S. Africa Private Health Care Needs Regulating, Report Finds

(Bloomberg) -- South Africa's private health-care market is uncompetitive and needs tougher regulation to ease the dominance of three main hospital operators and insurers led by Discovery Ltd., according to a much-delayed report into the industry.

The Health Market Inquiry, which has been investigating the industry for four years, made a series of recommendations in an 800-page report intended to increase competition and transparency in the industry. It found that Mediclinic International Plc, Netcare Ltd. and Life Healthcare Group Holdings Ltd. have a combined 90 percent market share of the private hospital market while Discovery generates far higher profit than its competitors.

The probe was initiated by the Competition Commission amid broader concern that private healthcare is only available to a minority of people who can afford it. More than two decades after the end of white rule, the country's inequality rates are among the highest in the world and more than one in four people are unemployed.

“Part of our recommendations will be aimed at regulators who, we have concluded, are not as sensitive to core competition concepts as they should be,” the inquiry said in its report.

Earning Profit

Discovery Health said its profitability is due to how well it runs the business and not because it charges higher fees. Netcare said it's still looking through the report, though there are several flaws that it intends to address in further submissions. Mediclinic Southern Africa said it also plans to respond to the findings. Life Healthcare did not immediately respond to requests for comment.

Representing the inquiry, Ntuthuko Bhengu said at a briefing that a new regulator would be chosen through a public process of nominations and a parliament vote. Stakeholders have until Sept. 7 to provide comments on the provisional findings and proposed recommendations, with a final report expected by Nov. 30.

--With assistance from Roxanne Henderson.

To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net

To contact the editors responsible for this story: Alastair Reed at areed12@bloomberg.net, John Bowker, Liezel Hill

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