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2018/07/27
2018/07/31 01:14 PM
THE CITIZEN
If a service is provided by a company rather than government, this does not automatically mean a market is at work. The point is obvious but has passed by many in South Africa.

Private provision of services is moving into the spotlight as the government looks to make the health system more accessible to the poor. One aspect is the Health Market Inquiry HMI, established by the Competition Commission and chaired by former Chief Justice Sandile Ngcobo.

It recently released a provisional report recommending more regulation of private health care. It has invited comment on its ideas. It is inevitable that whatever proposals it comes up with will be attacked as an assault on the free market.

This will ignore the reality that there is no market in health care in South Africa, at least not one which works the way markets should work. Markets work only for people who have enough money to take part.

So the local healthcare market would exclude many people who cannot afford private care. But that is not the only problem even those able to join medical schemes do not get the benefits markets are meant to offer.

For markets to work, consumers must be able to make informed choices: they must have both a real right to choose and enough information to make that choice. But information and choice operate weakly in private healthcare and not at all in the private health insurance offered by medical aids.

The Competition Commission and the department of health are not trying to abolish the market, they are trying to make it work. The accurate debate is about whether they are doing it in the best possible way.

It might be true that people who can afford private medical care can choose then general practitioner. But that is where it ends. If patients need specialised care to hospital treatment, they don't choose the specialist or the place they will be treated.

Given all this, the HMI's proposal that healthcare providers and funders should be regulated is a pro-market move it seeks to make informed choice more of factor than it is now.

Similarly, an amendment to the Medical Aid Schemes Bill, which would abolish brokers, is currently up for discussion.

It, too, is not an attack on the market. Its likely effect would be to force brokers into the customer relations departments of the medical schemes, improving market information by ensuring that consumers know that they are dealing with people who work for the schemes, not for them.

Again, to oppose this measure is not to defend the market it is the opposite. For years, it was assumed the market was delivering satellite television where there was only one supplier.

Concentration in the formal economy means most good: are produced by subsidiaries of a handful of companies and sold in stores owned by only two or three.

While competition between a couple of firms is technically market, it is hardly one which offers benefits to consumers. The claim that markets must be left alone very often means there is a need to leave existing private providers alone.

This hides the reality that, in current circumstances, the challenge is not to protect private providers but to ensure they really are subjected to the rules by which markets are meant to force them to play.
  
2018/07/26
2018/07/31 01:14 PM
FIN24.COM
The national department of health recently took a swipe at medical schemes’ use of brokers to realise membership growth in a stagnant industry. Medical brokers were paid R2.2bn in 2017, according to the department.

“Almost two-thirds of principal members of medical aid schemes pay monthly to a broker as part of their premium,” said health minister Dr Aaron Motsoaledi at the presentation of the Medical Schemes Amendment Bill. “Many of these members do not even know that they are paying this money, which in 2018 is R90 per month.”

The department wants this money to be made available to pay for direct health expenses of members, rather than serving brokers “who are actually not needed in the healthcare system”, he said.

“The draft Medical Schemes Act Amendment Bill does not contemplate the termination of the role of brokers,” says Dr Jonathan Broomberg, CEO of Discovery Health. “It simply requires that members give explicit consent for the appointment of their broker, after which medical schemes may continue to pay broker commission.”

Discovery Health Medical Scheme, with its 2.77m beneficiaries at the end of 2017, owns 57% of the market for open medical schemes. The scheme paid broker service fees worth R1.2bn in 2017, according to its annual report.

Broker fees are capped at 3% of a member’s medical aid contribution per month, or R90, whichever is the largest. Medihelp, another open medical scheme counted among the 10 largest schemes in the country, paid brokers R60.5m in 2017, up from 2016’s R54.8m.

“Medihelp believes that brokers will continue to add significant value to medical schemes in the future,” says Heyn van Rooyen, the fund’s principal officer. “Since the bulk of the scheme’s new business is enrolled via its distribution channel, it is obvious that this resource simply cannot be done away with.”

The number of beneficiaries at Medihelp grew by 2.3% during 2017, or 4 563 net new beneficiaries. The amount spent on brokers to service this growth, by dividing the amount spent on them by the number of new beneficiaries, equates to R13 268 per net new beneficiary.

Discovery Health Medical Scheme spent R28 399 per net new beneficiary as the scheme’s number of insured lives grew by 42 755 in 2017. BestMed, also one of the 10 largest medical schemes in SA, lost 236 members during 2017 while paying brokers R70.45m, according to its annual report.

Bonitas, the second-largest open medical scheme, lost 24 571 beneficiaries during 2017, and paid brokers R281.2m over the same period, according to its annual report. Suffice it to say the fund did turn a R16.9m deficit for 2016 into a R730m surplus last year.

At the release of the amendment bill, Motsoaledi had this to say of medical aid brokers: “We are aware that most of the work supposedly done by brokers is actually done by the Council for Medical Schemes – the statutory body.”

But the minister’s criticism of the use of brokers is not shared by medical schemes.

Medihelp’s Van Rooyen points out that healthcare brokers are subject to stringent compliance rules, such as accreditation with the Council for Medical Schemes, and industry-related examinations. They also have to spend considerable time and effort on undergoing training, he says.

“We believe that well-reasoned feedback will be fed through to the legislator during the time allowed for comment on the proposed bill,” says Van Rooyen.

Broomberg is also optimistic about the continued existence of medical aid brokers.

“We envisage that brokers will obtain the relevant consent from members, as many already do at present, and that brokers will continue to play a vital role in advising members on the appropriate choice of medical scheme options, as well as in assisting members to access their benefits,” he says.

Some of the listed companies providing medical aid brokerage services as part of their offerings include Sanlam, PSG Konsult and Liberty.
  
2018/07/26
2018/07/31 01:15 PM
Today, the DA conducted an oversight inspection at the Elim District Hospital in Limpopo. The health facility was administered under the failed National Health Insurance (NHI) pilot project in the Vhembe District.

The challenges at the Elim District Hospital are proof that the NHI will not address the serious issues at the root of the collapsing public health sector. Simply put, the NHI is not a feasible plan to fix the public health care system. If the pilot projects are failing, how can the ANC government expect it to succeed on a national level?

In the 2016/17 financial year, the Vhembe District scored a lowly 42% in the Office of Health Standards Compliance’s (OHSC) Annual Inspection Report and the DA’s findings at the hospital were indicative of why the district performed so poorly.

The DA spoke to the hospital’s CEO, Pfuluwani Matodzi, who stated that the 108-year-old hospital is currently faced with challenges such as staff shortages, despite the fact that 95% of the hospital’s budget is allocated towards personnel costs. Other challenges raised by the CEO include infrastructure issues and continuous water shortages.

Due to the facility’s budgetary constraints, the hospital is unable to pay for goods and services, lab costs, blood services and infrastructure repairs.

A visit to the maternity ward highlighted the plight of the hospital. It was seriously overcrowded, linen was old and many of the baby bassinettes were in disgraceful condition. Most disturbing was the fact that at the time of the visit there we no Bacillus Calmette–Guérin (BCG) vaccines for newborns.

Just down the road at the Waterval Clinic, there were no diabetic medicines, which is one of the biggest killers of people in Limpopo. There were also no antibiotics, cough syrups or medicines to treat minor ailments.

The DA is the only party that has a tried and tested alternative to the NHI. The DA’s Our Health Plan is the most credible and workable offer, as it will ensure that no South African is denied quality health care because they are poor.

In the DA-governed, Western Cape, patients have access to the best public health system in the country and we will continue to fight to ensure that all South Africans have access to dignified health services.

Issued by Lindy Wilson, DA Shadow Deputy Minister of Health, 26 July 2018
  
2018/07/26
2018/07/31 01:17 PM
THE SOUTH AFRICAN
The Solidarity Research Institute has released a report detailing the enormous amount of funding necessary to effectively implement the National Health Insurance (NHI) scheme.

The numbers far exceed those previously calculated by the Health Minister, Aaron Motsoaledi. What’s more worrying is the heavy impact this will have on South African taxpayers.

According to Solidarity researcher, Morné Malan, funding required by the NHI is closer to R357 billion with a deficit of approximately R210 billion.




NHI: How does it affect the taxpayer?

Malan outlined the exorbitant fees which would need to be carried by the South African taxpayer. According to his research, value-added tax (VAT) would effectively double in order to carry the weight of NHI.

Commenting on the burden taxpayers will be forced to carry, Malan said:

“It is very difficult to determine from where the additional money to fund the NHI will come. It will take as much as 70% of personal income tax, or even as much as 99% of the income through value-added tax (VAT) to provide for the deficit. VAT will effectively have to be doubled.”

Motsoaledi admits that he has no idea how much the NHI program will cost. Initially, the health minister threw out a thumb-suck figure of R259 billion. He blamed this irregularity on poor estimations calculated by an external accounting firm.

Both the World Bank and the World Health Organisation have agreed that the exact cost of a nationalised health system cannot accurately be quantified.

How much is a nationalised health system going to cost?

Motsoaledi firmly believes that introducing the national healthcare reform is a step in the right direction in the fight against South Africa’s social and economic inequality. The minister has remarked:

“You cannot balance books against service delivery on human life.”

Malan argues that the proposed system will almost certainly cost much more than what the government’s initial estimates indicate. Commenting on the speculative costs of NHI, the researcher said:

“What is even more worrying, is that the number for NHI funding is rather closer to R357 billion with a deficit of approximately R210 billion. It is simply madness to assume that this deficit can be eradicated by taxes.”

Malan added that while in theory, a free healthcare system has its merits, there is simply not enough money in the country to implement the scheme effectively.
  
2018/07/26
2018/07/31 01:54 PM
THE CONVERSATION
If a service is provided by a company rather than government, this does not automatically mean a market is at work. The point is fairly obvious but has passed many in South Africa by.

Private provision of services is moving into the spotlight in South Africa as the government looks to make the health system more accessible to the poor. One aspect is the Health Market Inquiry, established by the Competition Commission and chaired by former Chief Justice Sandile Ngcobo. It recently released a provisional report recommending more regulation of private healthcare. It has invited comment on its ideas.

It is absolutely inevitable that whatever proposals it comes up with will be attacked as an assault on the free market in health care. This will ignore the reality – that there is no market in healthcare in South Africa, at least not one which works in the way in which markets are meant to work.

To get an obvious point out of the way first, markets work only for people who have enough money to take part. So it is true that a healthcare market in South Africa would exclude many people who cannot afford private care. But that is not the only problem with the private healthcare system – another is that even those who are able to join medical schemes do not get the benefits markets are meant to offer.

For markets to work as they are meant to, consumers must be able to make informed choices: they must have both a real right to choose and enough information to make that choice. But information and choice operate weakly in private healthcare and not at all in the private health insurance offered by medical aids.

This places the South African debate about healthcare in perspective. The Competition Commission and the health ministry are not trying to abolish the market, they are trying to make it work. The accurate debate is about whether they are doing it in the best possible way.


No real choice

It might be true that people who can afford private medical care can choose their general practitioner. But that is where it ends. If patients need specialised care or hospital treatment, they don’t choose the specialist or the place where they will be treated.

And so they have no way of ensuring that they get the best possible care. While popular wisdom in the suburbs often assumes that all private doctors and hospitals are good, inevitably some are a great deal better than others and some are no good at all. But consumers do not make an informed choice on where to go and who to go to, although this is a far more important decision than buying a kettle.

Informed choice of a medical aid scheme is just about non-existent. Most people belong to the scheme their employer chooses. If they are “lucky” enough to have a choice in theory, they do not have one in practice. Medical aids do not publicise what they do and the language they often use most people can’t understand and so there is no way to “shop around” in ways which would make an informed choice possible.

The situation is quite the same when people have joined schemes. Information on what is allowed and what is not may be understandable to doctors and pharmacists, but not to scheme members.

The supposed solution is the medical aid broker, who is meant to help consumers to choose and to deal with the scheme after they join. But the brokers are paid by the schemes and so it is no surprise that they are there to look after the scheme, not the consumer.

Brokers direct people to the schemes they are working for, not those which will best meet the needs of the consumer. Anyone who has a problem with a medical aid’s decision will soon find that the broker is a public relations officer, not a consumer representative. Their job is to justify the scheme’s decision, not to question it.

Pro-market moves

Given all this, the Health Market Inquiry’s proposal that healthcare providers and funders should be regulated is a pro-market move – it seeks to make informed choice more of a factor than it is now. There is room for debate on whether it is going about it in the best way. But to claim that it is an attack on markets ignores the way in which private healthcare operates.

Similarly, an amendment to the Medical Aid Schemes Bill which would abolish brokers is currently up for discussion. It, too, is not an attack on the market. Its likely effect would be to force brokers into the customer relations departments of the medical schemes, improving market information by ensuring that consumers know that they are dealing with people who work for the schemes, not for them.

Again, to oppose this measure is not to defend the market – it is the opposite. To argue against it is to say that a market in which people know who they are dealing with and can make informed choices is not a good idea.

The tendency to assume that private provision means that there is a market even when there is not is not restricted to health care. For years, it was assumed in the mainstream that the market was delivering satellite television when there was only one supplier. Moving from services to goods, many beer drinkers no doubt toast the market as they choose between a range of labels produced by one company.

More generally, concentration in the formal economy means that most goods are produced by subsidiaries of a handful of companies – and sold in stores owned by only two or three firms. While competition between a couple of firms is technically a market, it is hardly one which offers strong benefits to consumers.

Making markets work

This has two implications for South Africa’s economic debate. The first is that not all proposals for regulating private economic activity are an attack on the market. A key feature of the country’s economy is that it is dominated by very few players and so markets often do not work as they should. A stronger government role could mean stronger, not weaker, markets.

The second is that, in these circumstances, the claim that markets must be left alone very often means that there is a need to leave existing private providers alone. This hides the reality that, in current circumstances, the challenge is not to protect private providers but to ensure that they really are subjected to the rules by which markets are meant to force them to play.

This article was originally published on The Conversation.
  
2018/07/26
2018/07/31 02:06 PM
POLITY
The trade union Solidarity is seriously concerned about the tremendous negative impact the proposed National Health Insurance (NHI) will have on tax payers.

