CAPE TOWN ù The Competition Commission has turned down private hospital group NetcareÆs proposed merger of its managed health-care division Medicross with rival PrimeCure, saying such a move would stifle competition and make it difficult for new black-owned companies to enter the market.
The commissionÆs decision to recommend that the Competition Tribunal prohibit NetcareÆs acquisition of PrimeCure signals its continued close scrutiny of the health-care sector, and puts a potential damper on NetcareÆs efforts to control costs by expanding its managed health-care services.
ôThe proposed merger is likely to negatively affect the ability of small firms and those controlled by historically disadvantaged persons to become competitive in the market.ö
The commission said the market for managed health-care services was highly concentrated, as the only other national player of any significance was CareCross.
Managed health-care companies like Medicross and PrimeCure offer medical scheme members cheaper packages but restrict their out-of-hospital care to a network of doctors and clinics.
PrimeCure has focused on low- income consumers, while Medicross has so far targeted middle-income earners. Both companies have been successful with their no-frills approach.
According to its website, PrimeCure provides medical services to 100000 people from 30 medical schemes, with a network of about 2000 doctors and 800 other health-care professionals. Medicross, which is jointly owned by Netcare and Netpartner Investments, runs a chain of 53 medical and dental centres.
ôThe proposed deal is likely to result in the removal of a potential competitor from the bottom segment of the market (PrimeCure) and reduce the number of potential players in this industry, to the detriment of consumers and competition in general,ö said the commission.
Netcare said yesterday that it planned to appeal to the tribunal against the commissionÆs recommendation.
The company said a combination of Medicross and PrimeCure would enable the delivery of low-cost health-care products ôat extremely competitive ratesö, and make private healthcare affordable to people who use the public health-care service.
PrimeCure CEO Charles Jacobs declined to comment yesterday, other than to say that the company would consider appealing against the commissionÆs recommendation, which, he said, would be discussed at a board meeeting today.
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