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New legislation on medicines to save consumers 20%

by Gabi Khumalo
on 12 Jun 2008
BuaNews Online
BuaNews Online

The Single Exit Price legislation introduced by the Department of Health has resulted in a 20 percent savings for consumers on medicines, according to Board Healthcare Funders (BHF) of Southern Africa.

The BHF said the legislation, if executed appropriately, will bring about transparency in pricing within the private healthcare environment.

The BHF supports the Health Minister, Dr Manto Tshabalala-Msimang and the department in developing and formulating this legislation which provides for establishing a Bargaining Chamber.

Managing Director of BHF, Dr Humphrey Zokufa said it was clear that free market principles cannot apply in the private healthcare environment in South Africa and the elements which need to be in place for perfect competition do not exist.

"In an environment of perfect competition, the consumer would have a choice of where to obtain a service, they would be in a position to assess the quality of the service and will have the power to buy or not to buy the service.

"This is exacerbated by a market where there is a private hospital oligopoly and a scarcity of specialist skills," Dr Zokufa said.

He noted that over the past few years, the industry has been dogged by a lack of transparency in prices for healthcare services for ward fees, theatre fees, prosthetics and healthcare technology.

This has contributed to making private healthcare unaffordable to the average working person in South Africa.

The same lack of transparency applied to medicines until the government introduced the Single Exit Price legislation, which has resulted in an approximate 20 percent savings for consumers on medicines, he said.

He further said that the BHF estimated recently that the manner in which private hospital groups were charging for anaesthetic gasses resulted in over-charging of approximately R300 million per annum to consumers.

Commending the government for its intervention by outlawing the previous pricing model and implementing a more accurate method of billing, Dr Zokufa said the BHF does not believe that transparency will be gained in the absence of a legal framework.

"There are no countries in the western world without a regulatory framework around pricing of healthcare, it is absolutely essential that the private sector sees itself as part of the entire healthcare solution and that together we demonstrate our ability to be the platform for a National Health Insurance system in South Africa," said Dr Zokufa.

He added that the BHF will meaningfully participate in the process.

"We believe that the implementation will give rise to a downward pressure on the price of private healthcare, which in turn will have a knock-on effect on premiums paid by consumers," he said.

Addressing the representatives of the private health sector during a meeting over the weekend, Minister Tshabalala-Msimang said the intention of the National Health Amendment Bill is to create transparency and make the private hospital sector more viable.

"The primary intention of the Bill is to create transparency and not to fix prices, the funders and service providers such as private hospitals will still engage and determine the price particularly for the Prescribed Minimum Benefits," said Minister Tshabalala-Msimang.

The meeting was part of the process of several engagements on the Bill, which has been tabled before Parliament.

The BHF is the representative body for 93 percent of medical schemes throughout South Africa, Namibia, Zimbabwe, Botswana and Lesotho. - BuaNews

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