According to Morné Malan, a researcher at the Solidarity Research Institute, the government’s total tax income is currently just more than R1 Trillion of which more than a third would have to go to the NHI. Malan further said that it is improbable that the government will cut on expenditure elsewhere and therefore, it is very difficult to determine from where the additional money to fund the NHI will come. It will take as much as 70% of personal income tax, or even as much as 99% of the income through value added tax (VAT) to provide for the deficit. Therefore, to continue with the same services which are currently funded by VAT, as well as provide for the shortfall regarding the NHI, VAT will effectively have to be doubled, which presumes that people’s spending patterns will stay the same, which will definitely not be the case.

Malan explained that according to the government’s own, very optimistic numbers, government spending on health care will have to increase with approximately 10,6% annually from 2019 until 2024/25. Given the current deficit in our budget, it is nearly impossible to determine where the additional funds will come from.

Solidarity is also concerned about the government’s naïve estimate on the scope and cost of the proposed project. According to Malan, the government base their numbers on the presumption that the economy will continuously grow at a rate of 3,5%, while South Africa is currently not even close to that growth rate. They further assume that the demand for health care in South Africa will experience the same increase experienced in other countries, such as Thailand, for example. The latter ignores the fact that we have an extraordinary high burden of disease in South Africa according to the World Health Organisation’s (WHO) Disability Adjusted Life Years method.

Malan argues that the proposed system will almost certainly cost much more than what the government’s initial estimates indicate. According to the government’s calculations in the white paper, the NHI will need approximately R256 billion by 2025, of which R72 billion will be a deficit on current government expenditure on healthcare. Malan explained further it is already difficult to imagine how the insurance would be funded and that the already over-taxed population will not be able to handle further increases. “What is even more worrying, is that the number for NHI funding is rather closer to R357 billion with a deficit of approximately R210 billion. It is simply madness to assume that this deficit can be eradicated by taxes,” Malan said.

According to Malan, the potential size of the NHI can be summarised as 1.2 times the size of total revenue presently generated from personal income tax, or even 1,5 times the income received by VAT. This means more than double these income sources of the government. Malan concluded by saying that it is simply not possible to fund the NHI within the current state of our economy, regardless of ideological wishful thinking.
  
2018/07/26
2018/07/31 02:49 PM
SOLIDARITY
Die vakbond Solidariteit het vandag sy kommer uitgespreek oor die geweldige negatiewe impak wat die voorgestelde Nasionale Gesondheidsversekering (NGV) op belastingbetalers sal hê.

Volgens Morné Malan, ʼn navorser verbonde aan die Solidariteit Navorsingsinstituut, is die regering se totale belastingopbrengs tans net meer as R1 000 miljard, waarvan meer as ʼn derde van hierdie opbrengs na die NGV sal moet gaan. Malan sê voorts dat dit onwaarskynlik is dat die regering elders op besteding gaan sny, daarom is dit bitter moeilik om te bepaal waar die bykomende geld om die NGV te befonds vandaan gaan kom. “Slegs om die tekort op te maak, kan soveel as 70% van persoonlike inkomstebelasting verg, of selfs soveel as 99% van die opbrengs wat deur belasting op toegevoegde waarde (BTW) verkry word. Derhalwe, om voort te gaan met dieselfde dienste wat tans deur BTW befonds word, asook om die tekort op die NGV te betaal, sal BTW effektief moet verdubbel wat veronderstel dat mense se bestedingspatrone dieselfde gaan bly, terwyl dit vir seker nie die geval sal wees nie,” het Malan gesê.

“Volgens die regering se eie, baie optimistiese syfers gaan staatsbesteding op gesondheidsorg met ongeveer 10,6% jaarliks vanaf 2019 tot en met 2024/25 moet toeneem. Gegewe die huidige tekort in ons begroting is dit bykans onmoontlik om te bepaal waarvandaan hierdie bykomende fondse gaan kom,” verduidelik Malan.

Solidariteit is ook verder besorg oor die regering se naïewe beraming van die omvang en kostes van die voorgestelde projek. Volgens Malan baseer die regering hul syfers op die veronderstelling dat die ekonomie deurlopend met sowat 3,5% sal groei, terwyl Suid-Afrika se ekonomie tans nie naastenby daardie groeikoers beleef nie. Verder maak hul die aanname dat die toename in die vraag na gesondheidsdienste dieselfde sal wees as wat ander lande, soos byvoorbeeld Thailand, ervaar het. Laasgenoemde ignoreer die feit dat ons ʼn besondere hoë siektelas in Suid-Afrika het volgens die Wêreldgesondheidsorganisasie (WGO) se DALYS-metode (“Disability Adjusted Life Years”).

Malan voer aan dat die voorgestelde stelsel veel meer sal kos as wat die regering se aanvanklike beramings aantoon. Volgens die regering se syfers in hul witskrif sal die NGV teen 2025 sowat R256 miljard benodig, waarvan R72 miljard ʼn tekort op huidige staatsbesteding op gesondheidsorg sal wees. Malan verduidelik verder dat dit al reeds onmoontlik is om die versekering te befonds en dat die oorbelaste bevolking nie verdere toenames kan bekostig nie. “Wat egter meer kommerwekkend is, is dat die syfer vir befondsing eerder veel nader aan R357 miljard lê met ʼn tekort van sowat R210 miljard in 2025. Dit is eenvoudig waansinnig om te dink dat hierdie tekort deur belasting uitgewis kan word,” het Malan gesê.

Volgens Malan kan die totale potensiële grootte van die NGV opgesom word as omtrent 1,2 keer die totale huidige belastingopbrengs verkry deur persoonlike inkomstebelasting of selfs 1,5 keer meer as alle opbrengs verkry uit BTW. Dit beteken meer as dubbeld hierdie inkomstestrome van die regering. “Dit is eenvoudig nie moontlik om die NGV te befonds met die huidige toestand van ons ekonomie nie, ongeag enige ideologiese wensdenkery,” het Malan saamgevat.
  
2018/07/26
2018/08/01 10:35 AM
BUSINESS DAY LIVE
The Competition Commission does not prove collusion between Discovery Health, MMI and Mediclinic but implies that cross-ownership enhances their scope for price fixing

Investors would do well to take note of the health market inquiry’s provisional report on why medical aid prices keep rising while benefits decrease.

The Competition Commission report may not bode well for the consumer but it notes that profits of the large hospital groups — Netcare, Mediclinic and Life Healthcare — are "consistent" and "sustained", with no chance of slowing down.

Even better were the profits of administrator Discovery Health, "multiple" times those of competitors "with no sign of effective challenge from incumbent or new firms".

The numbers illustrating Discovery Health’s dominance were erased from the report and instead pictures of a pair of scissors were drawn in their place.

This is no doubt due to Discovery Health’s concerns about confidentiality of its data, said by inquiry director Clint Oellermann to be a reason for the delay in the provisional report’s release.

The report, released after nine months of delays, highlights that there could be a substantial conflict of interest between two of the three largest administrators, which are supposed to negotiate good value for medical aid members and drive down hospital costs.

Administrators are companies that are paid by medical aid companies to manage claims, payment to doctors and hospitals, deal with fraud and recruit new members.

The commission notes that both administrators in question, MMI and Discovery Health, which should be competing to provide cheaper benefits to medical schemes, have shared ownership.
 
The commission implies that having competitors owned by the same company benefits investors and could lead to price fixing.

But analysts have downplayed the conflict of interest, saying the commission did not prove any collusion.

In a research note, the inquiry explains why cross-ownership of competing companies matters: "If a firm has participation in a competitor, even without controlling it, the scope for collusion will be enhanced."

Falcon & Hume competition lawyer Heather Irvine says: "There is a reasonable amount of economic theory which indicates that cross-ownership (common shareholders) may have anticompetitive effects in certain circumstances.

"However, this risk arises only when the companies in which the common shareholder holds [shares] are competitors (because then it may lead to information exchange between competitors, which in turn leads to price-fixing or other collusive conduct)."
Both MMI and Discovery have large shareholders that are themselves owned by investment group Remgro.

It gets complicated. Remgro has a 28% shareholding in RMB Holdings, which through FirstRand has an unknown stake in MMI. Remgro also has a stake in Rand Merchant Investment Holdings, which has a 25.8% stake in Discovery and a 25% stake in administrator MMI.

It gets worse. Remgro, with 42%, is also the largest shareholder of hospital group Mediclinic. This raises the question: do Discovery Health or MMI have an interest in driving down hospital prices for medical aid members or keeping profits high for their shared owners of Mediclinic?

Do the two administrators compete in adding shared value to medical aids for whom they pay claims; or choose not to compete as they share shareholders? The inquiry poses these questions but doesn’t answer them.

It does, however, describe the links between owners of MMI, Discovery and hospital group Mediclinic as substantial. "A substantial commercial relationship therefore exists between the largest and most influential owners of Discovery Limited, the owners of MMI and one major hospital group, Mediclinic."
But whether the ownership of Mediclinic makes Discovery Health less likely to bargain for good prices for hospital stays is never proven.

Irvine is not convinced. "This concern about cross-shareholding would not arise in relation to, for example, a medical scheme and a hospital group, which are not competitors in the same level of the market."

She says the commission loves to focus on cross-ownership, but the small number of institutional shareholders in SA means many companies share owners.

"The Competition Commission is obsessed with cross-ownership and likes to draw diagrams showing that there are lots of common interests held by shareholders throughout the SA economy. That is of course true — large institutional shareholders like the banks and the PIC all hold some shares in almost every listed company. However, this doesn’t necessarily lead to a lack of competition," she says.

The commission gives no evidence that administrators are allowing Mediclinic to charge more than other hospital groups. It finds that out of all the administrators, Discovery Health was the only one with enough clout to drive down hospital prices, including those of Mediclinic.

In a statement, Discovery Health CEO Jonathan Broomberg noted that the health-care market inquiry made "the observation that Discovery Health is the only administrator that has been able to use countervailing negotiating power to achieve lower hospital tariffs for its client schemes".

Investment analyst Warwick Bam says the commission failed to show that Mediclinic is paid more by Discovery (due to shared owners) than Life Healthcare and Netcare.

He says cross-ownership "would only be a problem for consumers if there is evidence of collusion or anticompetitive behaviour due to the cross-ownerships and cross-directorship between Remgro [with shares in Discovery and MMI] and Mediclinic.

"It should have been evident to the health market inquiry whether Mediclinic’s rates or utilisation data differed from those negotiated with Netcare and Life Hospitals, implying bias from the group structure." In other words, no evidence is revealed that proves Mediclinic gets more business or is paid more by Discovery Health than competitor hospital groups.

The health market inquiry report merely suggests there could be a "chilling effect" on competition. "Though MMI and Discovery Health have provided some examples of competition between them, we believe that common ownership between two of the largest administrators and of the large hospital groups might influence strategic direction and can have a chilling effect on competition over the long term," it says.

Despite failing to provide evidence of collusive conduct, the commission is adamant that consumers may be getting a raw deal at the expense of firms that look out for each other.

It says administrators are not driving hard enough bargains on prices. "Stakeholder-led negotiations have not yielded outcomes with a positive impact on expenditure and there remains a possibility that sector participants may continue to settle for mutually beneficial pricing levels at the expense of the consumer."

The examination of Discovery Health by the inquiry — it took four and a half years — does not end there. The report is concerned that no matter how it performs in driving bargains for its medical aid Discovery Health Medical Scheme (DHMS), it is guaranteed business from the scheme in perpetuity. This is contrary to what the law suggests.

Discovery Health, unbeknown to most consumers, is an administrator that gets paid about 10% of medical aid premiums to pay the claims of DHMS. It negotiates prices with hospitals and doctors and exposes medical aid fraud. If it is too expensive it could be fired by DHMS and a new administrator hired in its place.

But this is unlikely to happen, giving Discovery less incentive to compete for business or drop its fees. The report says it is unlikely DHMS will ever get a new administrator and in the same way Bonitas will keep Medscheme as its administrator. Trustees don’t have the skill to fire their medical aid administrators, it suggests.

Speaking after the release of the report, panel member Ntuthuko Bhengu called the idea as described in the law — that medical aids are run as not-for-profit entities — a "scam". The inquiry found what everyone in the industry knows: that medical aids are run by for-profit administrators.
  
2018/07/26
2018/08/01 10:40 AM
FINANCIAL MAIL
Investors would do well to take note of the Health Market Inquiry’s provisional report on why medical aid prices keep rising while benefits decrease. The Competition Commission report may not bode well for the consumer but it notes that profits of the large hospital groups - Netcare, Mediclinic and Life Healthcare - are “consistent” and “sustained”, with no chance of slowing down. Even better were the profits of administrator Discovery Health, “multiple” times those of competitors “with no sign of effective challenge from incumbent or new firms”.

The numbers illustrating Discovery Health’s dominance were erased from the report and instead pictures of a pair of scissors were drawn in their place. This is no doubt due to Discovery Health’s concerns about confidentiality of its data, said by inquiry director Clint Oellermann to be a reason for the delay in the provisional report’s release. The report, released after nine months of delays, highlights that there could be a substantial conflict of interest between two of the three largest administrators, which are supposed to negotiate good value for medical aid members and drive down hospital costs. Administrators are companies that are paid by medical aid companies to manage claims, payment to doctors and hospitals, deal with fraud and recruit new members.

Shared ownership

The commission notes that both administrators in question, MMI and Discovery Health, which should be competing to provide cheaper benefits to medical schemes, have shared ownership. The commission implies that having competitors owned by the same company benefits investors and could lead to price fixing. But analysts have downplayed the conflict of interest, saying the commission did not prove any collusion. In a research note, the inquiry explains why cross-ownership of competing companies matters, saying that if a firm has participation in a competitor, even without controlling it, the scope for collusion will be enhanced.

