oa South African Health Review - Private hospitals : health care delivery

Volume 2007 Number 1
  • ISSN : 1025-1715



Private hospitals play a significant role in the South African health system. Access to private hospital services however, is still very limited largely because they cost significantly more than services in the public sector. Beneficiaries of medical schemes are the primary customers of the private hospital industry, although an increasing trend of self-funding patients has been reported.

The changing preferences of the medical scheme population have influenced a significant shift from utilisation of public hospitals to private hospitals since 1990. As a result, private hospitals have experienced substantial growth with the total number of private sector beds increasing by 32% since 1998 to the current estimated 27 500 beds. Private hospitals however, are concentrated in the major metropolitan areas with most hospitals found in Gauteng, KwaZulu-Natal and the Western Cape. Private hospital facilities are predominantly owned by three major hospital groups i.e. Netcare, Medi-Clinic and Life Healthcare. Collectively, these groups own and operate more than three quarters of all private sector beds and more than 80% of all private sector theatre facilities.
The private hospital industry consistently attracts the attention of health care funders and regulatory authorities regarding its cost structures and pricing practices. A perception prevails that the fee-for-service reimbursement mechanism implemented by medical schemes encourages over-servicing thus driving cost-escalation in the environment which makes private hospital services unaffordable for the majority of South Africans. Conclusions highlight the need for the implementation of a comprehensive approach to regulate private hospital services with focus on costs, quality and transparency.

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