Despite the chaos the new regulations have caused in the private health-care industry, the medical-schemes sector seems to be taking everything in its stride.
Its once adversarial relationship with the industry regulator, the Council of Medical Schemes, has improved. The council has established its authority, and government and industry have found a way to engage each other more constructively.
But the challenges for the industry remain immense. Government's plan to establish a social health insurance system that will make health care affordable for more people, will require radical changes to legislation. All reforms will be phased in over the next few years and are likely to affect private health-care players in many ways.
The policy implementation will take longer than expected, says Elixir Health Consultancy director Reg Magennis.
"Implementation requires huge architectural changes," he says. "But reforms will generally benefit private providers by increasing the number of covered lives."
In a report on the main drivers shaping the structure and performance of the SA private health-care delivery system, Magennis says government policy and reforms could generate an organised multisectoral backlash against government if reforms do not generate politically acceptable outcomes.
Some important unintended consequences could be a loss of health-sector investment; renewed legal challenges; corruption; failed black economic empowerment initiatives; job losses; and rising dissatisfaction among employees, patients and professional practitioners.
Magennis says there is a mounting belief among private-sector players that government's health policy is underpinned by a philosophy of "nationalisation by stealth".
Overregulation and control could curtail investment in the health sector and result in disinvestment by international companies and emigration by professionals.
But the quality of SA's private sector has been recognised overseas and local stakeholders, such as Discovery's US-based Destiny Health, have made progress in exporting professional skills, benefit-design methodology and operating competencies.
"This is generating a growing source of foreign currency and creates meaningful new prospects for growth and investment in the industry," says Magennis.
The report suggests there is a need to involve the national treasury in the health-care environment to develop good principles of finance and economic growth.
"The state should consider moving away from health-care delivery and towards being a buyer of health-care services for the indigent," says Magennis.
Board of Healthcare Funders communication manager Heidi Kruger says there should be a new focus on governance in medical-scheme administration.
"Trustees of many schemes have little clout. Perhaps they don't take enough responsibility," says Kruger.
"Trustees have a legal and fiduciary responsibility to the scheme and should make sure they are equipped to run the scheme."
Fedhealth principal officer Jeremy Yatt says there is a conflict of interest between administrators and medical schemes. "The objective for an administrator is to make money," he says. "But the medical scheme is trying to defray medical costs."
He proposes self-administration to cut out the margin paid to administrators. "On a scheme of about 60 000 members, you could potentially save about R9m/month," he says.
Medical schemes could be required by future regulation to strengthen their governance structures by employing certain full-time staff such as principal and financial officers.
However, the registrar of medical schemes recently had to intervene to root out corruption among trustees and principal officers, who were found to have abused their role and added to administration costs.
Most trustees are appointed on a part-time basis. "They may attend meetings a few times a year, but some know little about the business of a medical scheme," says Kruger.
"They could be playing a much more active role in helping to transform the industry."
Magennis says administrators seem to be managing on a day-to-day basis rather than on long-term basis. This raises the risk for providers and medicine manufacturers who require less churn and more certainty for long-term investment.
"There seems to be short-term thinking when cost-cutting measures are implemented without concern for the resultant quality of care," says Magennis. "Medical schemes are also being given poorly conceived buy-down' options that lead to poor quality care."
Many of the regulations and the increasing power of hospital and medical- scheme groups have affected professional practitioners.
Magennis says professionals such as doctors and specialists are on the receiving end of a number of frustrating features, including benefit design; interference with clinical decisions; fee/tariff control; and interference with collective business such as preventing individual practitioners from working together.
But Solutio managing director Dan Pienaar says managed care is still one of the most effective ways of reducing costs.
"There is a move towards risk-sharing with providers," says Pienaar . "Involving clinicians in the design of managed-care programmes is essential."
Discovery has focused more on involving the patient in reducing costs. Discovery Health MD Barry Swartzberg says by introducing features such as the medical savings account, which can be used to fund small-ticket medical aid items on the member's account, costs have been cut substantially.
Ultimately, spiralling costs will only be brought under control if there is renewed co-operation between industry players.
