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Health care in South Africa

South Africa's health system consists of a large public sector and a smaller but fast-growing private sector. Health care varies from the most basic primary health care, offered free by the state, to highly specialised hi-tech health services available in the private sector for those who can afford it.

The public sector is under-resourced and over-used, while the mushrooming private sector, run largely on commercial lines, caters to middle- and high-income earners who tend to be members of medical schemes (18% of the population), and to foreigners looking for top-quality surgical procedures at relatively affordable prices. The private sector also attracts most of the country's health professionals.

Public versus private spend
Although the state contributes about 40% of all expenditure on health, the public health sector is under pressure to deliver services to about 80% of the population. Despite this, most resources are concentrated in the private health sector, which sees to the health needs of the remaining 20% of the population.

Drug expenditure per person varies widely between the sectors. In 2000 about R8.25-billion was spent on drugs in South Africa, with the state spending only 24% of this. Thus, R59.36 was spent on drugs per person in the state sector as opposed to R800.29 on drugs per person in the private sector. Of all the country's pharmacists, 40% work in Gauteng in the private sector.

The number of private hospitals and clinics continues to grow. Four years ago there were 161 private hospitals, with 142 of these in urban areas. Now there are 200. The mining industry also provides its own hospitals, and has 60 hospitals and clinics around the country.

Most health professionals, except nurses, work in private hospitals. With the public sector's shift in emphasis from acute to primary health care in recent years, private hospitals have begun to take over many tertiary and specialist health services.

Public health consumes around 11% of the government's total budget, which is allocated and spent by the nine provinces. How these resources are allocated, and the standard of health care delivered, varies from province to province. With less resources and more poor people, cash-strapped provinces like the Eastern Cape face greater health challenges than wealthier provinces like Gauteng and the Western Cape.


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Chantelle Benjamin
3 August 2009
Johannesburg — MEDICAL aid schemes' proposal to work with the government on a national health insurance (NHI) system, rather than operate independently, has been welcomed by economists and health professionals as it could make medical aid more affordable.
It would also mean the survival of most medical aids themselves and prevent job losses in the sector.

But experts warn the public health system first requires a radical overhaul before any NHI system can be implemented, saying it is poorly managed and resourced and will not be up to scratch soon.

Economist Azar Jammine said hurried implementation of an NHI system in the current economic climate could mean "not only the loss of the public sector health system but the collapse of the ... economy".

The Board of Healthcare Funders (BHF), which represents most medical schemes in southern Africa, on Friday unveiled a proposal it intends making once the government calls for public comment on NHI.

The board suggests that medical schemes offer top-up cover for shortfalls in the NHI package. Medical scheme administrators could also collect patients' contributions for NHI benefits from the central NHI agency, and pay service providers.

They said that medical schemes, in continuing services, would ensure a smooth transition for their 7-million users when moving into NHI.

The proposal would have the possible bonus of making medical aid cheaper for the man in the street, because members would only be paying for services not provided by the state.

Kurt Worrall Clare, CEO of the Hospital Association of SA, said any proposal by medical aids was premature until the government released a draft NHI document, but a private healthcare system remained vital .

"It's all fine having a financial model but if the percentage of nurses to patients remains at 2,8 nurses to 10000 people, when the overseas average is 12 to 10000, then delivery will suffer."

Jammine welcomed efforts by medical schemes to provide greater access to medical aid, saying he hoped such suggestions would "spawn a proposal that would see a more workable proposal than presently rumoured from government".

He agreed that any system coming into effect had to include proper input from the private sector and an overhaul of the public health sector.

"Government keeps saying that the same amount of money is being spent on 7-million medical aid members as 40-million South Africans but the money in the public sector is being spent inefficiently -- management and policies in this sector have been appalling and this has to be addressed."

Jammine said the government's funding of a national health plan could place serious strain on a system that is already spending on housing, infrastructure and electricity.
"Early implementation could ... mean the death of not just private healthcare but the entire economy as the costs will be so exorbitant."

