van den Heever BMC Public Health 2012, 12(Suppl 1):S5 http://www.biomedcentral.com/1471-2458/12/S1/S5 Page 8 of 13 Figure 3 Private hospital changes in market share from 1996 to 2006 for the three main hospital groups: Life Health, Netcare, and Medi-clinic Data from Council for Medical Schemes [16] From 2000 the market for private hospital acute beds was concentrated in the hands of only three hospital groups. hospitals in the private sector (they are not employed by hospitals), are actively attracted to hospital groups by capital investments in specialised medical equipment and practice management support. As certain hospital groups achieved sustainable revenue flows through the predictable demand provided by the specialist referrals, they were better positioned than independent hospitals to invest in the capital equipment required to attract more specialists. As independent hospitals lost their ability to retain specialists, demand for their services declined, exposing them to inevitable takeover by any one of the cash flush large hospital groups. As a result whereas in 1998 44.7% of private hospital beds were still in independent hands, by 2002 only 30.2% remained. By 2006 this had dropped to 16.2% (figure 3) [16]. Once the hospital consolidation passed an important concentration threshold in 1999, their market power, initially directed against independent hospitals (competi- tors), could now be directed against medical schemes who became price takers. Thus although a trend break in rising private hospital costs occurs only from 2000, the conditions for this trend break were established dur- ing the 1990s. (Figures 2 and 3). Scheme demographics The demographic make-up of medical schemes also became more inclusive from the mid-1980s to 1999 with a surging black middle class taking up coverage. Whereas in 1984 only 14.8% of scheme beneficiaries were black [20], by 1995 it improved significantly to 37.6% with whites at 48.6% [21]. These positive trends continued through 2000, with black beneficiaries substantially exceeding whites by 2007 with proportions at 42.8% and 39.8% respectively. By 2010 black beneficiaries consti- tuted nearly half of all beneficiaries at 46.3% (3.8 million beneficiaries) with whites now well below at 35.7% (3 million beneficiaries) [22]. The differential improvement in black membership from 1995 is attributable to