Falcon & Hume competition lawyer Heather Irvine says there is a reasonable amount of economic theory which indicates that cross-ownership (common shareholders) may have anti-competitive effects in certain circumstances. However, she says, this risk arises only when the companies in which the common shareholder holds shares are competitors (because then it may lead to information exchange between competitors, which in turn leads to price-fixing or other collusive conduct). Both MMI and Discovery have large shareholders that are themselves owned by investment group Remgro. It gets complicated. Remgro has a 28 percent shareholding in RMB Holdings, which through Firstrand has an unknown stake in MMI. Remgro also has a stake in Rand Merchant Investment Holdings, which has a 25.8 percent stake in Discovery and a 25 percent stake in administrator MMI. It gets worse. Remgro, with 42 percent, is also the largest shareholder of hospital group Mediclinic. This raises the question: Do Discovery Health or MMI have an interest in driving down hospital prices for medical aid members or keeping profits high for their shared owners of Mediclinic? Do the two administrators compete in adding shared value to medical aids for which they pay claims; or choose not to compete as they share shareholders? The inquiry poses these questions but doesn’t answer them. It does, however, describe the links between owners of MMI, Discovery and hospital group Mediclinic as substantial, saying that a substantial commercial relationship therefore exists between the largest and most influential owners of Discovery Limited, the owners of MMI and one major hospital group, Mediclinic.

Not convinced

But whether the ownership of Mediclinic makes Discovery Health less likely to bargain for good prices for hospital stays is never proven. Irvine is not convinced. She says that this concern about cross-shareholding would not arise in relation to, for example, a medical scheme and a hospital group, which are not competitors in the same level of the market. Irvine says the commission loves to focus on cross-ownership, but the small number of institutional shareholders in SA means many companies share owners. She says the Competition Commission is obsessed with cross-ownership and likes to draw diagrams showing that there are lots of common interests held by shareholders throughout the SA economy. That is of course true - large institutional shareholders like the banks and the PIC all hold some shares in almost every listed company. However, this doesn’t necessarily lead to a lack of competition. The commission gives no evidence that administrators are allowing Mediclinic to charge more than other hospital groups. It finds that out of all the administrators, Discovery Health was the only one with enough clout to drive down hospital prices, including those of Mediclinic.

No evidence of collusion

In a statement, Discovery Health CEO Jonathan Broomberg noted that the Health Market Inquiry made “the observation that Discovery Health is the only administrator that has been able to use countervailing negotiating power to achieve lower hospital tariffs for its client schemes”. Investment analyst Warwick Barn says the commission failed to show that Mediclinic is paid more by Discovery (due to shared owners) than Life Healthcare and Netcare. He says cross-ownership “would only be a problem for consumers if there is evidence of collusion or anti-competitive behaviour due to the cross-ownerships and cross-directorship between Remgro [with shares in Discovery and MMI and Mediclinic. Barn says it should have been evident to the Health Market Inquiry whether Mediclinic’s rates or utilisation data differed from those negotiated with Netcare and Life Hospitals, implying bias from the group structure. In other words, no evidence is revealed that proves Mediclinic gets more business or is paid more by Discovery Health than competitor hospital groups. The Health Market Inquiry report merely suggests there could be a “chilling effect” on competition. It says that though
MMI and Discovery Health have provided some examples of competition between them, the HMI panel believes that common ownership between two of the largest administrators and of the large hospital groups might influence strategic direction and can have a chilling effect on competition over the long term. Despite failing to provide evidence of collusive conduct, the commission is adamant that consumers may be getting a raw deal at the expense of firms that look out for each other. It says administrators are not driving hard enough bargains on prices.

In perpetuity

The report says stakeholder-led negotiations have not yielded outcomes with a positive impact on expenditure and there remains a possibility that sector participants may continue to settle for mutually beneficial pricing levels at the expense of the consumer. The examination of Discovery Health by the inquiry does not end there. The report is concerned that no matter how it performs in driving bargains for its medical aid Discovery Health Medical Scheme (DHMS), it is guaranteed business from the scheme in perpetuity. This is contrary to what the law suggests. Discovery Health, unbeknown to most consumers, is an administrator that gets paid about 10 percent of medical aid premiums to pay the claims of DHMS. It negotiates prices with hospitals and doctors and exposes medical aid fraud. If it is too expensive it could be fired by DHMS and a new administrator hired in its place. But this is unlikely to happen, giving Discovery less incentive to compete for business or drop its fees. The report says it is unlikely DHMS will ever get a new administrator and in the same way Bonitas will keep Medscheme as its administrator.



“Scam”

Trustees don’t have the skill to fire their medical aid administrators, it suggests. Speaking after the release of the report, panel member Ntuthuko Bhengu called the idea as described in the law - that medical aids are run as not-for-profit entities a “scam”. The inquiry found what everyone in the industry knows: those medical aids are run by for-profit administrators. One of the report’s major recommendations is that medical aid members get involved in voting for trustees, who are supposed to run the scheme, rather than let the administrator do this. It suggests trustee elections take place after hours, or on weekends when ordinary members can attend. It also wants a change in trustee pay so that the millions they earn are linked to their independence and the work they do in holding the administrator to account - and serving members’ interests. GTC healthcare consultant Jill Larkin added her support to the demand that trustees do more to keep administrators on their toes.

Long-term investments

Discovery Health says the long-term relationship with the scheme allows it to make long-term investments in technology, infrastructure and human resources. The report says the dominance and stability of the administrators hasn’t benefited the consumer through “economies of scale”. Discovery Health says its fees have been reduced in real terms each year. In the end, many of the report’s recommendations are largely focused on government. It states that the Medical Schemes Bill, 2008, which sought to strengthen scheme governance, has not yet been implemented. Much of what government can do is already allowed for in the National Health Act and Medical Schemes Act. Former chief justice and panel director, Sandile Ngcobo, said that what remains to be done is to implement these provisions. But at the launch of the report, Health Minister Aaron Motsoaledi blamed medical aids, hospitals and doctors, saying that stakeholders “don’t like to be regulated”. Back to top

MEDICLINIC DISAGREES WITH INQUIRY OVER COMPETITION
25 July 2108
Business Day
Page 4
Tamar Kahn

Mediclinic disagrees with inquiry over competition Tamar Kahn Private hospital group Mediclinic has taken issue with the health market inquiry's concerns about market concentration in the sector and its call for submissions on possible divestiture and a moratorium on issuing new licences.

Mediclinic does not agree with these findings ... and does not believe the proposed remedies are appropriate: it said in a statement issued on Monday. The inquiry was launched by the Competition Commission four and a half years ago to investigate the barriers to effective competition in the private healthcare market It released its preliminary report on July 5.

Mediclinic said it believed there was robust competition between the four big players: the National Hospital Network and the three JSE listed hospital groups Netcare, Life Healthcare and Mediclinic. "Hospital groups are able to leverage on economies of scale, enabling the provision of high quality, cost efficient care to the benefit of the patient," it said.

Mediclinic agreed with the inquiry's finding that healthcare expenditure was rising faster than consumer price inflation due to an increase in utilisation, but disputed its view that supplier induced demand played a significant role in driving this trend. "Mediclinic's economic and actuarial experts do not support the accuracy of the calculations and data under pinning these findings: it said. Increased utilisation was due to other factors, such as the increasing burden of disease, an ageing population and new technology, it said.

Supplier induced demand refers to a phenomenon in which increased access prompts additional use of a service that would not have otherwise occurred. In the case of hospitals, this could mean increased bed numbers trigger a surge in hospital admissions. Mediclinic said it supported the inquiry's recommendation that bilateral tariff negotiations be maintained between medical schemes and hospital groups. In a separate development, the health market inquiry said on Tuesday that it had received numerous requests for access to the underlying data considered in preparing its report and it would open its data access room to stakeholders during August.
  
2018/07/25
2018/07/31 03:03 PM
MEDICAL BRIEF
Critics of the National Health Insurance plan are “hardliners, driven by their desire to defend and perpetuate their own positions of huge benefit and privilege at the expense of the overwhelming majority”, writes Health Minister Dr Aaron Motsoaledi in City Press.

About a month ago, the national Health Department released the white paper on the National Health Insurance (NHI), which saw critics immediately going into overdrive, raising at least three issues,  says Motsoaledi.

He writes: “The first was that the NHI was a non-starter because of the poor quality of public healthcare. Actually, they went as far as saying that it was unworkable in our country. Two, that the NHI was unaffordable. Three, that the whole idea of the NHI was a ploy to destroy private healthcare, which had no problem and was the only hope for the nation.

“The first two issues are being brought as new observations, but actually they are not new. The National Development Plan (NDP), our socio-economic blueprint that has been adopted by virtually all political parties in Parliament, clearly stated that we need universal health coverage (UHC), in which funds are pooled to provide access to good quality healthcare regardless of socioeconomic background. In their wisdom and research, the 25 commissioners of the NDP said that, in order to achieve UHC, South Africa would need to solve two major problems of the healthcare system. These are the exorbitant cost of private healthcare and the poor quality and lack of efficiency in the public healthcare system.

“As the government, we embraced the findings of the commissioners, but the critics of NHI only acknowledge one problem and turn a blind eye to the other problem of the high cost of private healthcare. We are painfully aware that NHI will never be successful without improved quality and efficiency of the public healthcare system, which serves the majority of the population. Everything we are planning is in that direction. Unlike our critics, we want to argue that the second problem can only be ignored at our own peril.

“Last week, no less a person than former Chief Justice Sandile Ngcobo released a report on the findings of an extensive inquiry that took four years to conclude. On more than two occasions, he received input from the World Health Organisation as well as the authority on competition law, the Organisation for Economic Co-operation and Development. Their advice was very clear – that we are running one of the most expensive private healthcare systems in the world, but, further, that we are the only country that is spending so much money on so few people. The methodology used to arrive at the findings by the Ngcobo commission has been used for more than 30 years in Europe, but still hardliners, who are driven by their own desires to defend and perpetuate their own positions of huge benefit and privilege at the expense of the overwhelming majority of our people, want us to believe that there was something wrong with the findings.

“It is instructive to note that the people who argue that the NHI will be unaffordable to the country are actually basing their argument on the belief that the cost of private healthcare is a world gold standard which nobody can change and hence, in calculating the cost of NHI, they take this high cost, largely discredited by these reputable bodies in the world, and extrapolate it mathematically to the rest of the population. This is not the route that the NHI is designed to follow.

“These hardliners accuse the state of using the Ngcobo commission to pursue the rich, who, they argue, are by and large content with whatever they are paying and have no problem with the cost. What is being missed here, whether through ignorance or deliberately, is that the so-called rich people who are being targeted include ordinary teachers, nurses, doctors, policemen, magistrates and judges, politicians, clerks, managers, and trade union leaders.

“With the exception of some in the last group, all of the above are employed by the state. And when the cost of private healthcare increases exponentially, the state has to subsidise them. It does not end there. The state also offers tax rebates to any South African who has medical aid, whether they are employed by the state or not. Hence, in 2015, the state subsidy to private healthcare was R26bn and the tax rebates were R20bn – a total of R46bn. Three years later, in 2018, the state subsidy has increased to R31bn and the tax credits to R26bn. All these are driven by the ever-escalating cost of private healthcare, and the state is obliged to tag along in terms of the laws of the country.

“And because the state is legally obliged, its capacity to finance the public healthcare system has equally diminished over that same period. In simple language, the state is ratcheting up its financial support to private healthcare for a selected few who are, by and large, self-sufficient on their own, while at the same time reducing its support for the majority who are poor and dependent on the state.

“If you want to see why the country is said to be the most unequal society in the world, you do not have to look further than the healthcare system. It is inconceivable that, with all the evidence provided, a democratic and caring state should leave such gross inequality unattended.

“As the state, we will continue to plan, through the NHI, a massive reorganisation of the current healthcare system, both public and private, to bring about affordability and access to good quality for all.”
  
2018/07/25
2018/08/01 09:13 AM
BIZCOMMUNITY
Bonitas Medical Fund (the Scheme) reported a solid surplus of R730.20 million for 2017, recouping the R16.9 million deficit from 2016. Gerhard van Emmenis, Principal Officer of Bonitas, says, "2017 was an exceptional year for us in terms of financial results. This was largely due to several key cost-saving strategies and initiatives implemented during the 2016-2017 period."

This bolstered Bonitas reserves from R3.2 billion to R4 billion. "This surplus will be invested back into the Scheme and will allow us to offer our members access to healthcare of the highest quality."

Van Emmenis says, "Medical schemes need to be proactive in curtailing costs. Even though healthcare inflation continues to outpace general inflation by about 5% (12.5% in 2017), we cannot simply say, ‘It’s not our fault or our problem.’ We need to constantly be looking for different methods to contain costs and offer our members maximum value for money."

Quick overview:

"Although we took a multi-pronged approach to cost-saving, our main focus was on:

• Hospital negotiations, which delivered savings of R242 million.
• Fraud, waste and abuse (FWA) initiatives were also a significant focus and delivered recoveries of R31.2 million, with a potential preventative savings of R75 million.
• Other cost-savings initiatives of R59 million (examples of this included the benefit adjustments).
• A return on investments of 8.9% also contributed to the healthy fiscal outlook for Bonitas Medical Fund.

"The net healthcare results of R345.9 million and investment income of R394.3 million, underpin the Scheme’s ability to implement strategies in order to remain resilient during difficult financial periods. This, not only to help limit contribution increases, but also deliver on our mandate of making healthcare affordable for all South Africans."


Reserves increase

"From 3.2 billion in 2016, this has increased to R4 billion for 2017, which places us in a stronger, more robust financial position where we are confident of our ability to meet member claims."

Public healthcare in South Africa continues to operate far below optimum levels

"The current public health systems’ ability to provide the foundation for an NHI in the near future is questionable. The reasons include lack of economic growth, increasing unemployment, a large gap between rich and poor and a stark contrast between first- and third-world elements. It therefore stands to reason that the public healthcare system cannot carry any more of the burden. While public health gets its house in order, it is essential that private medical aids keep private healthcare costs as low as possible to make it affordable for as many people in South Africa as possible."

Hospital negotiations

During the 2016 financial year, the Scheme experienced an increase in the utilisation of healthcare services, particularly hospital admissions and related benefits. "We embarked on a hospital negotiations strategy at the end of 2016, which resulted in a savings of R242 million in 2017, without compromising members’ access to quality healthcare.

"We will continue to negotiate robustly with healthcare providers based on our size, to contain costs as far as possible, and negotiate the best possible rates for members," says Van Emmenis.

