Big three will be the death of the day hospital sector, industry body warns
The Day Hospital Association has urged the competition authorities to prohibit JSE-listed Mediclinic’s planned acquisition of the Intercare group, saying it would lessen competition.
The state of competition in the private hospital industry is currently under the spotlight, with the Competition Commission’s health market inquiry describing the sector as highly concentrated in its interim report published in July.
The inquiry found 90% of SA’s private hospital beds were held by Mediclinic and its two biggest rivals, Netcare and Life Healthcare.
Mediclinic announced in August 2017 that it planned to acquire a controlling stake in Intercare, which manages multidisciplinary primary care medical centres, including four day hospitals.
"Unfortunately the big three are entering the (day hospital) market. The last thing we would like to see is for them to have a monopoly," said DHA chairman Bert von Wielligh, who is also MD of day hospital group Cure Day Clinics.
He was talking at a stakeholder briefing in Johannesburg on Thursday.
Day hospitals offer same-day procedures, but the market has not grown as rapidly as providers had hoped. In the US, approximately 70% of all surgical operations are now performed in day hospitals, but the figure in SA sits at a mere 12%-15%.
Von Wielligh said day hospitals have struggled to get medical schemes to refer patients to their facilities, partly due to the lack of a national footprint.
There are 54 day hospitals that are not owned by the big three hospital groups, and most of them are in the Western Cape and Gauteng. Ten of these facilities are owned by AltX-listed Advanced Healthcare, which has failed to turn a profit since it listed on the AltX in 2014, and eight are owned by Cure Day.
But day hospitals also face problems securing licences from provincial health departments, and face a growing threat from the big hospital groups’ push into the day hospital market, he said.
"There is a challenge in obtaining day hospital licences (as) each province uses different criteria," he said. In some instances licences were declined, and then approved for one of the big three, he said.
"If all the big three engage in opening day hospitals we will soon see another monopoly in day hospitals. That will be really sad if that happens," he said.
Advanced Health CEO Carl Grillenberger said if hospitals and medical schemes were compelled to disclose the cost of procedures to patients before they were admitted, it would stimulate providers to offer more competitive prices.
It was also vital that health outcomes were disclosed, so consumers and medical schemes knew whether they were getting value for money, he said.
"A significant improvement in … transparency for health outcomes is require to drive improvements in value purchasing," he said.
Interested parties have until September 7 to make submissions to the health market inquiry about its draft report. It is expected to publish its final report in December.