4 January 2008
The Department of Health has received several complaints about excessive increases in private hospital tariffs for 2008. Medical schemes have reported that private hospitals have been unwilling to negotiate tariffs that are affordable to medical scheme members and inflation related at worst. This is deeply concerning when one considers that medical scheme membership at current prices is unaffordable for most South Africans.
We understand that the increases in private hospital tariffs range from 8% to 33%, - well above the general inflation rate. Medical schemes are now forced to pass this increase onto their members as well as employers. The added burden therefore falls on all South Africans as the cost to individual increases as does the cost of doing business in South Africa.
On several occasions I have expressed my concern about cost escalations and lack of transparency in pricing in the private health care sector. To address this challenge, I called a private health sector indaba a few months ago at which all stakeholders admitted that all was not well in the sector. At the meeting there was consensus that government had to strengthen its regulation of the private health care sector.
I had hoped that the Indaba would have at least sensitised the private health care sector to our concerns about escalating costs - and indeed to their own concerns. The 2008 private hospital tariffs does not reflect a spirit of working towards a national health system that provides reasonable and affordable access to all South Africans.
However, these increases are only the latest example of how unfairly the private health care sector operates. Earlier this year, the massive rebates that private hospitals received for surgical and medical devices was exposed. After initially denying these reports -the evidence presented clearly indicated that a number of private hospitals did receive rebates that were not passed onto the patient. In fact the impression that was being created was that these products were being sold at "cost". We now know that these rebates were significant and "cross subsidized" the true cost of ward fees.
It does not make good business sense to use cross subsidies in this manner. What is being suggested is that private hospitals made their profits from consumables and surgicals and not from ward fees. In other words every patient admitted to a private hospital must receive a significant stock of surgical and consumables (irrespective of the patient's needs) for the hospital to remain viable. Surely this will not be in the best interest of the patient's health care. I find it unacceptable that private hospitals continue to increase ward and theatre fees simply because they no longer receive kickbacks from suppliers of medicines, surgical and consumables.
In August last year we learnt that private hospitals were not adhering to the medicine price regulations when billing for anaesthetic gasses. The amount of anaesthetic gas administered to patients in theatre should be calculated in milliliters however private hospitals have been billing for the gas in minutes rather than milliliters. This has resulted in significant overbilling for anaesthetic gasses. I had written to the companies that run private hospitals advising them that the per minute approach is in contravention of the medicine pricing regulations.
Instead of complying with this request private hospitals have responded by increasing their theatre rates to take account of the reduction in tariffs charged for anaesthetic gasses. This is in contravention of the medicine pricing legislation since the billing of medicines must be transparent and adhere to all the requirements of the medicine pricing regulations.
As you are all aware, the ultimate responsibility for a country's health system performance lies with government. To us, the health of our people will always be a national priority and as the Minister of Health I have a responsibility to safeguard the health of all communities in South Africa.
I therefore appeal to private hospital groups not to implement the proposed pricing increases for 2008 until we have discussed this matter with them and reached agreement of what will be in the national interest.
I will therefore convene an urgent meeting of private hospital groups to discuss these tariff increases. I hope that all parties would participate in these discussions in a spirit of finding a solution that would benefit the people of this country.
Dr Manto Tshabalala-Msimang
MINISTER OF HEALTH
For more information contact Charity Bhengu 083 679 7424 or 012 312 0420