Does the private health care sector display oligopolistic characteristics in South Africa?

Germishuizen, Juanita (2009-12)

Thesis (MBA (Business Management))--University of Stellenbosch, 2009.

Thesis

ENGLISH ABSTRACT: In the field of Economics, the term “competition” refers to the method involved in steering an increase in supply, which leads to a decrease in equilibrium price and an increase in equilibrium quantity. However, competition involves more than just an increase in supply. In any economy, competition can affect factors, such as innovation, efficiency and the accessibility to goods and services. In some cases, the effect might not be positive, if the goods and services only benefit certain parties involved, rather than the general population. Traditionally, there are four basic types of market structure, with each structure displaying unique market power characteristics, which are initiated by an organisation’s profit motives. All market structures, other than that of perfect competition, are forms of imperfect competition. One such imperfect market structure is oligopoly, which has certain unique characteristics (Doyle, 2005:198). In the private health care sector, cost increases can be related to the increased market concentration, due to the increase of market power by hospital groups. Therefore, the prevalence of competition in the private health care sector should be monitored. That health care functions in a dynamic environment has been historically proven and can also be seen in the latest trends. A bundle of factors, rather than a single factor, determines success. Any overview of the international health care industry should demonstrate the rapid development of the industry. The industry, compared with the relatively elementary and experimental health care system of a few decades ago, is currently super specialised. A shift has taken place in the market from the role of the industry as a government-funded health care provider to that of a private hospital provider. In South Africa, the complexity of the health care sector is made even more complex by the many role-players and the interaction between the different private and public health providers. The cost of access to hospitals should be prioritised. Research shows that the private health care sector caters for the health needs of almost seven million people, who comprise only 15% of the total population. However, the sector has spent more money than the entire public sector, with the per capita expenditure exceeding that of the public sector eightfold. The increase in the cost of private hospitals in South Africa has been caused by changes in the market concentration. Such expenditure has given the private hospitals greater market power and has influenced their behaviour.

AFRIKAANSE OPSOMMING: In ekonomie verwys die term “kompetisie” na die metode betrokke om ’n toename in aanbod te veroorsaak, wat weer ’n verlaging in die ewewigsprys en ’n verhoging in die ewewigshoeveelheid tot gevolg het. Kompetisie behels egter meer as net ’n verhoging in aanbod. In enige ekonomie kan kompetisie faktore soos innovasie, doeltreffendheid en toegang tot goedere en dienste beïnvloed. In sommige gevalle is die effek egter nie positief nie, soos wanneer goedere en dienste slegs sekere belanghebbendes bevoordeel in plaas van die algemene publiek. Daar is, tradisioneel gesproke, vier basiese markstrukture wat elkeen unieke markbeherende eienskappe toon wat deur die organisasie se winsmotiewe geïnisieer word. Alle markstrukture, behalwe volmaakte kompetisie, is vorms van onvolmaakte kompetisie. Een so ’n markstruktuur is oligopolie wat sekere unieke eienskappe toon. In die privaat–gesondheidsorgsektor, is kosteverhogings gekoppel aan verhoogde markkonsentrasie as gevolg van die toename in privaat hospitaalgroepe. Kompetisie in die privaat-gesondheidsorgsektor moet dus gemonitor word. Dat gesondheidsorg in ’n dinamiese omgewing funksioneer is reeds bewys en kan ook in die nuutste tendense gesien word. Dit is egter ‘n hele groep faktore, nie slegs een faktor nie, wat sukses waarborg. ’n Oorsig van die internasionale gesondheidsorgindustrie toon dat ontwikkelinge in die industrie baie vinnig vorder. Vandag is gesondheidsorg uiters gespesialiseerd in vergelyking met dekades terug, toe dit relatief elementêr en eksperimenteel was. Die rol van die industrie het verskuif van ’n staats-gesubsidieerde diens na waar dit vandag grootliks deur privaat instansies gelewer word. In Suid-Afrika word ’n reeds komplekse gesondheidsorgsektor meer gekompliseer deur die baie rolspelers in die sektor asook die interaksie tussen die verskillende privaat- en staatsgesondheidsorgvoorsieners. Die koste van toegang tot hospitale behoort ’n prioriteit te wees. Navorsing toon dat die die privaatgesondheidsorgsektor dienste aan sewe miljoen mense bied wat slegs 15% van die totale populasie is. Hierdie sektor spandeer egter baie meer as die met ’n per capita uitgawe byna agt keer meer as staatsgesondheidsorg. Die oorsaak van koste verhogings in privaatgesondheidsorg in Suid-Afrikaanse hospitale is veroorsaak deur veranderinge in die konsentrasie van die privaatgesondheidsorgsektor. Dit gee privaathospitale groter markmag en beïnvloed dus hul optrede.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/996
This item appears in the following collections: