The private healthcare market is characterised by (i) an unregulated pricing environment; (ii) healthcare expenditure that is driven by medical practitioners (i.e., via their own practice or via referral for further investigation); and as a result, (iii) a supply-induced demand that reflects a lack of competition in the market of medical scheme administrators (Competition Commission SA, 2018). Health consumers are largely disempowered with no method to assess the value of services that schemes procure on their behalf, and hence no leverage to hold managed care organisations to account (Competition Commission SA, 2018). Due to the lack of regulations in this area, consumers are also unable to choose a medical aid scheme and cover plan based on value-for-money. Consumers often trade affordability with a reduction in the range of benefits covered by scheme plans offered, where schemes compete ‘cosmetically’ on products that are available on cost-ranges, instead of value-for-money (Competition Commission SA, 2018).

References:

Competition Commission SA. (2018). Health market injuiry. Available from:  http://www.compcom.co.za/wp-content/uploads/2018/07/Executive-Summary.pdf