Mediclinic objects to health market inquiry’s remedies for market concentration
Private hospital group Mediclinic has taken issue with the health market inquiry’s preliminary concern about market concentration in the sector, and its call for submissions on possible divestiture and a moratorium on issuing new licences.
"Mediclinic does not agree with these findings, and will be engaging further with the health market inquiry on this topic. Mediclinic does not believe the proposed remedies are appropriate," it said on Monday.
The inquiry was launched by the Competition Commission four-and-a-half years ago to investigate the barriers to effective competition in the private healthcare market, and released its preliminary findings on July 5.
Mediclinic said it believed there was robust competition between the four big players — the national hospital network and JSE-listed hospital groups Netcare, Life Healthcare and Mediclinic.
"Hospital groups are able to leverage on economies of scale, enabling the provision of high-quality, cost-efficient care, to the benefit of the patient," it said.
Mediclinic said that while it agreed with the inquiry’s finding that healthcare expenditure was rising faster than consumer price inflation due to an increase in utilisation, it disputed its view that supplier-induced demand played a significant role in driving this trend.
"Mediclinic’s economic and actuarial experts do not support the accuracy of the calculations and data underpinning these findings," it said.
Increased utilisation was due to other factors, such as the increasing burden of disease, an ageing population, and new technology, it said.
Supplier-induced demand refers to a phenomenon in which increased access prompts additional use of a service that would not have otherwise occurred. In the case of hospitals, this could mean increased bed numbers trigger a surge in hospital admissions.
Mediclinic said it supported the inquiry’s recommendation that bilateral tariff negotiations be maintained between medical schemes and hospital groups.
"The company maintains its position that these negotiations are robust and concurs with the inquiry that regulated price determination between these groups would preclude strategic purchasing and stifle much-needed innovation within the industry," it said.
It also supported the proposal to establish a supply-side regulator, provided it was independent and functioned in a transparent manner.
"This body could add value in clarifying the current uncertainty in the hospital licensing regime," it said.