Consumers are likely to pay less for doctors’ services and come away from hospitals without paying an arm or a leg after the Competition Commission ruled that doctors and hospitals should set their own prices.
The commission, a statutory body that polices price fixing and other anti-competitive behaviour, said on Tuesday a lengthy investigation of the health-care sector has found massive price rigging.
”Collusion is problematic because at its basic level, competitors, who should otherwise be competing on products, price or services get together and agree on those issues,” the commission said in a statement.
”This eliminates competition. The consumer is the ultimate loser.”
The commission said fee guidelines including the scale of benefits used by the Board of Healthcare Funders (BHF), the fee guideline of the Hospital Association of South Africa (Hasa) and the South African Medical Association’s (Sama) Tariff Book respectively fix the prices of medical aid reimbursements, hospitals and doctors.
As such they contravene the Competition Act and are illegal.
”The effect of the use of the ‘guidelines’ is that the practitioners, who are competitors and therefore are ‘firms’ [under the Act], do not compete on price for their services. To the extent that they do, they use the guidelines as a basis. This amounts to indirectly fixing a price,” the commission explained.
Instead of collusion, the commission wants a competitive environment in the health-care sector in which practitioners determine their own fees for services rendered.
”This must be done on an independent basis without coordination with competitors [colleagues]. In determining a price it is acceptable to consider what competitors are charging, so that one can price competitively,” the commission said.
It believed the role of professional associations such as Sama and Hasa is not to inhibit price competition but to maintain standards and ethics.
The regulatory bodies of professional associations could, however, release fee guidelines as long as their purpose is to show members and the public how competitively services are priced.
”A guideline is not a problem, per se, if it is prepared by an independent person, eg a regulatory body, university, research institution or firm … The rationale is that the independent person [compiler] is not a competitor and does not have a personal interest in pricing in the market.”
The commission said it has discussed an out-of-court settlement with the three associations.
”Settlement terms have been reached between the commission and Hasa and with Sama. Regrettably we have not found common ground with the BHF on a possible settlement. We will continue our efforts ‘within reason’ to find a solution with the BHF.
”Hasa, Sama and the BHF will continue to serve the interests of their members. We hope however, that this will not involve price fixing,” the commission said. — Sapa