Gosh, here’s a healthcare market that is spinning in the wind. It would be amusing if it were for the seriousness of it all.
This article illustrates a truly unique situation: a market where the payor sector is so ineffective that hospitals dictate pricing. Ok, maybe it’s not that unique. But in a large economy like South Africa, with its significant private insurer sector, it is unusual for the carriers to not be able to exert downward pricing pressures on the hospitals.
Generally, in a healthcare market where payors are NOT able to apply downward pricing pressure it is most likely due to the number of players, or lack thereof. Simply put, the insurance sector hasn’t reached critical mass.
But that’s not the case in South Africa. Challenges at hand for the payors there: Poor data collection, lack of experienced executive leadership, and an oligopolistic provider market (good for the hospitals)…..HK
South Africa – Hospitals Deny ‘Super Profits’
29 January 2008
Business Day (Johannesburg)