Fraud, waste and abuse (FWA)

It is estimated that 15% of claims in the healthcare industry contain an element of FWA. For a scheme of Bonitas’ size, this translates to a loss of R190 million. "To address this, we implemented initiatives against FWA including hospital and pharmacy claim analytics. The result was the identification of FWA of R129 million, with R31.2 million recovered in 2017."

The Scheme further benefitted from R75 million in potential savings. Five imprisonment sentences have been handed down by the judiciary – clearly indicating a zero tolerance approach to this white-collar crime.

Preventative care initiatives

There is an increased prevalence of lifestyle diseases such as diabetes, hypertension and cardiovascular disease as well as HIV/AIDS, cancer, chronic medicine management, back and neck pain, hip and knee replacements and mental illness. The old adage that "prevention is better than cure" cannot be more apt than in the healthcare industry.

For this reason Bonitas has a number of programmes aimed at predicting and preventing conditions before they become chronic and managing them in the most clinically appropriate way.

The Scheme bolstered its Managed Care initiatives in 2017, with the introduction of the Diabetes Management Programme.

The success of the diabetes programme is underpinned by the Scheme’s ability to identify potential diabetic patients and enrol them on the programme as well as actively manage them through support, testing and education. The Scheme and its partners have worked tirelessly to improve actively managed diabetes patients by 31% between May and December 2017.

The way forward

"In 2018, we will carry out a secondary initiative to identify hospitals on our networks that are not cost-effective and work towards improving their efficiency," says Van Emmenis. "We have introduced a Managed Care programme focussed on mental health and will explore other options to introduce alternative reimbursement models for procedures such as knee and hip surgery.

"During the year ahead we will seek to identify other opportunities to grow Bonitas and retain our existing membership base. This will include the possibility of amalgamations as well as developing new distribution models and channels.

"Connecting with our customers remains a key focus area as we seek to improve our digital capabilities to improve our members’ experience and communicate effectively to keep them informed and engaged. We will use the best technology available to make things simpler and more efficient.

"Attracting younger and healthier members is vital to ensuring the sustainability of the Scheme. To assist in this regard, we introduced BonFit in 2016 as well as several benefits to appeal to younger individuals and families in 2017.

"As rising healthcare costs continue to be a prohibitive factor in making quality healthcare affordable, we will continue finding innovative and sustainable ways of reducing expenditure," concluded Van Emmenis.

Top-line points of interest:
• A solid surplus of R730.20 million for 2017, recouping the R16.9 million deficit from 2016.
• 8.6% increase in claims in 2016.
• Net healthcare results of R345.9 million and investment income of R394.3 million.
• Robust reserves of R4 billion.
• 44.9% of all claims were for hospital admissions and 11.7% for specialists – these were the two highest cost-drivers.
• Savings from fraud, waste and abuse (FWA) amounted to R31.2 with a potential savings of R75 million.
• A savings of R242 million for 2017 from strategic negotiating strategy.
• 348,0088 principal members and 753,514 beneficiaries.
  
2018/07/25
2018/08/01 09:14 AM
BOLANDER
If you listen to Health Minister Dr Aaron Motsoaledi talking about the National Health Insurance (NHI) scheme, you could be forgiven for believing that it will be the panacea to all of our healthcare ills.

The illusion that is created by the rhetoric around the NHI – by its proponents, that is – is akin to the rhetoric around expropriation without compensation (EWC): that giving back the land will somehow magically defeat the perennial triple national evils of unemployment, poverty and inequality.

It is imperative that both the land question and the public healthcare question must be resolved, but it is confirmation bias that leads us to believe the implied causal relationships in these two debates.

Neither can survive even the most superficial scrutiny. That public healthcare is in a state of virtual collapse, is the elephant in the room in the NHI debate.

Yes, the NHI will result in a massive injection of funding into the terminally ill public healthcare sector, but that is hardly likely to heal the patient.

Public education has proportionately one of the highest budget allocations in the world, but, like public healthcare, it teeters on the brink of collapse.

Throwing good money after bad has done little to address the systemic problems in public education, so why should it magically fix public healthcare?

As much as it is vital that quality healthcare must be provided for the poorest of the poor, and of course, for the eight million odd unemployed and their dependents, will the virtual destruction of the private healthcare system achieve that goal?

Granted, the staggering rate of medical inflation that drives private medical aid contributions, is making private healthcare progressively unaffordable, but the solution to that problem is a regulatory regime for the sector that will provide for greater transparency in the dealings between the four principal parties in private healthcare: patients, medical schemes, private hospitals and medical practitioners.

The first shot across the bows of private healthcare has already been fired: the existing medical aid co-payment system, whereby a medical aid member pays a portion of the cost of a particular medical procedure, is on the chopping block, according to Dr Motsoaledi.

This should come as little surprise, as this is a key feature of the NHI.

The next casualty will be the present system of tax deductions for private medical aid contributions. What medical aid members have enjoyed to date as income tax abatements on medical aid contributions, will, if the NHI Bill passes unaltered, contribute to the as yet undetermined cost of the NHI.

Significantly, the NHI Bill provides no details of how it is to be funded, leaving that up to Treasury to decide. Occam’s Razor suggests the implementation of a payroll tax, since it is broad-based and easiest to administer.

Also up for debate, is whether or not private medical aid will even be permitted once the NHI kicks in.

The – flawed – thinking is that since every citizen will contribute equitably to the NHI, and since every citizen will have equivalent access to healthcare, why would private medical aid be necessary?

Dr Motsoaledi’s take on this issue in a 2017 press report is illuminating: “Now the question, which is also constitutional, if after you belong to NHI, which is mandatory, do you have a right to go and buy another private cover somewhere to use it for things.

“Once the NHI is up and running, what reason will you have to still keep medical schemes? It’s what they call a mandatory prepayment of care, that NHI.

“This means once the law is passed it affects all citizens in the country; they have to belong to it, they don’t have a choice.”

Reality, however, dictates otherwise. Anybody who has engaged with the public healthcare system will have encountered the interminable delays in accessing treatment for sometimes life-threatening ailments, engendered by a system that is woefully understaffed, and woefully overburdened with patients in need of care, critical or otherwise.

It makes no sense that those who can afford the cost of private healthcare, even if they are afforded no tax deduction and must also contribute to the NHI and never use its services, be deprived of the right to do so.

And besides, it is unlikely that such a prohibition would pass constitutional muster.

Despite the impossibility of crafting an entirely egalitarian socialist society becoming ever more apparent as the years have passed, our government stubbornly refuses to evolve its policy agenda from the realms of blue sky ideology to the pragmatism of harsh reality, and sustainable healthcare funding is yet another casualty of this pig-headedness.

The NHI Bill and the Medical Schemes Amendment Bill – needed to effect the planned changes to private healthcare – are open for public comment until end August.

In the idiom of Barack Obama speaking on Mandela Day: become an active citizen and have your say before it is too late.
  
2018/07/25
2018/08/01 09:18 AM
MONEY MARKETING
The GTC 2018 Medical Aid Survey (MAS) analyses and rates medical aid schemes according to a standardised comparison and ranks the choices available to members.

When analysed purely in terms of premiums – the survey’s micro ranking – Fedhealth emerged as the medical aid which held the most top positions across all the classifications. Discovery was ranked in first place for the survey’s macro rankings, which analyses a medical aid’s overall ‘health’ and longevity in terms of factors such as its solvency level, membership growth, net healthcare result and member satisfaction. When combining both the GTC micro and macro rankings, Discovery claimed the highest number of top positions among all categories – for the second consecutive year since the survey’s release eight years ago.
“While the overall results appear to tell a similar story to last year, it is encouraging – when drilling down into the details – to see such a variety of participants offering options across all sub-sections of the medical aid spectrum,” says Jill Larkan, Head: Healthcare Consulting, of wealth and financial advisory firm GTC.

“This means consumers can confidently access more schemes and plans offering private healthcare, and so decrease the burden on the government. In the past, the larger and more established companies tended to dominate the majority of the categories.”
Larkan ascribes this to companies becoming more innovative in their offerings in an attempt to differentiate themselves.
“We always welcome more competition among schemes, as it indicates a growing market and more variety for members with changing healthcare needs. However, this does add more complexity to a healthcare arena that is already difficult to navigate for the majority of members.
According to Larkan, this year’s survey proved again that the medical aid market continues to be a complicated space to navigate.
“What is worrisome is that many of the plans attempt to attract members concerned with the high cost of healthcare, by offering ‘manageable premiums’, perceived to be of good value, which in fact have far fewer benefits than their more ‘traditional’ counterparts. It is now more important than ever for members not only to look at price – which remains the most important consideration for many members under ever increasing financial strain – whilst also considering which benefits they are forfeiting for their lower premium,” she adds.
This year’s survey includes a comparison of average annual salary increases over ten years – according to The South African Trends Report 2017 by remuneration consultancy, 21st Century – against average annual medical aid premium increases since 2006.

“Over this period, medical aid premiums increased by 104.87% cumulatively, while salaries increased by 80.20%, which clearly demonstrates the pressure that consumers have been under in trying to keep up with healthcare costs,” says Larkan.
The MAS analyses plans based on a number of classifications, namely entry level, hospital, saver and comprehensive plans. Some of the entry level plans are salary-based and only cover prescribed minimum benefits (PMBs) whilst others restrict hospitalisation to state facilities.
“These entry level plans are a good option for members who are new to the private healthcare market and are happy to have a combination of a primary healthcare and hospital plan. Those members who expect slightly more comprehensive coverage but limit themselves to the cheaper plans, as a means to minimising cost, will be disappointed when they find out that they are not covered for a number of procedures they might have expected. In healthcare, the mantra ‘you get what you pay for’ could not be more apt.”
The Council for Medical Schemes (CMS) reported to Parliament earlier this year that complaints from medical aid members increased by 29% from 1 017 to 4 536 during 2017-18, compared to the previous year. This was largely attributed to a lack of understanding of the cover provided by their medical aids.
“This is in line with our experience: one of the biggest reasons for members’ unhappiness about a selected scheme does not know what their plan pays for. As there is no standardisation in the medical aid industry, it is very complicated for members to analyse medical aids, without the help of experienced professionals,” she says.
This year’s survey reviewed 21 open schemes and one closed scheme (Profmed) covering 22 plans divided into five categories, eight subcategories and three micro categories. Many of these were further split between network and non-network schemes, whilst some of them go on to reflect day-to-day spending levels. The full range of plans have been graded according to GTC’s ‘likelihood of support’ and offers a simplified method of comparing options and cost for members.
Larkan explains that, in addition to factoring in complaints received from members on social media sites such as Hellopeter.com– as an indication of members’ satisfaction with their medical aids – this year’s macro grading also took into account the compliments that schemes received, as well as the Hello Peter Index.
Bonitas moved up seven places in the macro rankings as a result of Liberty’s members being amalgamated into the Bonitas scheme. “This greatly enhanced the number of members on the scheme, which carries the highest weighting in the GTC macro rankings. The long-term effect of this amalgamation on measures such as net healthcare results will remain to be seen in the next year, when the claiming patterns of the new members are experienced in the Bonitas scheme.”
Larkan is also encouraged by the number of schemes that are giving due consideration to maternity benefits. “There are generally good benefits for young families, which means they can cover many items – including ante natal classes, maternity scans and consultations – out of the general risk carried by the scheme, without having to dip into their savings accounts.”
Larkan says: “Given the complexity of the medical aid industry and the varying needs of members, it is more important than ever for members, with the help of their healthcare adviser, to do a thorough analysis of their needs and means; and compare this to the options available in the healthcare market, before deciding on a scheme and then a plan option for their future.”

  
2018/07/25
2018/08/01 01:25 PM
BUSINESS DAY
Mediclinic disagrees with inquiry over competition Tamar Kahn Private hospital group Mediclinic has taken issue with the health market inquiry's concerns about market concentration in the sector and its call for submissions on possible divestiture and a moratorium on issuing new licences.

Mediclinic does not agree with these findings ... and does not believe the proposed remedies are appropriate: it said in a statement issued on Monday. The inquiry was launched by the Competition Commission four and a half years ago to investigate the barriers to effective competition in the private healthcare market It released its preliminary report on July 5.

Mediclinic said it believed there was robust competition between the four big players: the National Hospital Network and the three JSE listed hospital groups Netcare, Life Healthcare and Mediclinic. "Hospital groups are able to leverage on economies of scale, enabling the provision of high quality, cost efficient care to the benefit of the patient," it said.

Mediclinic agreed with the inquiry's finding that healthcare expenditure was rising faster than consumer price inflation due to an increase in utilisation, but disputed its view that supplier induced demand played a significant role in driving this trend. "Mediclinic's economic and actuarial experts do not support the accuracy of the calculations and data under pinning these findings: it said. Increased utilisation was due to other factors, such as the increasing burden of disease, an ageing population and new technology, it said.

Supplier induced demand refers to a phenomenon in which increased access prompts additional use of a service that would not have otherwise occurred. In the case of hospitals, this could mean increased bed numbers trigger a surge in hospital admissions. Mediclinic said it supported the inquiry's recommendation that bilateral tariff negotiations be maintained between medical schemes and hospital groups. In a separate development, the health market inquiry said on Tuesday that it had received numerous requests for access to the underlying data considered in preparing its report and it would open its data access room to stakeholders during August.
  
2018/07/25
2018/08/01 01:47 PM
MEDICAL BRIEF
Private hospital group Mediclinic has taken issue with the Health Market Inquiry’s preliminary concern about market concentration in the sector, and its call for submissions on possible divestiture and a moratorium on issuing new licences, reports Business Day. “Mediclinic does not agree with these findings and will be engaging further with the health market inquiry on this topic. Mediclinic does not believe the proposed remedies are appropriate,” it said.

The inquiry was launched by the Competition Commission four-and-a-half years ago to investigate the barriers to effective competition in the private healthcare market and released its preliminary findings on 5 July.

Mediclinic is quoted in the report as saying it believed there was robust competition between the four big players – the national hospital network and JSE-listed hospital groups Netcare, Life Healthcare and Mediclinic. “Hospital groups are able to leverage on economies of scale, enabling the provision of high-quality, cost-efficient care, to the benefit of the patient,” it said.