Malcolm Kahn, chairman of Fedhealth, said: "The process needs to be phased in over several years with key issues the substantial upgrading of public sector hospitals, the training of more doctors, nurses and ... staff, and exploring new avenues of funding."


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Medical aids feeling the pinch, MPs told

An increasing number of South Africa's 119 medical aid schemes are feeling the financial pinch, members of parliament's health portfolio committee heard on Wednesday, 26 August 2009.
"We're beginning to see medical schemes facing problems," the acting CEO and registrar of the Council for Medical Schemes, Patrick Matshidze, told MPs.

The council is a statutory body established in terms of the Medical Schemes Act.

Operating since 2000, its primary responsibility is to protect the interests of beneficiaries.

Briefing members, Matshidze tabled figures showing the average solvency ratio of medical schemes had dropped over the period 2005 to 2008, from 39.1% to 36.6%.

While this average was still "way above" the prescribed level of 25%, a total of 18 schemes had fallen below this.

"We've got... 18 open medical schemes that have failed to meet with the prescribed level of solvency. Among this 18, some are on their death bed... the most we can do is encourage them to either amalgamate, at best, or liquidate, at worst."

The council defines a solvency ratio as "the cash a medical aid scheme needs to keep in reserve, expressed as a percentage".

Matshidze said there were an increasing number of amalgamations and liquidations within the medical aid sector.

The council also handled complaints lodged by members against their medical scheme. A total of 37.2% of these (1166

complaints) in 2008/09 related to accounts not paid by schemes, an increase over the previous year's 36.9%.

"This remains a serious concern," Matshidze said.

Earlier this month, the Sunday Times reported that many of the country's 7.8 million medical aid scheme members were fast running out of funds to cover day-to-day medical expenses.

The newspaper quoted Matshidze as saying the council was investigating whether schemes were slashing benefits.

Speaking later to Sapa, he said the investigation was "on going" and the amounts involved had not yet been quantified.

Earlier, he told the committee that at the end of 2008, medical schemes had garnered R74 billion in contributions, and paid out R64.7 billion in claims.

Of the claims paid, by far the bulk went to private hospitals (about R23 billion), medical specialists (about R14 billion) and for medicines (about R11 billion), Matshidze said.

Committee chairman Bevan Goqwana told members that medical aid schemes would be called at a "later" date to account to members on their activities.








South Africa’s striking nurses open door for private healthcare

September 2, 2010 7:29pm


South Africa’s civil servants’ strike may have thrown the country’s public services into chaos, but it provided one private hospital group with a priceless PR opportunity.


When nurses at the Natalspruit Hospital near Johannesburg joined the strike, they left 53 premature babies unfed and unattended for a full day. Enter Netcare, the country’s biggest private hospital group, whose paramedics garnered an admiring press for spending a night transferring the children to two of its upmarket hospitals.

They were among 725 critically ill patients that Netcare has taken on free of charge, says Richard Friedland, Netcare’s chief executive. He is adamant that the decision was taken purely on humanitarian grounds. “We didn’t choose to go to the media on this,” he says. “It’s cost us about R20m so far.”

But there’s room for Netcare to expand in South Africa, he acknowledges. Only about 7m South Africans currently have private health coverage, he estimates – about half of the working population. And given the shocking state of many public hospitals, those who can afford to opt for private care are doing so in increasing numbers, helping Netcare’s domestic revenue to rise by 7.1 per cent in the first half of this year.

It’s not just patients who are going private – growing numbers of doctors and nurses are fleeing the public sector. That is one reason behind the government’s efforts to control the prices charged by private hospitals, says Lizelle Wentzel, an analyst at Frost & Sullivan. “Instead of focusing on the public infrastructure, they’re putting in a lot of effort to stop private-sector companies taking all the best people,” she says. “In the public sector it’s horrible – working conditions are bad and the salaries are poor.”

