an
unexplained increase in spend per member of more than 2% per annum after
adjusting for inflation.

“To put this in context, 2% of spending amounts to around
R3bn in 2014 terms i.e. R330 per beneficiary per annum, or a total of R1 650
per beneficiary over the five-year period studied [2010 to 2014],” the analysis

The unexplained cost increase appears to be for out-of-hospital
care (7.28% cost increase vs 5.6% inflation) while in-hospital care is a far
more important driver (a 10.84% increase vs 5.6% inflation). The analysis also
revealed that hospital tariffs had not increased much above inflation, but
there was a significant increase in the average cost per admission.

Defenders of the industry have argued that private
healthcare costs have increased due to increased utilisation by members and not
price increases.

Dr Mzukisi Grootboom, chairman of the South African Medical
Association (Sama), said the report should also make recommendations on medical
specialists and medical schemes. “The inquiry needs to look at how members
[are] affected by medical schemes rules. It needs to examine whether their
rules are conducive to the competitive nature of the industry and whether the
use of brokers and administrators are responsible for high medical costs.”

Carl Grillenberger, group CEO of day clinic specialist
Advanced Health, said he looked forward to the report’s
recommendations on private healthcare patients being informed about the quality
of service in relation to cost. This is currently not done by medical schemes,
he added. “There must be an environment of transparency. Medical schemes have
information on quality at their disposal.”

After the release of the provisional report, the industry
and public will have an opportunity to comment on it. After the comment period,
the inquiry will produce a final report, which will contain recommendations to
the minister of economic development, Ebrahim Patel. “[The recommendations will
be] on areas that need to be addressed on the state of competition in the
private healthcare sector,” said Clint Oellermann, director of the inquiry.

Administrative fines or even criminal charges might be
recommended for parties that are found to be engaging in anti-competitive
behaviour or collusion.