OBG talks to Adrian Gore, Chief Executive, Discovery Holdings

Interview: Adrian Gore

What are the most pressing needs in regards to improving public health care provision?

ADRIAN GORE: The public system is underfunded, but not as dramatically as many perceive. The levels of efficiency and the productive use of money are very poor, and management of the system needs to be improved. There is a lot of money being spent but we are not seeing this translate into new infrastructure or the new nurses and doctors that we need. South Africa’s per capita government spending on health care compared with many other countries of similar per capita income levels is substantial, so structurally the system needs to be reworked to achieve better results. Hopefully, the introduction of a National Health Insurance (NHI) system will address many of the systemic changes needed in terms of better delivery and better value.

In what ways do the private health care sector and the South African government collaborate?

GORE: The legacy of apartheid has left a lot of mistrust between business and government, and some believe that private health care has taken resources from the public system. This is not entirely untrue, as doctors will naturally migrate to where they earn more. But one could also argue that if the private system wasn’t there, many professionals would go overseas.

South Africa has a robust and high-quality private health system that is somewhat underappreciated. If you compare quality relative to cost, we rate alongside some of the best systems in the world. Having said that, private health care remains relatively unaffordable for much of the population, and non-affordability often gets incorrectly confused with expensiveness.

Over time the government has come to appreciate the private system as a friend rather than an enemy. When you look at the sheer size and scope of the proposed NHI, the government and the Ministry of Health are being very pragmatic about the fact that there exists considerable expertise and resources in the private system, which can be leveraged. I believe for the first time in a long time that we are now seeing faith and a bond between the private and public systems.

What impact will the proposed NHI scheme have on the demand for private health coverage?

GORE: If successfully rolled out, private health insurers and medical providers certainly stand to lose customers on the bottom, low-margin end. In the middle to top margins, people expect levels of care matching or exceeding that of developed economies. Unless the NHI is incredibly comprehensive, which, realistically, it will not be from the outset, this market will still pay for separate coverage over and above what the NHI offers.

Because of South Africa’s high Gini coefficient, the people paying for private health care are also the ones covering most of the tax base. Therefore a lot will also depend on how the funding for the NHI is sourced. If it comes in the form of an increase in the general tax rate rather than a separate health tax, people will perceive the incremental spending differently. The government should really be careful in tackling this issue rationally. When people are paying for themselves, the last thing you want to do is push them into the public system, where they will take scarce public services away from the people who need it the most.

Where do you see opportunities for private companies to participate in the NHI scheme?

GORE: The NHI scheme is still in its infancy, with a number of questions remaining as to how exactly it will be implemented. At the most basic level, it is important to note that it is not a tax-funded national health system like the one in the UK, but rather a paying fund. This is exactly the area where the core business and expertise of medical aid companies lies.

If the NHI is to be successful and reach its full potential, our skills are necessary. I am not under the illusion that everything will be outsourced, but with good faith and pragmatism on all sides there are real opportunities for us to assist and make significant contributions.