On the second day of this round of hearings, the Panel heard from the Clinix Health Group, the South African Nursing Council and Office of Health Standards Compliance. Testimony from each of these groups was extensive and lengthy as a result summaries of these proceedings will be published individually.

History and Structure of Clinix

Clinix Health Group was founded in 1992 by Dr Peter Matseke and presently operates 8 hospitals with 1450 beds in Gauteng, Limpopo and North West. Dr Matseke’s undertaking to bring private healthcare to previously disadvantaged communities was regarded as a major risk within the medical industry at the time. Currently Clinix is investing aggressively in world class facilities and the employment of nurses, cleaning staff and community based caregivers from communities in which its hospitals are based. Prior to establishing Clinix, Dr Matseke ran a successful medical practise working as a medical officer in the surgical department at Chris Hani Baragwanath Hospital.

Business Model

The group provides infrastructure, clinical services and bills for services rendered. The role of the doctors is to manage clinical processes, admit patients and they bill separately for their services.  In addition, Clinix  uses specialist services such as radiologists who act on the instructions of the referring doctors. The services account includes accommodating charges, theatre billing, equipment charging and pharmaceutical items.

Clinix hospitals serve communities where most of the people are low income earners and the majority of which are not medically insured.

Regulation and Staffing

The Clinix representative who led the submission spoke briefly about regulation in the health sector, quoting the National Health Act, Medical Schemes Act, the Constitution and National Core Standards Compliance as some of the relevant legislation. He said that even though regulations are important, and especially in the health sector they can become burdensome, constrain innovation, limit competition, and lead to increased costs. Adding that regulation restricts the use of doctors and nurses from abroad. Further, Clinix observed that there is a huge shortage of sufficiently skilled nurses and told the Panel that Clinix focuses on training and encouraging continuous learning. Clinix outlined the guidelines which it operates to ensure patients safety and quality care, making specific mention of its Physician Advisory Board (PAB). The PAB is an autonomous committee which  explicitly focuses on clinical matters and the quality of care within Clinix hospitals.

Relationship with Funders

Clinix recognised that Designated Provider Networks provides administrators the ability to channel significant volumes of patients to specific providers. It would make sense they added if these DSP’s included Clinix facilities because of the locations of Clinix hospitals, however this is not the case. They used the Discovery KeyCare plan to make the point, drawing to the Panel’s attention the fact that medical schemes do no reimburse service fees for members who do not use a network hospital or network specialist. This they said puts hospitals and specialists in the areas they serve at risk of non-payment.

Clinix lamented the imbalance in negotiating power with bigger schemes stating that this hindered its ability to compete. Clinix asserted that funders, in the endeavour of curbing escalating costs, have embarked on measurements of quality outcomes which compare Clinix with other listed hospitals. Clinix contends that this comparison is inappropriate because the impact of social ills and diseases patterns prevalent in the areas which Clinix serves is dissimilar to that in affluent areas. For these reasons, Clinix argued, the measurement of length of stay spend by patients cannot be expected to be the same.

Dr Matseke said there remains a lack of interest and funding in developing hospitals in townships because these areas are perceived as high risk.

Clinix patients are those who are on cheaper medical aid options and the implication is that Clinix is paid lower tariffs. Bigger groups he said had more bargaining power and could negotiate better tarrifs. Dr Matseke explained that without the necessary funding, new entrants would find it impossible to compete. Also, that hospital groups such as Clinix find are challenged in competing for specialists because they do not have the same facilities and equipment. He added that because of the non-payment by schemes and types of medical aid plans low income earners chose it was difficult for Clinix to attract specialists. In response to Chief Justice Ngcobo’s probe, Dr Matseke said: “Cheaper medical aid plans are restrictive, and the criteria used to chose DSP’s considers specialist services which is prejudicial to smaller groups as they are unable to attract specialists.

Dr Matseke put forward the proposal that the National Department of Health should set the rules regarding the licensing of private hospitals and the provincial departments should implement as they are closer to the issues. According to Dr Matseke the application process for licensing of private hospitals is not a barrier, in and of itself, but that new and smaller groups are unable to access capital to develop hospitals.

In the past, the Industrial Development Corporation had funded new entrants but no longer does, further limiting avenues for access to capital. Dr Matseke suggested that medical schemes should be allowed to fund new entrants to create access for their members