In August, the HPCSA released private medical sector tariff guidelines. The immediate criticism from doctors and dentists claiming that the tariffs were ‘unscientific’ and ‘out of kilter with the reality of running a healthcare business’ prompted the HPCSA to withdraw the guidelines and return to the drawing board. This is not the first time that government has attempted to ‘control’ prices within the private medical sector, and will probably not be the last time considering the health minister’s view that ‘uncontrolled commercialisation’ pervades the healthcare sector.
The ‘new’ guidelines were based on the 2006/07 National Reference Price List compiled by the Council of Medical Schemes in conjunction with the Department of Health and, in 2010, declared invalid by the courts. The HPCSA adjusted the price list for inflation, but medical costs have increased at a faster rate than inflation due to the introduction of new technologies and procedures. This is one of the many fundamental flaws of government- controlled prices - governments are always slow to react to new developments. Any price list it introduces will, without doubt, quickly become irrelevant and cause confusion in the entire private medical sector.
Compounding the problem is the 2004 Competition Commission ruling that prevents medical schemes from negotiating prices with service providers. This must be reversed as a matter of urgency in order to increase the bargaining power of medical schemes so that they can offer reduced prices to consumers. If they are prevented from negotiating, they must also not be expected to ‘pay in full’ the fees charged by service providers. This has the potential to exhaust an entire pool of savings and render the medical schemes insolvent, and are thus harmful to all individuals covered by the affected medical scheme options. The only and obvious way to decrease prices in the private sector is to increase competition.
With regard to doctors’ fees, the minister would need to put an end to the ‘old boys club‘ that dominates the medical fraternity by dissolving the government created monopoly responsible for training doctors in this country. Ironically, the HPCSA determines the number of places available for trainee doctors and currently limits them to approximately 1400 positions each year. Everyone is well aware of our growing population, let alone the dramatically increased burden of disease driven mainly by the onslaught of HIV/AIDS and TB, yet, despite greater demand, the HPCSA has only slightly raised the number of available trainee doctor places from what it was in the 1970s.
SA’s population has increased from about 24.28 million in the mid-70s to the current estimate of 50.59 million, an increase of 26.31 million people. When you add to this our ageing population, which will require more and more treatments for chronic ailments in the future, you cannot fail to see that the current shortage of doctors is going to get even worse. Our poorly performing public healthcare system exacerbates this problem because it is driving our doctors away. Common reasons cited for the mass exodus of skilled healthcare personnel from the public sector are poor salaries, high workloads, poor work environments and few opportunities for advancement.
According to HPCSA, despite the fact that medical schools produced approximately 19500 graduates between 1990 and 2005, their records show only 9304 new registrations during this period. This implies that a significant number of individuals, after graduating, instead of practising in SA, are leaving the country.
In terms of rules created by the HPCSA, SA is also the only country in the world where private hospitals are prevented from directly employing doctors. Private hospitals thus resort to other methods in order to attract various healthcare professionals to establish their practices within private hospital premises. For example, they may invest in sophisticated equipment and/or improve the infrastructure to make the hospital more appealing. This has the effect of driving up prices which are ultimately passed on to the patient. These rules should be amended so that doctors and other medical specialists can be employed directly by private hospitals.
The HPCSA’s attempt to introduce a tariff guideline in the private sector will not reduce prices in the long run. A long-term strategy to alleviate the chronic staff shortages requires the government to relax the controls on tertiary education facilities, make entrance to these facilities less restrictive, and allow the private sector to provide a large percentage of tertiary medical education for doctors. It should also allow medical schemes to negotiate tariffs with service providers.
If the Department of Health genuinely has all of this country’s citizens’ interests at heart, it would increase competition in the market by removing the barriers currently constraining the efficient functioning of the private provision of healthcare services. Increased competition in the market will lead to decreased costs and improve the overall healthcare options of the nation - it is not necessary to introduce price controls and other artificial barriers preventing private sector participants from effectively competing. Let people decide how and where they want to spend their money.
If tariff guidelines on doctors’ fees are introduced, apart from exacerbating the brain drain, I predict that in order to keep doctors from leaving, government will force our remaining doctors to be enslaved in the public sector for longer periods under the guise of community service or, to put it more accurately, servitude.
This article was first published in the October edition of the Medical Chronicle