Minister of Trade, Industry and Competition, Parks Tau, has emphasised the importance of regulating private healthcare costs to guarantee that affordable healthcare remains accessible to the majority of South Africans.
“There is a serious concern about access to private healthcare in the country, given the high levels of market concentration and high prices,” he said on Tuesday.
The Minister was speaking at a joint media briefing with Health Minister Dr Aaron Motsoaledi to share progress on implementing the recommendations from the Health Market Inquiry (HMI) into the private healthcare sector.
The HMI, conducted five years ago by the Competition Commission and chaired by former Chief Justice of South Africa, Justice Sandile Ngcobo, identified numerous factors that impede competition within the private healthcare sector.
Key issues highlighted include an unregulated supply side in service provision, a lack of transparency in pricing, exclusive contracts, and various anticompetitive practices that create barriers for new entrants.
In addition, the HMI noted that the absence of a tariff determination framework, among other factors, contributes significantly to these inefficiencies.
“Importantly, given the lack of a structured price determination framework, the HMI found that there has been abuse in the pricing of Prescribed Minimum Benefits, as well as non-Prescribed Minimum Benefits, in the form of overutilisation of services and co-payments, thus driving up the cost of healthcare.”
On 14 February 2025, Tau published the Draft Interim Block Exemption for Tariffs Determination in the Healthcare Sector after engaging in consultations with both the Competition Commission and the National Department of Health.
This exemption is designed to fill the regulatory gap in tariff determination, aligning with the recommendations put forth in the 2019 HMI.
Its primary objectives are to establish a collaborative multi-stakeholder framework for regulating healthcare tariffs, enhance price transparency, and ultimately drive down costs for consumers.
Currently, Tau said there is no structured and transparent framework for determining tariffs for healthcare services.
“Due to the lack of a formal tariff determination framework, consumers are faced with uncertainty on prices, potential balance billing, and tariffs which are not determined through a transparent process.
“As a result of this gap in tariff determination, patients, medical schemes, and even smaller healthcare providers are often disadvantaged.”
The draft block exemption enables healthcare stakeholders to collaborate effectively on tariff-setting and related issues, aiming to enhance affordability and lower costs.
It encompasses agreements for the collective determination of tariffs for healthcare services, the establishment of standardised diagnosis codes, and the implementation of quality measurement criteria.
This multi-stakeholder framework introduces a transparent and structured approach to tariff determination, ensuring that the interests of all parties involved are balanced and represented.
To facilitate this process, the Tariffs Governing Body (TGB) and the Multilateral Negotiating Forum (MNF) have been established to oversee and promote collaborative tariff-setting.
He noted that the framework excludes private hospitals due to their considerable market power, promoting collective bargaining among medical schemes and healthcare providers to ensure that services remain affordable for consumers.
According to the Minister, the exclusion of private hospitals from the block exemption pertains specifically to their dominant market position, which applies only to hospital fees related to admission and does not extend to treatment fees.
“The publication of the draft interim block exemption marks a critical step towards addressing the cost of access to healthcare and promoting transparency in the healthcare market.”
Meanwhile, Motsoaledi noted the escalating cost of private healthcare in South Africa, with medical price inflation (MPI) at 9.5% compared to a consumer price index of 4.5 to 4.6%.
According to the Health Minister, the lack of structured tariff setting has led to varying prices and blame towards the State.
He said the Competition Commission’s 2004 ruling prohibited collective negotiation of prices, leading to a “lacuna” in tariff-setting.
According to Motsoaledi, various attempts to regulate prices, including the National Health Reference Price List and the Health Professions Council of South Africa’s guidelines, faced opposition and legal challenges.
“In our country, it is generally agreed that the cost of private healthcare is now beyond the reach of most South Africans.
“We would be right to assert that it has become an uncontrollable expenditure. This affects every aspect of South African life.”
The Minister noted the HMI recommended the establishment of an independent Supply-Side Regulator for Healthcare (SSRH) restructuring licensing, creating a single data repository, and negotiating private sector prices through a multilateral forum.
The inquiry also advocated for eradicating the fee-for-service payment system and implementing a standard benefit package under National Health Insurance (NHI).
However, Motsoaledi said he noted the National Treasury’s reluctance to form new public entities, which poses a challenge.
“It is for these reasons that we are implementing some of the recommendations of HMI as a temporary stop-gap measure which will be progressively upgraded to the levels envisaged.
“We are doing this because naturally the phased-in implementation of NHI is going to take longer and we need the interim to relieve the pressure which people experience when seeking healthcare services,” he added. – SAnews.gov.za
