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Independent hospitals in South Africa face a series of problems as South Africans increasingly turn to public healthcare facilities.
“This is especially true for those situated in communities most in need. Despite providing essential services, these facilities are often in a precarious position, battling market pressures and operational challenges that threaten their sustainability,” Heather Orton from EY South Africa said.
Orton noted that independent hospitals do not have the benefit of economies of scale, competitive rates, and prime locations that attract top specialists, unlike their larger counterparts.
“The struggle is twofold: they must continuously innovate to serve communities effectively while ensuring they remain financially viable, “she added.
“These hospitals are grappling with high inflation and consumer affordability issues, with medical aid costs escalating beyond standard inflation rates.
“This economic strain alters how people approach their healthcare, driving an increasing number to rely on public healthcare due to the dwindling affordability of medical aids.”
“The rise in gap cover insurance is a telling sign of the times, as more people find certain medical procedures out of reach, leading to an increased dependence on public hospitals.”
Amidst this shift, private hospitals have had to focus on specialised areas like paediatrics and ICU, as many also try to manage a decline in revenue streams through strategic changes, such as cost optimisation and improved supply chains.
Although digital healthcare systems are being used by larger providers, this is difficult for smaller community hospitals where technological advancement differs significantly.
In addition, attracting top talent is difficult for smaller hospitals as competition is fierce with centrally-located hospitals.
The industry also lacks coordination, often resulting in price dismicrimation amongst independent hospitals.
Overall, the market size for independent hospitals is dropping substantially, as public healthcare dependency has risen from 72% to 85% in recent years due to the affordability crunch.
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