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08 May 2013

Healthcare market inquiry announced

The Competition Commission (CC) will start a long-awaited market inquiry into pricing in the private healthcare sector.

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The Competition Commission (CC) will start a long-awaited market inquiry into pricing in the private healthcare sector in September, Economic Development Minister Ebrahim Patel announced.

Speaking during debate on his budget vote in the National Assembly, Patel told MPs it would be a "historic inquiry", because it would be the first time competition authorities would use new powers conferred upon them.

During a media briefing earlier, he said: "The inquiry will use new powers, powers under section six of the Competition Amendment Act of 2009, and it will examine pricing, cost, and the state of competition in the sector.

Sketching the background to the probe, Patel said until 2009 the CC could only pursue specific instances of active collusion and price-fixing.

Healthcare sector first to be looked at

There was no provision for a wider inquiry into a particular sector. The healthcare sector would be the first to come under scrutiny, in a market inquiry expected to take up two years to complete.

"Some years ago the competition authorities ruled that the old practice of setting a common tariff was uncompetitive, and the intention was to ensure that through the exercise of competition medical costs would come down. In reality we've seen a growing trend of healthcare price and costs increases," Patel said.

Government took its cue from some commentators, who were concerned that the health markets "contain a massive asymmetry of power".

"When you go to a shop to buy a television set, if you don't like the price you decline to buy. If you have a cardiac arrest and you are rushed to hospital and you don't like the cost, you still have to get them to treat you."

The inquiry would allow industry players and consumers to provide evidence of what was happening in health markets.

"What are the pressures that are leading to cost rises? That inquiry -having regard to all the facts - can then make the appropriate recommendations," he said.

The commission is expected to publish the terms of reference soon.

 
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