Mediclinic said that while it agreed with the inquiry’s finding that healthcare expenditure was rising faster than consumer price inflation due to an increase in utilisation, it disputed its view that supplier-induced demand played a significant role in driving this trend. “Mediclinic’s economic and actuarial experts do not support the accuracy of the calculations and data underpinning these findings,” it said. Increased utilisation was due to other factors, such as the increasing burden of disease, an ageing population, and new technology, it said.

The report says supplier-induced demand refers to a phenomenon in which increased access prompts additional use of a service that would not have otherwise occurred. In the case of hospitals, this could mean increased bed numbers trigger a surge in hospital admissions.

Mediclinic said it supported the inquiry’s recommendation that bilateral tariff negotiations be maintained between medical schemes and hospital groups. “The company maintains its position that these negotiations are robust and concurs with the inquiry that regulated price determination between these groups would preclude strategic purchasing and stifle much-needed innovation within the industry,” it said.

It also supported the proposal to establish a supply-side regulator, provided it was independent and functioned in a transparent manner. “This body could add value in clarifying the current uncertainty in the hospital licensing regime,” it said.
  
2018/07/24
2018/08/01 09:19 AM
E-HEALTH NEWS
The recent approval of the National Health Insurance (NHI) Bill shocked many in and out of the healthcare industry, but pharmaceutical organisations committed to increased pricing transparency will have a competitive edge as government pushes ahead with its plans of expanding affordable healthcare to the masses. This is according to CEO of Pharma Dynamics, Erik Roos, who goes on to explain why it is imperative that the pharma industry skilfully navigates through the NHI conundrum while managing the expectations of the public at large.

Healthcare reform challenges all of us that operate in the sector to keep and expand our place at the table. In its current form, the proposed NHI is by no means perfect and there remains a lot of uncertainty around funding, medical skills shortages, the role medical aids will play and how infrastructural problems, wastage and corruption in the public sector will be tackled. It is becoming increasingly clear, however, that NHI is here to stay, which makes it imperative for pharmaceutical companies to get involved in the debate at the highest level in order to help shape a sustainable and effective healthcare system for South Africa.

NHI requires a new healthcare mind-set

Health firms need to ready themselves for the influx of tens of millions of new consumers – mostly of low income and how they are going to care for them on a sustainable basis emphasising wellness prevention and disease management as opposed to constant crisis management. Already more than 40% of deaths in our country are associated with non-communicable diseases (NCDs), also known as diseases of lifestyle, such as cardiovascular disease, hypertension, diabetes and cancer. About 80% of these diseases can be prevented if interventions are put in place to curb unhealthy lifestyle behaviours early on.

Access to affordable care for patients is the most important component that needs to be considered in any health reform legislation; therefore a great deal of focus will be placed on the price of medication, devices and services. Providers operating in the sector need to become resilient by connecting on a large scale to the culturally diverse communities they serve while remaining cost effective.

Getting the right balance between quality and cost

The dilemma for hospitals is finding a way to provide more access while simultaneously lowering costs. Doctors are likely to get caught up in rapid industry consolidation and must adapt to new payment models, changing traditional practices. As more people gain access to medicines via NHI, generics are sure to grab a generous share of the pie, but the challenge for pharmaceutical companies will be to stay competitive by providing more cost-effective products, linked to other value-added benefits.

However, if government continues to award tenders solely based on price under the NHI regime, that medicine shortages and stock-outs – already a concern – could worsen. This will place tremendous pressure on pharmaceutical firms, particularly suppliers of generic medication, who have already dropped their prices significantly in an environment where annual increases are highly regulated.

Foreign investment is also likely to decline as multinationals withdraw from the market and as a result patients’ needs will be compromised. Shortages and supply chain breakdowns could also quickly spiral into outbreaks of disease. To counter this, government could expand tax rebates for pharmaceutical companies which will not only allow more patients to have access to affordable medication, but also ensures the sustainability of the SA pharma sector.

The local pharmaceutical industry employs close to 10,000 full-time staff and contributes about 1.58% to the SA GDP. It also spends significantly on local socio-economic development initiatives and training medical reps and healthcare practitioners on new pharmaceutical molecules to ensure that medicines are appropriately administered. Continued pressure placed on the price of generics under NHI could over time degrade the industry and lead to a lack of knowledge around the safe administration of treatments, putting patients at risk.

A seismic shift in healthcare won’t happen overnight

Globally, NHI schemes, such as those in Europe, have taken many years to implement and in SA it could take up to 14 years before NHI is fully rolled out, even though government is pushing for a 2026 deadline.

Universal health coverage (UHC) is a global priority and more countries are adopting an NHI-type approach. Virtually all of Europe has either publicly sponsored and regulated universal healthcare or publicly provided universal healthcare. Yet, it is important to note that universal healthcare doesn’t imply government-only healthcare, since many countries continue to have both public and private insurance and medical providers. No flawless model exists, but SA must attempt to augment its existing health system to accommodate all of its residents by ensuring accessible and affordable quality care, whilst buoying the healthcare industry as a whole.

As a company, Pharma Dynamics is committed to being an active partner with government in the expansion of universal healthcare in the country and will continue to look at ways to serve more people, operating more efficiently and streamlining costs in order to best support the NHI programme. However, much more debate is needed on how to implement the NHI policy effectively.

Government’s obligation to provide universal healthcare can be complemented by leveraging the expertise of the private sector and optimising business models to bring in more patients and reduce overall system costs. There is a great need for medicine availability, skilled medical human resources and quality care. A comprehensive approach should be taken in which the quality of the healthcare system is improved simultaneously with the rollout of the NHI, in order to benefit every South African.
  
2018/07/24
2018/08/01 01:24 PM
BUSINESS LIVE
Private hospital group Mediclinic has taken issue with the health market inquiry’s preliminary concern about market concentration in the sector, and its call for submissions on possible divestiture and a moratorium on issuing new licences.

"Mediclinic does not agree with these findings, and will be engaging further with the health market inquiry on this topic. Mediclinic does not believe the proposed remedies are appropriate," it said on Monday.

The inquiry was launched by the Competition Commission four-and-a-half years ago to investigate the barriers to effective competition in the private healthcare market, and released its preliminary findings on July 5.

Mediclinic said it believed there was robust competition between the four big players — the national hospital network and JSE-listed hospital groups Netcare, Life Healthcare and Mediclinic.

"Hospital groups are able to leverage on economies of scale, enabling the provision of high-quality, cost-efficient care, to the benefit of the patient," it said.

Mediclinic said that while it agreed with the inquiry’s finding that healthcare expenditure was rising faster than consumer price inflation due to an increase in utilisation, it disputed its view that supplier-induced demand played a significant role in driving this trend.

"Mediclinic’s economic and actuarial experts do not support the accuracy of the calculations and data underpinning these findings," it said.

Increased utilisation was due to other factors, such as the increasing burden of disease, an ageing population, and new technology, it said.

Supplier-induced demand refers to a phenomenon in which increased access prompts additional use of a service that would not have otherwise occurred. In the case of hospitals, this could mean increased bed numbers trigger a surge in hospital admissions.

Mediclinic said it supported the inquiry’s recommendation that bilateral tariff negotiations be maintained between medical schemes and hospital groups.

"The company maintains its position that these negotiations are robust and concurs with the inquiry that regulated price determination between these groups would preclude strategic purchasing and stifle much-needed innovation within the industry," it said.

It also supported the proposal to establish a supply-side regulator, provided it was independent and functioned in a transparent manner.

"This body could add value in clarifying the current uncertainty in the hospital licensing regime," it said.
  
2018/07/24
2018/08/01 01:49 PM
THE CITIZEN
Mediclinic's Roly Buys disagrees with the finding that it is one of the three dominant players, and says there is robust competition between all hospital groups.

Mediclinic Southern Africa has defended its private hospital business, which has come under fire for being dominant, saying its sustained profitability is due to operational efficiency and management skills.

“Our profitability is something that we have achieved through our management style, big investments in advanced systems and technologies that have enabled the provision of high quality and cost-efficient care to patients,” Roly Buys, Mediclinic’s chief strategy officer, tells Moneyweb.

Buys was responding to the long-awaited provisional findings of the Competition Commission’s Health Market Inquiry (HMI) on SA’s private healthcare market, which was unveiled earlier in July.

The HMI panel, led by former chief justice Sandile Ngcobo, found that failures in regulation and governance have contributed to a lack of competition and high levels of concentration in the private hospital market. Hospital groups Mediclinic, Netcare and Life Healthcare have been fingered by the HMI for promoting a highly-concentrated market with limited competition. According to the HMI, the three hospital groups have a combined market share of 83% in terms of the number of beds and 90% in terms of the total number of admissions.

“One of the most important consequences of the dominance of the three large hospital groups is that no funder [medical aid scheme] can afford not to contract with any one of the three big facility groups or to totally exclude one of these groups from any provider networks,” the 484-page HMI report read.

If the market was less concentrated – for example, with six large private hospital groups instead of the current three – medical aid schemes “would likely have the option not to contract with one of the groups”.

This, the HMI says, would “create a completely different bargaining dynamic, to the benefit of patients”.

Buys, who disagrees with the finding that Mediclinic is one of the three dominant players, says there is robust competition between all hospital groups, including the National Hospital Network.

He adds that over the past five years the private healthcare market has seen the entrance of independent private hospital groups, including acute care hospitals and day-clinics, which has been good for competition and patients.

“We are seeing many hospital licenses that have been given to independent hospital groups and we see them building more hospitals. Most of the big hospital groups in the past five years have built at least two new hospitals but the independent players have built more. The hospitals built by independents would even be based right opposite ours and they have become direct competitors,” says Buys.

Among the independent hospital groups he mentions are Lenmed Health Group, Busamed Group, and day-care specialist Advanced Health.

Supply-induced demand

The HMI found that some of the costs incurred by patents for in-hospital care rather than out-hospital cannot be explained.

An analysis of medical scheme claims data by the inquiry revealed that the average private medical scheme spend per member increased by 9.2% per annum for a five-year period from 2010 to 2014. This was nearly four percentage points higher than average consumer price inflation over the five-year period of 5.6%.

After taking into account changes in medical scheme members’ plan type, gender, disease profile and membership movement, there was an unexplained increase in spend per member of more than 2% per annum after adjusting for inflation or in rand terms, R3 billion.

Buys says Mediclinic doesn’t support the accuracy of the HMI’s calculations as it uses headline inflation instead of stripping out medical inflation from the headline figure and using it as a benchmark.

The HMI has recommended a moratorium in terms of which Life Healthcare, Mediclinic, and Netcare would not be granted licenses for new facilities, or permission to increase the number of beds within existing facilities until their individual market share is not more than 20%.

Buys says a moratorium is not a sensible option.

“Hospital groups bring new facilities wherever there is a need. They respond to the need by building new facilities. A moratorium that says nothing about medical needs at all is really not a practical solution.”

Mediclinic plans to engage with the HMI panel about its disagreements with the findings.
  
2018/07/23
2018/08/01 09:21 AM
FIN24.COM
Health Minister Dr Aaron Motsoaledi should withdraw the Medical Schemes Amendment Bill, until the Competition Commission finalises the Health Market Inquiry, according to Andre Jacobs, an executive at ASI Financial Services.

There are currently three key documents affecting the healthcare sector in South Africa, the National Health Insurance (NHI) Bill and the Medical Schemes Amendment Bill published for comment in June and the Health Market Inquiry preliminary report released on July 5.

The preliminary report of the four-year investigation into the private healthcare sector, by the Competition Commission found that the market “displays consistently rising medical scheme premiums accompanied by increasing out-of-pocket payments for the insured ... and a progressively decreasing range of services covered by medical scheme options."

Stakeholders in the private healthcare sector and the public have until September 7 to comment on the 800-page report and the Health Market Inquiry will then consider all representations and publish the final report by the end of November.

Jacobs said that the comment period for the Medical Schemes Amendment Bill ends on September 20 and this will prevent relevant sections from the Health Market Inquiry’s final report being included in the bill and could duplicate the process.

Mark Arnold, Principal Officer of Resolution Health Medical Scheme warned of the timing clash between the Health Market Inquiry and the amendments to the bill regulating medical schemes.

 “There is significant risk that the regulatory environment being created through the legislative amendment process currently underway could conflict with the lessons learned in the course of the HMI’s work, which will only be fully apparent on the release of its final report,” Arnold said in a statement on Friday.

The Medical Schemes Amendment Bill proposes an end to co-payments by the client and the medical aid for healthcare services, increased cross subsidisation of members across age groups and income levels as well as the barring of medical aid brokers.

Arnold questioned why the work of the Health Market Inquiry, which was the “most comprehensive assessment of the private healthcare sector ever undertaken in our country” was not being considered by the bill amending medical schemes.

The Health Market’s preliminary report found that despite SA consumers having 22 open medical schemes to choose from, just two dominate the market. Discovery Health has nearly 55% of the market, while Medscheme is a close second.

The inquiry also stated that there was a lack of players in the private hospital sector with just three groups- Netcare, Mediclinic and Life Healthcare — holding a combined market share of 83%, which disadvantaged patients.

Fin24 previously reported that financial services company GTC in its eighth annual Medical Aid Survey found that the subscriptions for members are outstripping salary increases.
  
2018/07/23
2018/08/01 09:25 AM
BIZCOMMUNITY
Has the almost simultaneous release of the National Health Insurance (NHI) Bill, the Medical Schemes Amendment Bill and the provisional findings of the Health Market Inquiry (HMI) created an information overload, where some of the insights from the inquiry could be lost in the noise?

Will HMI insights get lost in the rush to finalise healthcare laws?

"There is significant risk that the regulatory environment being created through the legislative amendment process currently underway could conflict with the lessons learned in the course of the HMI’s work, which will only be fully apparent on the release of its final report,” says Mark Arnold, principal officer of Resolution Health Medical Scheme.

A considerable amount of time, resources and expertise have been invested in the HMI, but with the final report due for release in November, however, there is a risk that the full benefit of these insights could be lost due to the timing of these inter-related developments, as the period for submissions on Medical Schemes Amendment Bill and the National Health Insurance Bill close in September, he says.

“As it stands, the HMI findings might be considered when fine tuning the proposed amendments to medical schemes law. However, far greater value could be added if the final HMI findings and recommendations are embraced and incorporated as the foundation for the amendments in the creation of a fresh approach to healthcare for the country.

