NHN advises caution regarding NHI

"...We advise caution and careful consideration with respect to the scope and timing of implementation on National Health Insurance. The private sector should be fully engaged in the process so that our consumers, sick South Africans, get the services they require," says National Hospital Network CEO Otto Wypkema.

Wypkema was responding to an announcement made by the Deputy Health Minister Dr Molefi Sefularo at the Board of Healthcare Funders annual conference that legislation would be in place by April next year to start implementing the NHI plan.

National Hospital Network's members include 88 independent private hospitals, day clinics and psychiatric clinics and ophthalmic clinics. The group is the fourth largest private hospital group with representation in South Africa's major cities with over 18% of the private sector beds.

"We have confirmation from a wide range of sources, including the Council for Medical Schemes, trustees of medical schemes and administrators that NHN's fee structures are the most competitive of the hospital groups. In theory, we would therefore be first in line to benefit from greater numbers of public sector patients," says Wypkema.

"But we are concerned that over-hasty or ill-considered implementation could threaten our already vulnerable shortages of doctors, specialists and nurses. Many doctors in the private sector bulk at the idea of the capitation-based remuneration which is a key feature of National Health Insurance. Efforts must be made to accommodate these doctors, so that they stay in South Africa where they are needed.

"Furthermore, the Department of Health has confirmed that budgets and costings would only be available after the proposed legislation was in the public domain. Surely parliamentarians should have a notion of what NHI is going to cost as they evaluate the proposals?'" he asked.

Firoze Habib, spokesman for the Louis Pasteur Hospital in Pretoria said that the proposed funding of NHI would be general tax with a progressive mandatory contribution.

"In a society which is already overburdened with tax, an underperforming economy and a largely unskilled labour force, are we not shooting ourselves in the foot?", Habib asked. He suggested concentrating on growing the economy, attracting foreign investment, improving infrastructures and creating business opportunities.

"Against the backdrop of nurse, doctor and pharmacist shortages, we cannot afford a further loss of skilled labour," said Habib.

Co-payments - an interim solution

A fundamental problem to be confronted is the issue of financing the proposed NHI; one of South Africa's most shocking statistics is that out of a potential working age population of 19 million people, only 5.4 million pay tax. This means that 13.6 million people are either unemployed or earn salaries below the income tax threshold.
It is possible that it will be many years before agreement is reached, and in the meanwhile, creative, interim solutions have to be found.

"In my view, one option which would serve to increase access, retain expertise and offer policy-makers some speedy results would be for the Department of Health to design a voucher and co-payment system, where those who are willing to pay more for private hospital services will just have to pay for the difference between public health facilities and private health facilities," says Wypkema.

"Prices for different procedures could be fixed at an agreed ‘public sector rate', which the Department of Health would commit to paying, even if the procedure was done in a private hospital. However, those who wished to pay more, would have the right to approach private hospitals and pay extra for the benefit of not waiting or other reassurances that private facilities provide.

"To use another metaphor, it is like the Department of Health agreeing to pay for a burger and chip meal voucher, valued at R30.00. If however, the patient wishes to have a more up-market meal, the R30 voucher can be used as part payment, with the patient paying the balance.

"This model, a variation of which is used in France, brings many threads together. It will immediately free up valuable public hospital space for the very poor and it forces hospitals to design transparent pricing systems and to compete on this basis," says Wypkema.

"Not many policy makers realise that hospitals in South Africa have a wide range of cost drivers; nurses salaries and transport costs differ by region, rents, leases and the price of food varies, doctors charge different rates. It is a mistake to see them as monolithic entities," said Wypkema.

"From our point of view, it would be mistake if the Department of Health did not capitalise on these differences to its own benefit," said Wypkema. "Best of all, this system could be set up very quickly."