• 12 Nov 2014

    SAMA rejects simplistic BHF report on private health costs

    SAMA rejects simplistic BHF report on private health costs

    The South African Medical Association (SAMA) is perturbed by the current hysteria and furore in the media following the publication by the Rapport newspaper of selective quotes from allegations made by the Board of Healthcare Funders (BHF) in their submission to the Competition Commission’s market enquiry into private healthcare. The BHF inter alia claims that some private specialists charge up to 300% of the medical aid rate.

    SAMA is concerned that a misperception is created by placing a one-sided emphasis on the matters in question. What needs to be understood is that a medical aid rate is nothing more than a insurance/benefit cover representing an amount or amounts that a particular medical aid would be prepared to pay on its client’s behalf. It bears no relation whatsoever to a doctor’s actual cost of running his/her practice.  In the more recent history of medical aids in South Africa, their “insurance cover”/benefits to their clients have never been equivalent to the actual cost that doctors incur in running their practices – including overheads, expensive equipment, actual time spent with a patient and a variety of other cost drivers.

    Notwithstanding their expensive practice running costs and in order to actively assist patients through an endeavour to make private healthcare more affordable, the medical profession has in the past continually been involved in negotiations with medical insurers regarding “discount levels” to be used by the profession, benefiting the public by means of more affordable medical aid premiums until the intervention of the competition commission in 2004.

    These negotiations resulted in the legislative creation of a so-called “scale of benefits”, promulgated in the Government Gazette for use by the medical profession and other stakeholders, and regulated by the predecessor to the BHF, the Representative Association of Medical Schemes (RAMS). In terms thereof doctors who charged discounted medical aid rates were guaranteed payment for their services within thirty days.

    The medical profession was hopeful that this piece of legislation would afford more people access to private medical care. Private doctors could choose between charging “private rates”, based on their practice costs, or signing contracts with medical aids, guaranteeing payment within a reasonable amount of time. Some preferred to enter into contractual arrangements with the medical aids and were designated “contracted in”. Those who did not enter into these arrangements remained “contracted out” and continued charging “private rates”. At that stage private medical fees still reflected the cost of running a practice relatively closely.

    During the annual negotiations between medical aids and the medical profession, the annual increases to the benefits that were agreed to - on the basis of affordability - were in most cases below the prevailing inflation rate. Over the years a situation arose where the differential between what it costs to run a medical practice and what insurers are prepared to pay grew larger and larger.

    It is important to also point out that medical aids will only pay a third of a doctor’s expenses when measured against a doctor’s overall practice costs, hence, for example, R100 on a R300 bill, which creates the distorted impression of an unwarranted 300% increase by the doctor.

    The medical profession conducted in-depth cost studies in 2005 and again in 2008 that clearly indicated there were no inappropriate increases in fees on the part of the profession. There was a close relationship between the prevailing private rate and the cost studies.

    Medical procedures are costly, and most doctors try their best to maintain a balance between the cost of running their practices and the welfare of their patients. If the public wants a clearer picture of the high cost drivers of private healthcare, they would do well to ask their medical insurance funds why their benefits cover so little of a doctor’s actual practice costs.

    Dr Mzukisi Grootboom, Chairperson: SAMA

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