Aaron Motsoaledi, health minister, wants to improve the situation through a new national health insurance system. The details of that scheme remain unclear, but it has been met with scepticism by many in private healthcare who worry that South Africa cannot afford the costs of establishing it – as much as R216bn, according to the research consultancy Econex. The system would probably oblige private hospitals to lend assistance in some form – something which could drag down their standards as they struggle to help a public sector “in disarray”, the Institute of Race Relations warned recently.

Dr Friedland, however, insists that the private sector will be happy to play its part. “Healthcare reform is necessary and inevitable in South Africa,” he says. “The private healthcare sector has a lot of expertise it can offer in partnership with the government.” That may be so – but as Ms Wentzel points out, bungled reform will only strengthen the steady exodus of medical professionals in search of better pay and working conditions overseas.



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How to achieve health for all
05 Oct 2010
Di McIntyre

SINCE the ANC’s announcement last month that a national health insurance (NHI) will be pursued, we have once again seen claims that an NHI is unaffordable and that the whole idea should be consigned to the garbage bin. However, South Africa can have a health system that makes us proud and serves everyone, rich and poor, in an equitable manner. We need honest debate which is stripped of party political interests; it needs to be a discussion which reflects the views and interests of all our citizens, especially the poor who currently rely on a state health system that is struggling to cope.

I attempt to try to unpack the options that face South Africa, to promote broader public debate from an informed perspective, by painting scenarios of where we could head using the approach popularised by Clem Sunter.

There is no question that a key area of concern about proposals to introduce major health-system reform is whether these changes will be affordable and sustainable. The other critical element of the current debates is whether we are able to achieve an integrated health system or whether we are destined to continue to have a highly fragmented health system. These two issues are therefore selected as the two ‘axes’ for the scenarios summarised in the figure pictured.

The starting point for considering what health-system changes would be helpful is to be clear about the path on which we are currently set. Our health system is heavily fragmented. A key division is between those who are medical-scheme members (16% of South Africans) and those who are not (the remaining 84%). Health-service access is very different for these two groups.

Our current health system is second-rate in many ways. For increasing numbers of families, medical-scheme cover is just not affordable. In the early 1980s, medical- scheme contributions for a family took about 7% of average wages and salaries across all formal-sector workers. This had increased to 14% by the early 1990s, 20% by the early 2000s and a staggering 30% by 2007. The challenges facing the underresourced public health sector are well known. There is no question in my mind that change is needed, and needed soon.

If this is not the direction in which we want to head, where do we want to go? Some argue that we need to pursue social health insurance (SHI) — the ‘divided forever’ scenario. It is proposed that everyone who is formally employed and who earns more than the income-tax threshold should be required to have medical-scheme membership. The problem is that this scenario is a very expensive option. Based on recent scheme-spending levels, R1 in every R10 spent in South Africa would have to be spent on medical-schemes alone, for the benefit of less than 40% of South Africans who will be able to afford it. Even with concerted efforts to contain costs, the overall price tag of this option is enormous.

This scenario is called ‘divided forever’ because it will entrench a fragmented two-tier system between the haves (those that have insurance cover and access to any health service they desire) and the have- nots. Proponents of this path argue that SHI is a logical step towards universal coverage. But experience in other middle-income countries, notably many Latin American countries, shows that it is very difficult to overcome the divisions created by SHI once they have been entrenched. Progress towards universal coverage is unlikely under this scenario.

Many believe that, instead, an integrated system is needed. What is so prized about such a system? The global call for progress to universal health systems (the subject of the soon to be released World Health Organisation 2010 Report — so it is indeed a global call) is based on the following two principles:

• that no one should have their livelihood threatened because they have to pay for health care, i.e. that all citizens should be provided with financial protection from health-care costs; and

• that all citizens should be able to access the health care they need.

In order for these principles to be realised, an integrated health system is needed. It simply doesn’t work to have all the richer, healthier people contributing to and benefiting from one funding pool (or worse, to a number of fragmented pools) and all the poorer, sicker people in a completely separate funding pool. You end up having a lot or most of the money for health care going to serve a relatively healthy group and very little money available to provide health care for those who bear most of the burden of ill-health.

