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Ministers unveil interim fix for private healthcare pricing crisis

Ministers unveil interim fix for private healthcare pricing crisis
Yeshiel Panchia
By Yeshiel Panchia
24 Feb 2025
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The move aims to address a two‐decade regulatory vacuum blamed for runaway costs, opaque pricing, and a system where patients are increasingly burdened with unforeseen expenses as the gap between what their medical schemes reimburse and the actual fees charged by providers widens.

Six years after the landmark 2019 Health Market Inquiry, Health Minister Dr Aaron Motsoaledi and Trade, Industry, and Competition Minister Parks Tau have announced steps to implement some of its recommendations, including a draft interim block exemption to regulate private healthcare tariffs. 

The move aims to address a two‐decade regulatory vacuum blamed for runaway costs, opaque pricing, and a system where patients are increasingly burdened with unforeseen expenses as the gap between what their medical schemes reimburse and the actual fees charged by providers widens.

“The current practice involves medical schemes unilaterally revising the coverage that they are willing to pay, and the health professionals either accepting these terms in return for direct payment or charging a higher rate,” said Tau during a press conference announcing the Health Market Inquiry progress made regarding the report.

The briefing follows the publication of a draft exemption on Friday, 14 February 2025, which will permit collective bargaining among medical schemes and providers to set tariffs specifically for the provision of Prescribed Minimum bBenefits — a process outlawed in 2003 by the Competition Commission over collusion fears. The exemption, valid for five years, seeks to curb overutilisation, balance billing, and “the lack of a formal tariff determination framework”, according to Tau.

The Health Market Inquiry’s legacy


The Health Market Inquiry, chaired by former Chief Justice Sandile Ngcobo, exposed systemic failures: private healthcare costs rose 9.5% annually against the Consumer Price Index’s 4.5%, while outcomes stagnated. 

“Fee-for-service means cash payment for every service received, and it is the main driver of volume and cost inflation,” stated Motsoaledi. 

The inquiry also highlighted the impossible task placed on patients, with Motsolaledi saying: “You don’t expect a patient to go to the doctor when (they are) very sick and start negotiating fees.” 

By law, medical schemes are bound to pay for costs related to 271 conditions and 27 chronic conditions that are classified as Prescribed Minimum Benefits. Under the Medical Schemes Act, the Prescribed Minimum Benefits include diseases such as tuberculosis and cancer while examples of chronic conditions that fall under Prescribed Minimum Benefits include asthma, epilepsy and hypertension or high blood pressure.

Return to collective bargaining


The draft exemption revives multilateral negotiations via two structures:

  1. Tariffs Governing Body: Experts to oversee pricing.

  2. Multilateral Negotiating Forum: Stakeholders (excluding dominant private hospitals) to set maximum tariffs for prescribed and non-prescribed benefits.


Smaller hospitals, already exempt under a 2023 Competition Commission ruling, may join negotiations. The framework targets price transparency and caps on co‐payments, which surged after 2003 when medical schemes unilaterally slashed reimbursements, leaving patients liable for gaps.

“The exemption further seeks to promote price transparency, certainty between medical scheme members, health practitioners, and medical schemes, and address the issue of unexpected co-payments and out-of-pocket payments by consumers,” Tau said. 

Skepticism and stumbling blocks


Critics have argued the interim measure sidesteps the Health Market Inquiry’s core recommendation: an independent Supply Side Regulator to oversee tariffs, licensing, and capacity planning.

The National Treasury blocked the Supply Side Regulator, citing fiscal constraints and overlapping National Health Insurance (NHI) mandates. Instead, oversight falls to the Health Department — a move questioned by stakeholders.

When the HMI report was released, the Competition Commission said it had identified “inadequate stewardship of the private sector with failures that include the Department of Health not using existing legislated powers to manage the private healthcare market, failing to ensure regular reviews as required by law, and failing to hold regulators sufficiently accountable. As a consequence, the private sector is neither efficient nor competitive.”

“Exclusion of private hospitals from the block exemption only applies to hospital fees or the cost of admission, and the exclusion does not apply to the fees for treatment,” said Tau.

Fee-for-service: a relic under fire


The exemption prioritises phasing out fee-for-service models, which are seen as driving excessive, economically motivated medical testing. Motsoaledi illustrated this by recounting how vendors once advised that a GP should perform frequent ultrasounds to recoup the high cost of the equipment, rather than basing its use solely on clinical need.

The shadow of the NHI


While the exemption is an interim measure,  its success hinges on NHI’s uncertain rollout. Motsoaledi said that these regulatory efforts were part of a longstanding attempt to control healthcare prices. In 2008, the director-general of health invited private hospitals, medical practitioners, and medical schemes to submit detailed cost information regarding the delivery of health services, aiming to better understand and manage price structures.

The draft document is open for public comment until Monday, 31 March,
after which medical schemes and providers will need to decide whether to engage in collective price negotiations under the Multilateral Negotiating Forum or comply with established NHI protocols. This decision represents a key step toward creating a systematic framework for setting healthcare service prices.

Public comment can be submitted to Dr Ivan Galodikwe, email [email protected] or hand delivered at 3rd Floor, Block E, 77 Meintjies Street, Sunnyside, 0132. DM

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