“Closing the submission period on the Medical Schemes Amendment Bill, which specifically deals with the private healthcare sector, before the HMI’s final report is available is analogous to putting the horse before the cart.

“Such an approach squanders the opportunity to strengthen legislation with the full benefit of wisdom garnered during the lengthy and expensive inquiry and the best chance we have of making informed decisions that will shape the future of healthcare in South Africa for all.”

Significant political pressure

Acknowledging that there is significant political pressure for legislative certainty that will pave the way for the full implementation of the NHI Arnold notes that a better integrated process would be more likely to achieve a successful and sustainable new healthcare paradigm in the long run.

“If we are to overcome the challenges facing private healthcare – some of which also threaten to derail the goals of universal health coverage – we need to develop a balanced and well-informed piece of legislation, and this is a process that should not be rushed,” he adds.
  
2018/07/23
2018/08/01 09:28 AM
FA NEWS
Timing of medical schemes legislative amendment risks putting the cart before the horse.

The release of the National Health Insurance Bill, the Medical Schemes Amendment Bill and the provisional findings of the Health Market Inquiry, all within the space of three weeks, has provided much food for thought about the future of South African healthcare.

“A considerable amount of time, resources and expertise have been invested in the Competition Commission’s Health Market Inquiry [HMI],” says Mark Arnold, Principal Officer of Resolution Health Medical Scheme.

“In the four-and-a-half years since the HMI began, it has had input from every relevant stakeholder. The inquiry represents the most comprehensive assessment of the private healthcare sector ever undertaken in our country.

“With the HMI’s final report due for release in November, however, there is a risk that the full benefit of these insights could be lost due to the timing of these inter-related developments, as the period for submissions on Medical Schemes Amendment Bill and the National Health Insurance Bill close in September.”

Arnold points out that there is significant risk that the regulatory environment being created through the legislative amendment process currently underway could conflict with the lessons learned in the course of the HMI’s work, which will only be fully apparent on the release of its final report.

“As it stands, the HMI findings might be considered when fine tuning the proposed amendments to medical schemes law. However, far greater value could be added if the final HMI findings and recommendations are embraced and incorporated as the foundation for the amendments in the creation of a fresh approach to healthcare for the country.

“Closing the submission period on the Medical Schemes Amendment Bill, which specifically deals with the private healthcare sector, before the HMI’s final report is available is analogous to putting the horse before the cart.

“Such an approach squanders the opportunity to strengthen legislation with the full benefit of wisdom garnered during the lengthy and expensive inquiry and the best chance we have of making informed decisions that will shape the future of healthcare in South Africa for all.”

Andre Jacobs, an executive at ASI Financial Services, adds: “The Minister of Health requested that the Competition Commission conduct the HMI, which, after several delays, published its preliminary report for public comment on 5 July 2018 and the public and stakeholders have until 7 September 2018 to make comment. The HMI Panel will then consider all the recommendations and comments and is expected to publish its final recommendations by 30 November 2018.

“Considering public comment on the Medical Schemes Amendment Bill (‘MSAB’) must be provided before 20 September 2018, this not only eliminates the opportunity to include the relevant HMI findings in the MSAB but also duplicates effort and threatens to fundamentally weaken public comment.

“In addition, the Constitution and the Promotion of Administrative Justice Act (PAJA) prescribe that this process needs to be fair and there is a concern that excluding the findings of the HMI may not be aligned to this.

“It is our view that it may be prudent for the Minister to consider withdrawing the Medical Schemes Amendment Bill until the findings and recommendations of the HMI are finalized,” Jacobs asserts.

“Market experts have been involved in, and unanimously commended the HMI’s work in reviewing the private healthcare market. Even if certain commentators dispute some of the specific conclusions and recommendations, overall appreciation of the inclusive and comprehensive process is widely accepted.

“Therefore, the attention of society and stakeholders should be to focus on the HMI report and the comment leading up to 7 September 2018. This will enable society to further participate in a meaningful debate on the industry as access to healthcare is of national importance,” Jacobs adds.

“Acknowledging that there is significant political pressure for legislative certainty that will pave the way for the full implementation of the National Health Insurance (NHI), Arnold notes that a better integrated process would be more likely to achieve a successful and sustainable new healthcare paradigm in the long run.

“If we are to overcome the challenges facing private healthcare – some of which also threaten to derail the goals of universal health coverage – we need to develop a balanced and well-informed piece of legislation, and this is a process that should not be rushed,” he adds.

“More haste in finalising the Medical Schemes Amendment Bill is likely to result in a framework that could hold up progress towards a truly progressive health system that will benefit generations to come,” Arnold concluded.
  
2018/07/23
2018/08/01 09:31 AM
ECONEX
On 21 June 2018, the Minister of Health, Dr Aaron Motsoaledi released the National Health Insurance Bill (NHI Bill) and the Medical Schemes Amendment Bill (MSA Bill). The Minister explained that the overarching objectives of the bills are the achievement of universal access to healthcare and the lowering of healthcare costs. We assess whether the NHI Bill and the MSA Bill are sufficient to achieve the twin objectives of increasing access and decreasing cost.

To the extent that all South Africans are currently able to access healthcare in the public sector, being charged according to their income and ability to pay, one could argue that South Africa already has universal access to healthcare. However, there are unacceptably large disparities in the quality of healthcare in the country, and the standard of healthcare available in the public sector is abysmally low. Approximately 84% of the population make use of the public healthcare sector, and the quality gap between the public and private sectors is wide and expanding. For the Minister’s objective to have a meaningful impact on health outcomes in South Africa, the NHI Bill would need to ensure universal access to quality healthcare.

So how does the NHI Bill propose to remedy the state of healthcare in South Africa? The South African public healthcare sector is riddled with governance and operational failures that have the left the system on the brink of collapse. The dire state of the system is well documented. One would rationally assume, then, that a plan put in place to remedy the situation would focus extensively on issues of governance and operational efficiency.

However, the NHI Bill is conspicuously silent on governance and operational features of the healthcare system. The NHI Bill effectively provides for the establishment of the National Health Insurance Fund (NHIF). According to the Bill, the NHIF is a central fund that will be the sole purchaser of a predetermined basket of healthcare services across the country, in both the public and private sector. The NHIF will procure this basket of healthcare services for all NHI beneficiaries, and these services will be free to registered beneficiaries at the point of access. Contributions to the NHIF will be mandatory for those who can afford to contribute.

The NHI Bill therefore provides for the establishment of a strategic procurement fund, and the Bill leaves underperforming provincial systems of healthcare delivery largely intact. It is doubtful that a strategic procurement fund will meaningfully improve access to high quality healthcare if it does not specifically address the governance and operational failures in the system.

We mention above that the NHIF will provide a distinct basket of healthcare services, which will be free of charge at the point of access. The Bill provides for the establishment of a Benefits Advisory Committee to determine what these benefits should be. However, the Bill requires that the Benefits Advisory Committee take account of the funds available in determining what should be included in this basket of services. Herein lies a fundamental stumbling block to determining what services will be procured by the NHIF. Determining the funding requirements of the NHI has been a notoriously difficult task.[1] The Davis Tax Committee highlights the vast range of estimates of the cost implementing the NHI, and the Minister himself has commented on the impossibility of calculating the cost of such a system. Indeed, without a clear indication of what the NHIF will procure (i.e. what benefits will be covered) funding calculations are impossible. Yet the Bill requires the Benefit Advisory Committee to determine benefits based on the funds available. It seems impossible then to determine which healthcare services will ultimately be provided by the NHIF.

An important provision in the NHI Bill and one that is potentially problematic from an economic perspective is the establishment of the Health Benefits Pricing Committee, which will recommend and determine the price of the health benefits that will be provided by the NHIF. Failure to apply the prices decided by the Pricing Committee will result in practitioners losing their accreditation to supply services to the NHIF. The impact of regulating prices amongst healthcare practitioners (particularly those in the private sector) on the incentive to continue to practice is worrisome. It is likely to be challenging to arrive at prices that satisfy both practitioners and the NHIF.

In terms of lowering the cost of healthcare, the likelihood of the NHI and MSA Bills achieving this objective will depend on which services are covered by the NHIF and what this means for medical scheme membership going forward. The MSA Bill stipulates that medical schemes may not cover health services procured by the NHIF. Schemes may only cover services not provided by the NHIF, and in this sense may provide “top-up” or supplementary healthcare cover. The NHI Bill explains that medical schemes may cover healthcare services for individuals not eligible for NHIF cover, services accessed outside of the referral pathway,[2] and for services not deemed necessary by the Benefits Advisory Committee. The impact of these stipulations on medical scheme membership and the size and composition of risk pools will determine what the ultimate effect will be on medical scheme premiums. It will therefore determine the impact on the affordability private healthcare cover in South Africa.

Much uncertainty and confusion surround the future of healthcare in South Africa at the moment, and future blog posts will deal with more detailed aspects of the NHI and MSA Bills. The probability that the NHI and MSA Bills will achieve the objectives of universal healthcare and decreased cost seems low and much debate is likely to characterise the healthcare arena in months to come.

[1] Econex has done work on the financing of the NHI, available here.

[2] The NHI Bill stipulates that registered NHI beneficiaries must access healthcare through their primary healthcare provider, after which they may be referred to other parts of the healthcare system (e.g. specialist or hospital care).

Author/s: Dr Paula Armstrong

Nothing in this publication should be construed as advice from any employee of Econex and should be seen as general summaries of developments or principles of interest that may not apply to specific circumstances.
  
2018/07/23
2018/08/01 09:31 AM
Daily Dispatch
Adrian Gore's Discovery has enjoyed rapid growth since its inception some 26 years ago, broadening its product offering beyond medical aid into insurance and financial products and, this year, banking. The company's diversification away from its core healthcare product is drawing more intense investor interest as the long term prospects for that business are muddied by the impending National Health Insurance (NHI) . So pervasive has Discovery Health's growth been that the recently completed Health Market Inquiry, which looked into competition in the private healthcare market, described it as "an indication of market failure" and that the market showed no signs of self-correcting.

The company, founded by Gore and a colleague in 1992 after leaving Liberty Holdings, is made up of a medical aid arm, life insurance, a Vitality health programme and some other financial products. Its insurance arm has already overtaken its healthcare business, and, according to Bloomberg data, makes up more than 50% of the company's revenue. As part of its ever evolving and diversifying business, the firm is set to launch Discovery Bank this year.

The bank will face stiff competition from existing banks as well as the soon to be launched TymeDigital bank, owned by the Commonwealth Bank of Australia, and former FNB CEO Michael Jordaan's Bank Zero.

 Wayne McCurrie from FNB Wealth and Investments said healthcare companies were unlikely to feel the impact of the NHI for about a decade.

McCurrie said Discovery had a loyal customer base in South Africa, to which it is now cross selling its other products. However, banking might be a tough nut for Discovery to crack. "The problem with Discovery is they don't have enough capital to truly be a big player in the banking market," he said, adding the bank might start small and to truly become big, would need to raise capital by selling shares.
  
2018/07/23
2018/08/01 01:51 PM
NETWERK24
Die markondersoek het bevind die gesamentlike markaandeel van die drie nasionale hospitaalgroepe beloop 83% van die beddens en 90% van die opnames.

Die internasionale hospitaalgroep Mediclinic stem nie saam met die bevindinge van die markondersoek oor die private gesondheidsbedryf dat disinvestering en ’n verbod op nuwe lisensies dalk nodig is om die dominansie van dié groep asook Netcare en Life Healthcare hok te slaan nie.

Mediclinic het sy aanvanklike mening oor die voorlopige verslag van die markondersoek uitgespreek wat op 5 Julie uitgereik is.

Belanghebbendes het tot 7 September kans om daarop kommentaar te lewer. Die markondersoek het bevind die gesamentlike markaandeel van die drie nasionale hospitaalgroepe beloop 83% van die beddens en 90% van die opnames.

Dit word as “hoogs gekonsentreerd” ingevolge internasionaal aanvaarde kriteria beskou. “Ons het talle opsies oorweeg om dit te hanteer, insluitende disinvestering en ’n verbod op die uitreiking van nuwe lisensies aan die drie groot hospitaalgroepe Netcare, Life en Mediclinic.

Die verbod sal vereis dat die groepe nie lisensies vir nuwe hospitale of vir meer beddens kry totdat elkeen op grond van hul aantal beddens nie meer as ’n markaandeel van 20% het nie.”

“Disinvestering skep talle vrae oor of dié maatstaf nie erger is as wat nodig is nie.” Die markondersoekspan het voorleggings oor dié opsies gevra. Mediclinic sê in ’n verklaring hy neem kennis van die kommer oor konsentrasie wat in die voorlopige verslag uitgespreek is en dat kommentaar daaroor versoek is.

“Mediclinic stem nie saam met die bevindinge nie en sal met die markondersoek oor die onderwerp skakel. Hospitaalgroepe gebruik skaalekonomieë om kostedoeltreffende sorg van hoë gehalte tot voordeel van die pasiënt te lewer. Ons glo daar is ywerige mededinging tussen die vier groot hospitaalgroepe, naamlik Mediclinic, Life Healthcare, Netcare en die National Hospital Network (NHN).”

Die NHN is ’n maatskappy sonder winsbejag met die mandaat van verskillende hospitale om namens hulle tariewe met mediese skemas te onderhandel. Dié netwerk kry elke drie jaar by die mededingingskommissie vrystelling om namens die hospitale tariewe te beding.

Die markondersoek het nie na die NHN verwys ten opsigte van konsentrasie nie. Hiermee stem Mediclinic ook nie saam nie Die hospitaalgroep betwis die siening dat deel van die stygende koste in die private gesondheidsorgbedryf veroorsaak word deur die vraag wat deur dokters en die hospitale aangedryf word.

Afgetrede hoofregter Sandile Ngcobo, voorsitter van die ondersoekkommissie, sê die inligting van die markondersoek toon daar is sterk bewyse daarvan. Dit is wanneer ’n dokter die pasiënt aanmoedig om meer sorg te ontvang as wat nodig is vir die mediese probleem.

Mediclinic sê sy ekonomiese en aktuariële kundiges betwyfel dit of die berekeninge en data waarop dié bevindinge gegrond is, akkuraat is.

