Standard tariffs for medical practitioners, the standardisation of medical scheme options, and more targeted licensing for hospitals are in the offing if the government decides to implement the recommendations of the Competition Commission’s inquiry into the private healthcare market.

The provisional report of the inquiry, which was released at a briefing on Thursday by chairman, former chief justice Sandile Ngcobo, has recommended the creation of a dedicated Supply-Side Regulator of Healthcare to regulate medical practitioners and determine tariffs. It has also recommended that tariffs for prescribed medical benefits should be binding and that tariffs for non-prescribed medical benefit conditions should have the status of reference tariffs.

Its recommendations come in the wake of the release of two bills that will also overhaul healthcare in the country: the National Health Insurance Bill and the Medical Schemes Amendment Bill.

The inquiry looked into the constraints on competition in the private healthcare sector in a context of high and rising costs. It found that over-servicing by medical practitioners was one of the factors that has driven up private healthcare expenditure. This over-servicing includes increased admissions to hospitals, increased length of stay, higher levels of care, greater intensity of care, and the use of more expensive forms of care than necessary.

The inquiry looked into the constraints on competition in the private healthcare sector in a context of high and rising costs

The recommendation on standard tariffs for medical practitioners was welcomed by South African Medical Association (Sama) chairman Dr Mzukisi Grootboom, who said the association, which represents doctors, had been lobbying for this for many years. He emphasised, however, that the process of tariff setting would have to be fair and that no doctor should be expected to provide services at below cost and should be able to earn a reasonable return on their investments.

It was also important, Grootboom said, that the regulator be neutral and completely independent from the Department of Health.

Council for Medical Schemes (CMS) acting registrar Dr Sipho Kabane said he welcomed the proposal to standardise medical scheme options. It was something the council had been advocating for a long time as the multiplicity of options confused consumers. The council was developing a framework to guide the industry on what should be contained in the reduced number of standardised options.

This framework would include a risk-adjustment mechanism to mitigate the consequences the consolidation of options would have on cross-subsidisation. Kabane believed standardisation would encourage competition in the market on the basis of quality and service. It would enable consumers to compare the various options available.

The inquiry found that the "deliberate" way in which medical aid schemes bundle, package and price their options allowed them to weaken and even avoid outright price competition.

Dealing with the pricing of health services, Ngcobo said in his speech that one of the most frequent complaints made to the inquiry was that there was currently a "tariff vacuum" in the private healthcare sector that made it very difficult for schemes and members to estimate and compare the costs of care among providers. The Supply-Side Regulator could set tariffs either after extensive consultation with stakeholders in a public forum or through a multilateral price-setting mechanism in which stakeholders would conduct tariff negotiations.