The cost of healthcare

Posted on 11 December 2013

The cost of care
The private hospital industry is a national asset, and international studies prove the quality and price of care in SA compare favourably to the rest of the world. However, building (and maintaining) a hospital is expensive, and private hospitals also invest in the latest technology to make sure you get the best possible care. Private hospital input costs can’t be placed in the same consumer price index (CPI) basket as food or your bond, as their cost structures and the regulatory environment in which they operate make it difficult to contain these costs. For these reasons, the price of private hospital services usually increases at a margin higher than CPI each year.

Private vs public
State hospitals don’t incur capital cost – their upkeep is financed by the national treasury through your income tax and the like, they’re exempt from VAT and don’t pay other tax.

Insuring your health
Medical schemes must accept anyone who applies, and regulations state that all members are charged the same rate. This one-size-fits-all principle means younger, healthier people drop out of the medical scheme until they need it, which leaves the older, sicker members, who are likely to use healthcare services more often and for longer. The cost of providing healthcare increases and, in turn, increases the medical scheme contribution rate for all members in that pool – healthy or sick.

For more information please download the infographic (PDF) or view the video animation (YouTube).

The information provided in this article was correct at the time of publishing. At Mediclinic we endeavour to provide our patients and readers with accurate and reliable information, which is why we continually review and update our content. However, due to the dynamic nature of clinical information and medicine, some information may from time to time become outdated prior to revision.