Impact of tariff regulation on private hospitals

Genesis was appointed to assess the potential impact of a proposal by the Department of Health to regulate tariff negotiations between hospitals and medical schemes, as well as to permit the use of National Health Reference Price List (NHRPL) prices as a default in the event of no agreement being reached.

By using various bargaining models, the project team was able to demonstrate that the default position would ultimately be the binding constraint.

The team also demonstrated that the determination of NHRPL prices did not properly assess the actual costs of service provision, resulting in the real risk that these tariffs could materially damage the private hospital sector in South Africa.