Physiotherapy industry gets leg up from the competition watchdog

The Competition Commission has given the physiotherapy industry the green light to have centralised procurement for the next five years, saying this would empower the sector to negotiate better terms with suppliers, allowing the savings to be passed on to consumers.

The industry will be expected to keep records and report to the commission annually a portion of cost savings in rand terms that have been passed on to consumers “and/or medical aid beneficiaries” in fulfilment of the competition exemption. The competition watchdog said the centralised procurement will be conducted through a request for proposal to suppliers for the “discipline-related cost basket” in exchange for participation on the preferred provider list.

The request for the exemption was brought by the SA Society of Physiotherapy (SASP), the country’s pre-eminent industry body.

“The commission is of the view that collective procurement could help SASP members secure lower prices and demand higher quality standards from suppliers, ultimately promoting overall efficiency,” the commission said. “The benefits may extend beyond cost savings and improved quality and positively impact patients receiving physiotherapy services.”

The completion reprieve comes with conditions, with the commission looking to increase the participation of historically disadvantaged people in the profession over the period of the exemption, which lapses in 2030.

Under the conditions, SASP will have to report to the commission annually on how the industry is transforming and on services it renders to “underserved and lower-income communities”.

The SASP and its more than 3,200 members will also commit to a proportion of their

centralised procurement spend from broad-based BEE entities, while also expanding employment opportunities for historically disadvantaged people. “The SASP and its members shall implement measures to achieve transformation in the field of physiotherapy. This will be done by implementing mentorship programmes that enable experienced professionals to train and support new entrants,” the commission said.

“The SASP and its members shall commit to taking active steps in promoting overall transformation, including the membership structure, to enhance the participation of historically disadvantaged people in the industry in line with the set targets.”

The commission found 100% of SASP members qualify as either small or medium enterprises and about 25% of the establishments of the organisation’s total membership are owned and operated by historically disadvantaged people.

It said the SASP would be required to provide an annual description of how centralised procurement has created “opportunities and incentives for products required in physiotherapy practices to be made and purchased locally”.

SA’s competition regime allows the commission to pardon conduct otherwise prohibited if the exemption is required to achieve socioeconomic aims — an instrument the commission has been using across several sectors, including logistics.

While the competition pardon granted to the SASP and its members is a breakthrough, the organisation faced pushback from the commission in its request to have its members collectively engage with medical schemes and medical scheme administrators to set prices. The commission felt this request, which sought to have the profession collude on prices with state and private hospitals, suppliers and other service providers, might lead to high costs for consumers.

The SASP argument was that its members were predominantly price-takers in their dealings with medical schemes and medical scheme administrators that control the manner and method of reimbursement for professional services rendered.

It said that allowing its members to collectively bargain would promote the entry of small and medium-sized businesses or firms controlled or owned by historically disadvantaged people.

The commission rejected this premise, saying consumers would be left worse off. “The investigation revealed that granting an exemption to SASP will limit competition in the market and result in tariffs that are above competitive levels, which will be detrimental to consumers.

“As a result, the commission has decided to reject the SASP exemption application in respect of collective bargaining, billing codes and global fees,” it said. “No evidence was found indicating that physiotherapists are price-takers or have no bargaining power in the healthcare industry.”