Hiermee stem Mediclinic saam :

1. Die jaarlikse styging van meer as verbruikersprysinflasie in gesondheidsorgkoste kan toegeskryf word aan meer dienste wat gebruik word, nie aan oormatige tariefverhogings nie. Die toename in die dienste wat gebruik word, word veroorsaak deur ouderdom en siektes wat toeneem.

2. Eenvormige standaarde is nodig om die gehalte van sorg in die private gesondheidsbedryf te meet. Die onafhanklike liggaam wat voorgestel word daarvoor, stem ooreen met wat Mediclinic aan die markondersoek voorgestel het.

3. Die Raad op Gesondheidsberoepe se etiese reëls moet hersien word sodat daar meer samewerking tussen verskaffers en die verskaffing van sorg kan plaasvind. Dit is nodig sodat multidissiplinêre spanne geskep kan word. Die reëls moet verander word om hul gesamentlike vergoeding moontlik te maak. Mediclinic sê dit is nodig om die gefragmenteerde sorg in die mark aan te pak.

4. Bilaterale onderhandelinge oor tariewe tussen mediese skemas en hospitale moet behou word. Mediclinic sê hy stem saam met die bevinding dat die bepaling van pryse deur die staat innovasie aan bande sal lê.

5. Die doeltreffendheid van nuwe tegnologie moet gemeet word.

6. Die openbare sektor kan dienste by die private sektor aankoop.

7. In beginsel word die beheerliggaam vir verskaffers ondersteun indien dié liggaam onafhanklik sal wees en op deursigtige wyse gaan funksioneer. “Die liggaam kan waarde toevoeg en die huidige onsekerheid oor die regime vir hospitaallisensies opklaar.”
  
2018/07/22
2018/08/01 09:32 AM
CITY PRESS
About a month ago, the department of health released the white paper on the National Health Insurance (NHI), which saw critics immediately going into overdrive, raising at least three issues.

The first was that the NHI was a non-starter because of the poor quality of public healthcare. Actually, they went as far as saying that it was unworkable in our country. Two, that the NHI was unaffordable. Three, that the whole idea of the NHI was a ploy to destroy private healthcare, which had no problem and was the only hope for the nation.

The first two issues are being brought as new observations, but actually they are not new. The National Development Plan (NDP), our socioeconomic blueprint that has been adopted by virtually all political parties in Parliament, clearly stated that we need universal health coverage (UHC), in which funds are pooled to provide access to good quality healthcare regardless of socioeconomic background. In their wisdom and research, the 25 commissioners of the NDP said that, in order to achieve UHC, South Africa would need to solve two major problems of the healthcare system. These are the exorbitant cost of private healthcare and the poor quality and lack of efficiency in the public healthcare system.

As the government, we embraced the findings of the commissioners, but the critics of NHI only acknowledge one problem and turn a blind eye to the other problem of the high cost of private healthcare. We are painfully aware that NHI will never be successful without improved quality and efficiency of the public healthcare system, which serves the majority of the population. Everything we are planning is in that direction. Unlike our critics, we want to argue that the second problem can only be ignored at our own peril.

Last week, no less a person than former Chief Justice Sandile Ngcobo released a report on the findings of an extensive inquiry that took four years to conclude. On more than two occasions, he received input from the World Health Organisation as well as the authority on competition law, the Organisation for Economic Co-operation and Development. Their advice was very clear – that we are running one of the most expensive private healthcare systems in the world, but, further, that we are the only country that is spending so much money on so few people. The methodology used to arrive at the findings by the Ngcobo commission has been used for more than 30 years in Europe, but still hardliners, who are driven by their own desires to defend and perpetuate their own positions of huge benefit and privilege at the expense of the overwhelming majority of our people, want us to believe that there was something wrong with the findings.

It is instructive to note that the people who argue that the NHI will be unaffordable to the country are actually basing their argument on the belief that the cost of private healthcare is a world gold standard which nobody can change and hence, in calculating the cost of NHI, they take this high cost, largely discredited by these reputable bodies in the world, and extrapolate it mathematically to the rest of the population. This is not the route that the NHI is designed to follow.

These hardliners accuse the state of using the Ngcobo commission to pursue the rich, who, they argue, are by and large content with whatever they are paying and have no problem with the cost. What is being missed here, whether through ignorance or deliberately, is that the so-called rich people who are being targeted include ordinary teachers, nurses, doctors, policemen, magistrates and judges, politicians, clerks, managers, and trade union leaders.

With the exception of some in the last group, all of the above are employed by the state. And when the cost of private healthcare increases exponentially, the state has to subsidise them. It does not end there. The state also offers tax rebates to any South African who has medical aid, whether they are employed by the state or not. Hence, in 2015, the state subsidy to private healthcare was R26bn and the tax rebates were R20bn – a total of R46bn. Three years later, in 2018, the state subsidy has increased to R31bn and the tax credits to R26bn. All these are driven by the ever-escalating cost of private healthcare, and the state is obliged to tag along in terms of the laws of the country.

And because the state is legally obliged, its capacity to finance the public healthcare system has equally diminished over that same period. In simple language, the state is ratcheting up its financial support to private healthcare for a selected few who are, by and large, self-sufficient on their own, while at the same time reducing its support for the majority who are poor and dependent on the state.

If you want to see why the country is said to be the most unequal society in the world, you do not have to look further than the healthcare system. It is inconceivable that, with all the evidence provided, a democratic and caring state should leave such gross inequality unattended.

As the state, we will continue to plan, through the NHI, a massive reorganisation of the current healthcare system, both public and private, to bring about affordability and access to good quality for all.

  
2018/07/22
2018/08/01 09:35 AM
SUNDAY TIMES
The National Health Insurance (NHI) fund is set to shake up South Africa's healthcare sector but experts caution that it will not be a success if South Africa does not first resolve existing problems.

The country's public healthcare system is plagued by staff, medicine and supply shortages, poor infrastructure and surgery backlogs. The private sector — although providing better quality healthcare — is characterised by prohibitive and ever increasing costs.

The disparities in both sectors were highlighted by Statistics SA's General Household Survey 2017 which found 71.2% of households made use of public healthcare facilities as their point of access. House holds that access private healthcare amounted to 27.4%.

To bridge the gap and ensure all South Africans have access to free, high-quality care, the Department of Health has introduced the National Health Insurance Bill, which will pave the way for the NHI fund. However, the bill does not elaborate on where the budget for the fund — to be implemented in 2030 — will come from.

The Treasury has allocated an additional R4.2-billion for NHI over the medium term, to be funded through an amendment to the medical expenses tax subsidy.

Alex van den Heever, professor of governance at the University of the Witwatersrand, said for the NHI scheme to be effective the government needed to change the way provincial health services operate, rather than "throwing money at them".

The NHI framework did not propose to do anything to resolve the issues in the medium term until 2026.

"What makes the [NHI] a distinctive or unusual proposal is that it claims to be creating or establishing universal coverage in a system that already has universal coverage. But instead of actually trying to incorporate an uncovered group into a public scheme, it's proposing to incorporate a covered group, medical scheme members," he said.

Van den Heever questioned using a tax subsidy to fund NHI. "It is implied that in bringing the group in, they are somehow going to improve the subsidy for lower income people. There are hard fiscal constraints around whether you can de facto increase the value of the subsidies going from current taxpayers to other people," he said.

Momentum Health head of sales and marketing Damian McHugh saidalthough countries such as the UK, Germany and Australia have universal healthcare, it is difficult to use them as case studies.

"It's taken Germany 125 years and it's still not perfect. So it is a very complex thing to get right and in a vast majority of those countries you have a very high employment ratio, which means a lot of people are paying tax so there's a lot more money in your system."

He said the NHI was a good plan that was not necessarily doomed to fail but could only succeed if South Africa could get quality healthcare to a broader base of people without affecting the pockets of excellence in the public sector and private sector.

Head of orthopaedic surgery at Wits Dr Mmampapatla Ramokgopa said: "It is very clear that we are battling, our hospitals and clinics are not run in the way we'd expect them to be."

Continuing challenges the public healthcare sector was facing, particularly at hospitals, were the "the small battles" that needed to be won before an NHI scheme could be implemented.

"When you run short of oxygen in a hospital, what do you call it? This has happened at Chris Hani Baragwanath Hospital, which is supposed to be a centre of excellence."

"What case do we have now [to implement NHI], as inefficient as we are?" Ramokgopa said.

However, it seems that Health Minister Aaron Motsoaledi will push forward with his plan to implement NHI, regardless of the concerns raised. In his introduction of the fund last month, he said he was aware of concerns that the system needed to be fixed but NHI was not a matter of debate.
  
2018/06/15
2018/06/20 03:15 PM
PRETORIA NEWS
A new group made up of health professionals and academics is piling pressure on Health Minister Aaron Motsoaledi ahead of the introduction of the National Health Insurance (NHI) scheme.

The 99 individuals on the list - seen by Independent Media - are calling for a review of the NHI.

Motsoaledi has hit back saying opposition to the NHI and calls for his head are being orchestrated by some medical aid societies that do not want it to be implemented.

In a nine-page document, the pressure group blasts the public health management and NHI given the nod by cabinet last week.

Motsoaledi was expected to make the NHI scheme’s contents public this week but will now probably only hold a media briefing next week. Health spokesperson Foster Mohale said it would be difficult to comment on the document before this briefing. He urged the group to wait for Motsoaledi to unpack the NHI bill and then participate in public comments.

This is the second round of organised criticism directed at Motsoaledi and his department, particularly concerning NHI, in less than a week.

Last week Cosatu pleaded with President Cyril Ramaphosa to get rid of Motsoaledi, accusing him of dragging the implementation of NHI. The labour federation also blamed him for the general collapse of public health facilities across the country.

In the latest attack, Dr Amilcar Juggernath, part of the group of 99, said they had collective concerns about the poor state of public health. “We are a collective who wanted to collaborate in the fight for better healthcare."

In the document, the group argues that the creation of the NHI was unclear. Also, that it was “unresearched” and merely there to address the current crisis with no future plans.

“The most striking observation is that the government has lost control of the NHI narrative. It will have to adopt a new approach to regain that control. It is now also common cause that implementation of the NHI has been characterised by a lack of transparency, equivocal Treasury support and, paradoxically, a deteriorating public service,” reads the document.

The group said it supported Universal Health Coverage (UHC) that would have been cost effective and easily accessible to all compared with the NHI.

Among their calls is for the formation of an inter-sectoral cabinet committee to manage the provincial and municipal health budgets, administration and service delivery in public health. “The swift transfer of industrial scale health institutions, such as academic complexes and specialised institutes, to a national authority under presidential mandate,” they said.

The move has been perceived as bordering on a drastic call to put Motsoaledi’s health ministry under administration.

The document emerges against the backdrop of Motsoaledi’s presentation to the SACP Central Executive Committee (CEC) on June 2 which showed how billions of rand was being channelled to private health companies at the expense of the poor.

His presentation came as the country’s GDP plummeted by 2.2% in the first quarter of this year. The leaked presentation shows 8.5% of the country’s GDP went to healthcare of which 4.4% was gobbled up by private health that services only 16% of the population. A whopping R46.7billion is allegedly spent on government employees’ medical aid schemes with the remaining 4.1% of the GDP going to a public health sector that accommodates 84% of the population.

Motsoaledi’s document also accused private hospital groups of squeezing the independent group of hospitals formed by township doctors out of business from the mid-1990s to 2006 through rigorous commercialisation. The independent group had more than 50% of beds in the private sector in the early 1990s and this number shrunk to 12.3% by 2006.
  
2018/06/15
2018/06/20 03:16 PM
THE STAR
In an interview, Health Minister Dr Aaron Motsoaledi said that his biggest risk in the implementation of NHI is fear and lack of political will on the part of the state.

Khathu Mamaila: The health ombud paints a very gloomy picture of the healthcare system in the country. Under the current circumstances, should we really be even talking about the implementation of the NHI?

Minister Aaron Motsoaledi: It is true that I pronounced publicly that the healthcare system is under extreme distress. You may call it a crisis but there are those who prefer to call it a collapse. I am the one who came up with the idea of having a health ombud, a position that never existed in the past. Some people who did not understand what we were trying to do asked me what is a health ombud, and my explanation was that the health ombud is a public protector in our health system. Everybody is now familiar with how the health ombud dealt with the Life Esidimeni tragedy. Your main question is whether under the present circumstances we should be talking about NHI. I am very worried why it is not clearly understood that NHI is not a luxury which we implement when everything is going right. If everything was going right, then you do not need NHI.

You need NHI precisely because you want to use this universal health coverage plan to correct the wrong things in the healthcare system. Remember that we are not the first country in this planet to implement such a system. Many countries have done so for more than half a century.

All the countries who implemented it had something in common. They were prompted by very serious problems in their healthcare system. Those problems were created by the prevailing economic conditions at the time. A prime example is that of Britain. When the British started their National Health Service, a similar plan to NHI, it was three years after World War II. Their healthcare system was in tatters, with high mortality and morbidity. They had a high rate of unemployment and many poor people. That is when the government of the day decided that to save many people from death, let’s start a health system that will not only cater for the rich but will help everybody. Since NHI is the equaliser between the rich and the poor, to quote Margaret Chan, the former World Health Organisation director-general, then we should accept that this is the only system that is appropriate to address the problems in healthcare in our country, which is reported to be the world’s most unequal society.

KM: Perhaps before we get into the details of NHI, ordinary people are saying that what the health bombed said was their daily experiences. They say the quality of public healthcare has been deteriorating over the years. Some even argue that public hospitals are in a worse state than they were during apartheid. Is this fair comment?

AM: This might not be an unfair comment, to be frank. But the point of dispute among many people is what brought this situation about. A number of commentators believe that it is just because of corruption, poor management, incompetence and unskilled officials as well as under-budgeting in the public healthcare system. This sounds like a powerful argument, but really this is too simplistic. These issues that many people argue are the causes are the consequences of a deeply fragmented system. Apartheid was fragmented along colour lines, but both groups were treated in the public hospitals, which had most of the resources even though they were not equal. Nobody was getting treatment in an exclusive and extremely expensive private hospital which was also heavily subsidised. All the human resources, skilled professionals, were accessible to all.

