Report: Dispute over private-hospital fee hikes

The registrar of medical schemes, Patrick Masobe, has threatened to take private hospitals to the Competition Commission if they fail to justify their price increases planned for next year, Business Day reported on Monday.

Private hospitals traditionally raise tariffs on January 1 after negotiations with medical schemes, whose members constitute the bulk of their patients.

According to the report, the bargaining power of hospital groups has been a growing concern for the government, which complains they are one of the main drivers of soaring private healthcare costs.

Masobe, who heads the supervisory council for medical schemes, stepped in after schemes complained they were unable to negotiate affordable rates for next year.

He has the support of the board of healthcare funders, which represents medical schemes.

In a letter sent on Thursday to Netcare, Medi-Clinic, Life Healthcare and the National Hospital Network (NHN), Masobe accused them of attempting to introduce unlawful ward and theatre price hikes, flouting the law on prices for anaesthetic gases and bullying schemes into accepting unreasonably high tariff increases for next year.

“I can no longer tolerate medical schemes being held over a barrel by hospital groups to implement hugely inflationary increases,” Masobe told Business Day.

The report quoted Stephen Harrison, the council for medical schemes’s senior strategy adviser, who said that except for Medi-Clinic, private hospitals were planning ward and theatre fee increases ranging from 8% (Life Healthcare) to 33% (NHN), and Netcare planned a 21% hike.

Harrison said the hospitals claimed the increases were needed to compensate for lost profits after they agreed to scrap their mark-ups on consumables and “surgicals” this year.

However, the council believed these profits were unlawful as these mark-ups should have been jettisoned after a 1998 industry agreement.

Medi-Clinic has billed patients for surgicals and consumables at net acquisition costs since 2004, according to company spokesperson Biren Vilodia.

The council also objects to all private hospitals’ plans to incorporate the cost of anaesthetic gases into theatre time, with increases of R6 to R13 a minute from January 1.

Harrison told Business Day this contravened the Medicines Act, which provides for billing based on the volume of gas used.

Masobe has demanded that private hospitals give the council “a full costed motivation” by January 15 for their tariff increases for next year, failing which he will ask the competition authorities to investigate whether they have abused their market power.

Vilodia said the increases were justified as the public-sector pay increases this year had compelled Medi-Clinic to raise nurses’ salaries 13%. Life Healthcare spokesperson Marietjie Shelly said nursing was the group’s biggest cost driver.

Netcare’s Mark Bishop declined to comment, saying the company had yet to receive Masobe’s letter.—Sapa

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