Increased use ‘raises medical costs’

EVIDENCE from many players who have made submissions to the Competition Commission’s private healthcare inquiry indicates that increased service utilisation is the biggest factor pushing up healthcare costs, a top Netcare executive argued on Tuesday at the Hospital Association of SA conference.

The reasons behind SA’s soaring healthcare costs have been fiercely contested for many years.

Health Minister Aaron Motsoaledi has maintained that specialists and private hospitals charge unreasonably high prices, while industry groups have argued that costs have risen on growing demand for services from increasingly sick patients and the high cost of new technology.

“The debate in SA has been mediocre, and stagnated on price,” said Netcare’s director for strategy and health policy, Melanie da Costa. “Research has fallen on deaf ears because it was commissioned by the private sector. The inquiry is an opportunity for an impartial assessment of the facts,” she said.

Netcare had commissioned research from Lighthouse Consulting for its submission, which showed that increased utilisation accounted for 41% of medical schemes’ increased spending on hospitalisation from 2000 to 2013. Membership growth accounted for 15.4% of the increased spend, utilisation growth per capita accounted for 25.6% of the pie, real price increases 8.2% and inflation 50%, she said.

Similar figures were reported by SA’s two biggest medical schemes in their submissions to the Competition Commission, Ms da Costa said.

Medical scheme administrator Discovery Health said in its submission utilisation drove 40% of the growth in total claims between 2009-10 and 2013-14, while Medscheme put the figure at 50%.

Ms da Costa said SA’s trends in healthcare spending were not unusual, as governments globally were grappling with healthcare costs rising faster than inflation.

SA’s real healthcare costs had increased 4% from 2009 to 2012, considerably lower than the global average of 6.2%, she said.

Ms da Costa said the market inquiry was running about a year behind schedule, and the Competition Commission had requested extensive additional information from many participants. The commission is updating its timetable, a notice on its website reads.

Ms da Costa said Dr Motsoaledi’s opening speech, in which he said the costs of treating noncommunicable diseases were contributing to the “ever-escalating costs” of healthcare marked an interesting departure from his usual position.

“For the first time I think we were hearing him saying the burden of disease and healthcare utilisation are driving costs. It’s quite an admission,” she said.

McKinsey & Company partner Imraan Munshi said new business models and digital technology offered opportunities to provide healthcare in novel ways. In India, Aravind Eye Hospitals provided cheap eye surgery by using technicians instead of surgeons for all but the complicated cases.

Almost 160,000 health apps were available for health, he said.



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