For example, Johannesburg Hospital, now Charlotte Maxie, was an exclusively white hospital, but in terms of specialised skills that served this hospital, they were available to serve Baragwaneth Hospital, which was exclusively a black hospital. But in today's economic fragmentation, as opposed to colour fragmentation, the situation is much more brutal. In this brutal system, 4.4 percent of the GDP is spent on only 16 percent of the population, while the remaining 4.1 percent (of a total of 8.5 percent of the GDP which is spent on healthcare) is shared by 84 percent of the population. No other country in the world spends so much money on so few people. I have heard some arguing that 4.1 percent is sufficient for the poor majority. But for how long do we expect the poor majority to keep on absorbing insults like this?

KM: While the rationale for NHI is sound, does the country currently have enough resources to implement NHI?

AM: There are people propagating a misleading notion to the country that private healthcare use strictly private health money from rich people. This is an outrageous lie.

The private healthcare system is heavily subsidised by the public. There is enough money for health for everybody in the country. The problem is that it is used on too few people. But this does not mean that we are intending to ban the private healthcare system. We just want to make the healthcare resources in both private and public to be available to all people in the country. I want somebody to stand up and tell me how it is wrong, morally, politically legally and constitutionally to give equal treatment to people without regard to their economic status.

KM: If we move away from historical factors, in your view, what is the major contributing factor to the over-burden of the public healthcare system?

AM: People can gloss over the facts to maintain a particular narrative. But one fact that nobody can dismiss is that in 2004, only 400 000 people were receiving antiretroviral drugs from our public healthcare centres. That number has increased more than 10 times. Today just over 4.2-million people are getting antiretroviral drugs from our hospitals. This explains the longer queues that are a familiar sight in our hospitals and clinics. In a way we are victims of our own successes. Yes, people may complain about the long waiting periods, which we try our best to reduce, but what is not often said is that we run the biggest ARV programme in the world. We are saving millions of lives.
People need no longer die of HIV and AIDS. We have turned the corner. Statistics support the view that fewer people are dying of HIV and Aids. Life expectancy has also increased. And all these are supported by the current healthcare system.

KM: Given the concrete material conditions prevailing in the public healthcare sector, can NHI be rolled out successfully?

AM: I wish to remind the public about the White Paper. In that document we clearly said that NHI is a substantial policy shift which needs a massive reorganisation of the health system, both public and private. Without this massive reorganisation you can't roll out NHI. The reorganisation and the rollout must happen simultaneously and the NHI bill indicates how this will happen. Of course the issue of the allocation of resources is important. The shortage of doctors, nurses and other health specialists has a lot to do with how health resources in the country are distributed. Under NHI all South Africans will be able to access quality healthcare in both the public and private sectors. In other words, health expertise, which is currently reserved for the few who have medical aid, would be made available to all.

KM: Minister, would this plan not just extend the queues to the private hospitals? In other words, the overcrowding that we see in public hospitals will become a common feature in the private hospitals?

AM: That scenario you are describing assumes that we are going to leave the public health system as it is and just impose NHI on it. This would not be the case. The fear of the long queues in private hospitals is the same fear that certain people had regarding democracy. Some people feared that the blacks will dominate the public space that they used to enjoy exclusively. NHI’s objective is to eliminate the queues, not to extend the queues to other places which had no queues in the past. Part of the reorganisation would be to make primary healthcare to be the heartbeat of our healthcare system. We want to move away from a curative approach to a preventive approach. In other words, with early detection, we believe that fewer people will need to come to hospitals and many of their problems can easily be dealt with at clinics. We have already started with some of the campaigns to reduce the number of people who will need to visit hospitals.

We have been actively campaigning against smoking and tightening the regulations on smoking. And we have done the same regarding sugar and salt.

KM: Some observers argue that while resources are a major factor, pouring money into an inefficient workforce is unlikely to solve the problem. What is your view'?

AM: Everybody knows that the public health workers have to break their backs to serve the majority. About 80 percent of the specialists are found in the private sector and 20 percent must serve a huge population of 84 percent. Which one is inefficient? Under NHI we are not going to pour any money we just want sufficient allocation to serve the entire population.

KM: Now that you have presented the NHI bill to the cabinet and got cabinet approval, what do you see as the biggest stumbling block in the implementation of NHI?

AM: That would be lack of political will on the part of the state to implement NHI. Really, I see the biggest risk as fear by the state, when the state gives in to scaremongers and their total onslaught on NHI. There are many other obstacles in our protracted journey to implement NHI. In my view, the second biggest hurdle is poor understanding of what NHI is and what it intends to achieve. There are many people who are opposed to it, but when you listen to them attentively, you realise that they do not even understand the basic tenets of NHI. I think we should not take things for granted that our people know enough about NHI and how it will affect their lives. There are those who believe that I am on a mission to destroy private healthcare through NHI.

Of course this could not be further from the truth. We want to free the resources that are locked up in the private sector so that we use all the available resources in the country to deal with our health challenges. But we must increase our public education campaign of NHI. If we can get the various stakeholders, policymakers and the public to understand the theory of NHI. I think we would have won a huge battle in the implementation of NHI.
  
2018/06/14
2018/06/20 03:17 PM
BUSINESS DAY LIVE
The party has asked Cyril Ramaphosa to set up a judicial commission to get to the bottom of challenges crippling the country’s system.

The DA has called on President Cyril Ramaphosa to establish a judicial commission of inquiry into the state of public healthcare, after its random survey of hospitals and clinics revealed significant gaps in patient care.

Chronic understaffing, equipment shortages and long waiting times characterised many of the facilities the DA visited. Its observations tally with the problems highlighted by provincial health MECs in presentations to Parliament this week, which revealed that even the tightly managed Western Cape health department was struggling to cope with demand.

“Public health facilities are no longer places of healing. They have become death traps for the poor, who have no other options available to them,” said DA spokeswoman Refiloe Nt’sekhe.

“While inspecting the RK Khan Hospital in KwaZulu-Natal, we learnt that waiting times for CT [computed tomography] scans are three months, while the next available mammogram appointment is in 2019.”

Emergency medical personnel in Mpumalanga told the DA that they were using their own money to buy vital equipment such as blood pressure monitors, while in the Northern Cape staff at Kimberley Hospital complained about a lack of basic supplies such as toilet paper.

The DA’s Gauteng health spokesman Jack Bloom acknowledged achievements such as the roll-out of HIV and tuberculosis treatments, but said many patients were being short-changed. “There are pockets of excellence in Gauteng where staff are doing their best and patients get top-rate care. But the problem is the waiting times: you can wait five years for hip surgery at [Chris Hani] Baragwanath,” he told Business Day.

Gauteng had excellent academic hospitals, which attracted patients beyond its borders, increasing pressure on a stretched service. The DA had written to Ramaphosa requesting a judicial commission of inquiry as it would have the scope and power to get to the bottom of the mismanagement and corruption plaguing public health, Bloom said.

The DA said its plan for universal healthcare offered patients a better deal than the government’s proposed National Health Insurance (NHI).

Published in 2016, the plan promises universal healthcare quicker and cheaper than NHI.

It proposes scrapping medical aid tax credits and using the money to improve public healthcare and subsidise medical scheme membership for more people.

“Our health plan is the most practical approach to universal healthcare as it aims to keep what should be kept, fix what should be fixed and smartly extend services that should be extended within the limits of the national purse,” said Nt’shekhe.

Meanwhile, the National Education, Health and Allied Workers Union is planning mass action in Limpopo after the province’s health department failed to pay staff R160m in performance bonuses for 2016-17.

The union’s Limpopo spokesman, Jacob Adams, said the department had offered to pay R90m. “We told them to go to Treasury [and ask for more].”
  
2018/06/14
2018/06/20 03:20 PM
BUSINESS DAY LIVE
Fighting fires: Health Minister Aaron Motsoaledi visits a health centre in Mmabatho in the North West, amid a National Health Education and Allied Workers Union strike in April. Some critics say public healthcare has deteriorated under Motsoaledi and Cosatu is calling for him to be replaced.

Fighting fires: Health Minister Aaron Motsoaledi visits a health centre in Mmabatho in the North West, amid a National Health Education and Allied Workers Union strike in April. Some critics say public healthcare has deteriorated under Motsoaledi and Cosatu is calling for him to be replaced.

Over the past decade, "crisis" has been used to describe the provision of public health services in SA. But it would be unfair to describe the entire system as crisis-ridden. Certain sectors of the system are approaching a dysfunctional state while in others achievements have been made.

For some years now, a string of research reports have pointed to various crises in the health sector. In 2016 an Econex report warned that the number of doctors available was half the average in a middle-income country. The Office of Health Standards Compliance concluded in a 2016 study that most public hospitals were not functioning even close to adequate levels. The Future Health Index ranked SA last among 19 nations in a global survey that measured healthcare system efficiency.

Since 2011, due to the financial crisis that began in 2008, per capita expenditure on health has been static or negative, the 2017 South African Health Review published by the Health Systems Trust reads.

The sector has responded to lower budgets and rising costs by limiting or cutting personnel; securing savings on medicines tenders, administration and expenditure; reducing capital spending on buildings and medical equipment; and prioritising primary healthcare.

These cuts seem to have created the formula for producing the Life Esidimeni tragedy, in which about 144 psychiatric patients died at ill-equipped nongovernmental organisations, when there was little consideration for the human cost of trimming budgets.

The government wants to change the system, mainly through improving primary healthcare and the proposed National Health Insurance (NHI), which many stakeholders warn is unworkable. The NHI is meant to kick in from 2025 but may take 10 more years to launch.

The NHI will require policy makers, actuaries, insurance experts and others to create a workable system, but even that enormous effort will depend on administrative efficiency in the public health system.

The system is largely not working well. Some say public healthcare has deteriorated under Health Minister Aaron Motsoaledi. Cosatu is calling for him to be replaced.

Motsoaledi has an unenviable job. He has to transform and modernise an inadequate system and somehow get nurses to tackle their jobs with enthusiasm while they are easily tempted by more lucrative offers from elsewhere. The crisis in the nursing profession will be difficult to unravel.

Motsoaledi comes across as someone who is always complaining: about the inefficiencies in his sector; ineffective partners and employees; and inappropriate legislation.

Perhaps he protests too much or perhaps there is some logic to his complaint that it is impossible to get all the parts of the vast machine of public health — managed at three levels of government — working efficiently together.

The public health system requires many key players to function smoothly: doctors, nurses and other health workers; and managers and administrators of hospitals, clinics and other health systems at city, town, district, provincial and national level.

A central plank of national government policy is to improve primary healthcare, which suffered drastic reversals under apartheid. Primary healthcare is a move from a curative model to one that prevents disease. It is not an outcome that can be achieved by the health department alone — it also requires basics such as the provision of drinkable water, secure housing and safe living conditions.

Drastic effects

The success of primary healthcare also depends on immunisation programmes and school feeding schemes that could contribute to reducing the high infant mortality rate and the low rates of life expectancy (51 years for black males), which have been stubborn problems since the apartheid era.

As many of these programmes are municipal and provincial functions, recent failures of local authorities have had drastic effects on the health of the nation.

SA spends 8.8% of its GDP on healthcare — one of the highest health budget ratios of middle-income countries — yet infant mortality rates have recently been rising. Many health facilities and provincial departments have been placed under national administration, including the North West health department in April.

SA does not have enough nurses, as many leave for the UK or Saudi Arabia to earn pounds or dollars and the government is unable to compete with those wages. The Department of Health does not have accurate figures of these sojourners.

There are not enough doctors either. SA’s eight medical schools produce about 1,300 doctors annually, not counting any number of pharmacists, microbiologists, radiologists, laboratory technicians and other health professionals.

Only 30% of physicians work in the public sector, despite it serving more than 80% of the population, and public primary healthcare centres are overburdened. Doctors are leaving the public sector due to poor working conditions, poor salaries, high workloads and limited opportunities for advancement.

This becomes a vicious circle: every doctor who leaves the public service makes conditions more difficult for those who remain. This crisis extends to academia, with teaching doctors leaving academic hospitals, depleting the number of teachers who are able to pass on skills in anaesthesiology, haematology, orthopaedics and all other specialities.

Rural clinics do not have enough doctors, and the department is failing to place doctors in rural areas as part of its community service apprenticeship scheme.

SA also has its peculiarities. It has a high rate of motor vehicle accidents, with an astronomical toll in injuries and deaths; and violence and injury are the second leading causes of death. With high unemployment rates, these factors have increased the number of people suffering from mental health disorders.

Blind eye

The AIDS crisis began to emerge only when democracy arrived. The apartheid government turned a blind eye, probably because it seemed to affect only black people. It gained recognition only after the period of Thabo Mbeki’s denial.

An epidemic of huge consequences, HIV and AIDS will continue to tax the health sector for decades. As many as 4-million people are now taking antiretroviral medication, which they will have to do for the rest of their lives, and they will have to be monitored for the regimen to work with any success. SA has one of the highest rates of HIV infection, with one of the largest number of people suffering from AIDS.

Drug-resistant tuberculosis is rife, as is the older variety of TB, often linked to HIV. In 2014, TB was the leading cause of death in SA. Strangely, cardiovascular patients presenting at many clinics exceed the number with TB, while diabetes and other chronic illnesses are also showing up.

Movement of populations within the country pose problems for regional health systems. It causes large fluctuations in the number of people requiring treatment, complicating resource planning.

Among the successes of the system is the rollout of antiretroviral and especially the prevention of mother-to-child transmission of HIV. Rates of infection have plummeted from about 25%-30% before 2001 to an estimated 1.4% in 2016.

SA has excellent healthcare facilities, but they are available to a very small segment of the population. It could be argued that democracy itself prompted the crisis in the health sector: a system built for 4-million people suddenly had to service the entire population.

The system that caters to the majority of the people — 50-million of them, with 5-million enjoying private care — is semi functional, littered with intermittent breakdowns at hospitals, spates of baby deaths and cancer sufferers left untreated. This system nevertheless lurches on, the nurses doing their duty — some sullenly, some with compassion — the doctors taking naps when they can during 24-hour shifts.

It works as well as it can under the weight of SA’s history, politics and divisions. But it could do much better.
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