Prevention better than cure: Safeguarding against disease will help ease the load on hospitals

Though there was very little certainty as to precisely what the National Health Insurance (NHI) plan entails as of early 2012, it was thought that it would bring profound changes to the health care sector in South Africa. The plan is a government effort to close the gap between the quality of health care available to the rich and poor, and is in line with a long-running theme of governance in South Africa of reducing the disparities in what is historically a two-tiered system, by addressing the needs of the disadvantaged of the apartheid era. The Department of Health issued a policy paper in 2011 that, until more specifics are released, serves as a blueprint for the plan.

At the heart of the reforms are principals such as equality and access, but there is more than just ideology at stake. The NHI also represents an effort to move from an expensive and inefficient treatment-oriented system to a cost-effective preventive one. The Department of Health cites research showing that high-income countries spend an average of 7.7% of GDP on health care. With its public and private sector activities combined, South Africa spends 8.3%. However, the country still suffers from many of the health problems of low-income countries. This is considered a function of its wealth gap and the extreme problems that come from its HIV/AIDS epidemic as well as from other disease burdens, but also due to public sector inefficiencies. South Africa thinks it will get more value from its health care spending if it does more to head off health problems before they arise.

CHALLENGES: Large obstacles await the government’s reformers, however. More of almost every human and material input imaginable will be required to carry out the necessary reforms: doctors and nurses, hospitals and primary care clinics, administrators and regulators, funding and planning. The government is aiming for a implementation phase of 14 years, which means a fully implemented NHI by 2025. According to Brian Daniel, CEO of Pfizer South Africa, coordination and cooperation will be key. “For the NHI to become a success, it is necessary for private and public health care providers to increase cooperation. Better coordination between government departments that deal with health care issues could also make a big difference,” he told OBG.

For the country’s private providers, such as hospitals and medical insurance schemes, the NHI could mean a drop in their business, although the government has made it clear that it not trying to crowd out the private sector and foresees a prominent role for them as well as for public-private partnerships (PPPs). Until more details are released, the plan is to try different approaches, see what works, and then be more specific about structures and methods.

AUDIT: Another major NHI-related effort in 2012 will be the completion of a national audit of hospitals. As South Africa has struggled in the past because of a lack of complete data, the goal now is to inspect hospitals, mandate improvements where they are needed and ensure competent administration by making hospital CEOs reapply for their jobs and hiring only those that are qualified. Hospitals that pass audits or make the reforms that auditors require will then be classified into five groups: district hospitals, regional hospitals, tertiary hospitals, central hospitals and specialised hospitals. At the district level, general services as well as four specialties ( obstetrics and gynaecology; paediatrics and child health; general surgery; and family medicine) will be available. Patients with needs beyond the scope of district hospitals will be referred to regional hospitals, and as needed to tertiary and central hospitals, or specialised ones depending on what treatment they require.

The policy paper calls on the parliament to establish a new regulator, which may be called the Office of Health Standards and Compliance, for future inspections, establishing norms and standards, and providing an ombudsman function.

PREVENTIVE ACTION: In line with the goal of easing the burden on hospitals via preventive measures, the plan calls for the establishment of primary health care agents at the municipal level. The Department of Health wants at least 10 per ward, and their job will be to monitor locals, encourage them to take preventive measures such as disease testing and improving nutrition, identify vulnerable people and groups, and intervene where necessary. It is estimated that this could reduce child mortality and disability by 21-38% among those not yet 15-years-old, and adult mortality and disability by 10-18%, according to the Department of Health. Challenges include staffing, compliance with centrally set standards and convincing patients that their privacy is assured.

All South Africans will be able to participate in the NHI, but the policy paper does not foresee an end to private care. Those who wish to buy extra coverage will be able to do so, as they do now. However, two incentives for purchasing private insurance will be gone. The first is the expectation of the improved nature of the new care offerings, which could lead cost-conscious customers to conclude that they do not need to spend the extra money. The second is that the tax break to encourage people to participate in the health care system will be eliminated.

What is envisioned is conceptual for the time being. It is based on the premise of increased primary care to lighten the load at the curative stage, a more specifically regimented organisation of national care centres, improved administration and the use of private-sector options as a supplement.

The policy paper provides an outline of the transition process as well as a three-phase, 14-year schedule for adoption, along with a list of reforms that will be carried out. It covers the reasons for these reforms, but does not specify the reforms or detail how they will be implemented.

IMPLEMENTATION: In the first five years of the implementation phase, covering 2011-16, tasks that will be completed include the facilities audit, creation of the regulatory body, classification of the country’s hospitals, training of primary care agents, rehabilitating nursing colleges that had been abandoned, improving information-management systems, formulating a human-resources strategy, registering citizens with the NHI, cost modelling and accrediting private providers. Six flagship hospitals are also planned to be built as PPPs – two in Gauteng and one each in KwaZulu-Natal, Eastern Cape, Limpopo and Mpumalanga. Ten pilot projects were also introduced in April 2012 to test run different health care models in various parts of the country, including urban and rural areas, before final plans are made.

Phase 2 of implementation will occur from 2016-20, and Phase 3 from 2021-25. The policy paper mandates featured reforms and mileposts for each phase: 3000 practitioners and networks should be accredited and contracted with by the end of Phase 2, for example, and 6000 before Phase 3 is over. A basic health card will be issued in the second phase, and one with additional capabilities in the latter. Other highlights of the 14-year to-do list include a parliamentary act creating the NHI, the establishment of an NHI fund, the creation and staffing of family health teams, and management reform.

NHI FUND: The paper is not only light on details, but also does not delve into costs – another fundamental factor that those in the sector have been questioning. The government’s stated preference is for a single-payer fund, in which the system would feature the NHI as the sole buyer of health care services that are made available to the public. The idea is to create a single fund, called the NHI Fund, which would achieve scale-based savings through pooling demand. It is unclear how the fund will be financed, but stated options include the national budget, employer contributions and individuals, according to the policy paper. For now, the government has declined to create a dedicated tax. A multi-payer system is still an option, however, according to the Department of Health’s policy paper.

The government has said it will need to spend R125bn ($15.3bn) in 2012 in order to achieve full implementation by 2025. That annual total is seen increasing gradually, to R214bn ($26.19bn) in 2020 and R255bn ($31.21bn) in 2025.

UNCERTAINTY: Although South Africa does not hold back when it comes to public health care spending, scepticism remains about whether the NHI is affordable and whether the country can muster up the human resources, technical and administrative expertise, as well as the physical assets necessary to make it happen. The government is well aware of this uncertainty, and its policy paper contains four pages reviewing past attempts to improve the health care sector that date back to the year 1928. “The desire to fix the public health system is wholly appropriate, but this plan is still just a wish list,’’ said Melanie Da Costa, director of strategy and health policy for Netcare, the operator of the largest private hospital network in South Africa and in the UK. “We need to bring in a lot of skill and capacity to make it happen.’’