One way of pursuing an integrated system is to attempt to cover everyone using the current medical-scheme model. A mechanism (called risk-equalisation) could be put in place to get some kind of integration across individual schemes. However, the cost of medical-scheme cover makes this option unaffordable. It would result in more than R2 in every R10 that is spent in South Africa going to cover the entire population via medical schemes. For this reason, this scenario has been called a ‘no go’ — no country in the world has such a system and it is not something worth even considering for South Africa.

I believe that it is possible to achieve an affordable, sustainable and integrated system which would contribute to improving the health of all in South Africa. How is this possible? Everyone agrees that the first step is to improve services substantially in the public-health sector. There is much to be done, both in terms of improved management and resourcing. Some say: “Why not just focus on improving the public sector”. The most valuable and scarce resource in the health sector is that of health professionals. We undoubtedly need more health workers in the overall health system, but we could be utilising the human resources we do have far more efficiently and equitably than at present. For example, it is simply not feasible for a single pharmacist in a public hospital to provide good quality services when they are serving many hundreds of patients every day. Less than 10% of pharmacists registered in South Africa work in the public sector. Perhaps we could do better if patients with a chronic illness were able to collect their monthly prescription at a local retail pharmacy instead of queuing all day in a public hospital. However, this would only be possible if we have a large integrated pool of public funds that can be used to purchase health services from public and private providers for the benefit of all South Africans. It is not simply a matter of focusing on improving the public sector; we need to change the way in which health services are funded if we are to use the health professional resources in South Africa effectively. An integrated pool of funds is the only way to ensure that all the available human resources are used more effectively. Then everyone will be able to access health services on the basis of their need for care and not on the basis of their ability to pay.

Ensuring affordability in a universal health system requires other changes. Two things are particularly important. First, it is critical to have high-quality primary level services and for primary care providers to determine access to specialist and hospital inpatient care. This is the way medical schemes used to work (you had to be referred to a specialist or hospital by your GP), but direct access to any and all specialists has contributed to the expenditure spiral in schemes. Second, we need to change the incentive structure for health-care providers. At the moment, we pay private doctors and hospitals a fee for every service delivered; the incentive is to provide as many services as possible. It is known that many of the stressful, very expensive diagnostic tests performed are unnecessary. International experience clearly demonstrates that changing the way of paying providers is necessary to secure greater value for money.

The ‘healthy nation’ scenario is what I believe public debate should focus on. Surely we can all agree that we do not want to continue on the current path (the ‘second-rate system’)? Instead of saying that health- system change is unaffordable, let’s focus on how we can achieve a sustainable, integrated health system that benefits all. A healthsystem that brings our nation together rather than dividing us further. We can rebuild our health system to be the pride of every South African.

Di McIntyre is the South African Research Chair in Health and Wealth in the Health Economics Unit, University of Cape Town.


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Foreign doctors will have to be recruited if the mooted national health insurance (NHI) is to be successfully implemented, hospital workers union Hospersa said on Wednesday.

"While the government's NHI plan has theoretical merit, in practice it will be exceedingly difficult to implement, particularly within the envisaged timeframe of 14 years," the union said in a statement.

"South Africa already suffers from an acute shortage of skilled health care personnel, yet the new system will require about 80 000 additional posts.

"It will be difficult to meet demands -- and it is entirely likely that foreign doctors will have to be recruited," Hospersa said.

The ANC said at its national general council last week it wanted to phase in national health insurance over 14 years from 2012.

The plan was expected to cost R128-billion in its first year, increasing to R376-billion by 2025.

Membership of the NHI would be compulsory for the whole population, but the public could choose whether to continue with voluntary medical aid scheme cover.

The ANC suggested the NHI be funded from various sources, including a surcharge on taxable income, payroll taxes for employees and employers, and an increase in value added tax (VAT) earmarked for the NHI.

Hospersa said it would be "exceedingly difficult" to implement the plan in the envisaged timeframe.


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