OBG talks to Richard Friedland, CEO, Netcare

Interview: Richard Friedland

To what degree is the government considering the private sector as a prospective contributor towards its National Health Insurance (NHI) system?

RICHARD FRIEDLAND: In South Africa, as in most countries, the government’s view is that health care should be free at the point of access and one should not unduly profit from its provision. There will thus always be some friction regarding the role and contribution of the private sector. If one analyses what the NHI structurally aspires to become, the UK’s National Health Service (NHS) appears to be the benchmark. Historically, the NHS has been fully funded by tax revenue, with token allowances for participation by the private sector in providing services to NHS patients. In recent years, the NHS has begun to allow the private sector to undertake significantly higher volumes of work on its behalf. This trend has been driven by necessity, due to financial constraints and a poorly performing economy, rather than by an ideological shift. The value added through the NHS’s partnerships with private providers is indisputable.

The South African Department of Health has publicly said the private health care sector will have a role to play in the NHI. The recent groundbreaking social compact between public and private health care points to acceptance that no single sector can individually and successfully confront the immense health challenges in South Africa, and may herald closer cooperation between the two sectors. Given worsening global economic conditions, downgraded credit ratings and falling demand for government bonds, South Africa could face austerity for the first time since 1994. It is time for greater pragmatism. We hope to see closer collaboration between the public and private sectors, and, eventually, a more permanent model of collaboration.

How can the private sector help ease the burden on government facilities in a manner that the state considers fair and equitable?

FRIEDLAND: The UK has introduced a system called Any Qualified Provider (AQP), whereby prospective health service providers receive credentials based on quality and capacity. The state sets tariffs at a level that is quite low but realistic. It is up to the providers whether or not they choose to participate. From that point, providers are assessed by patient-reported outcome measures, which are made public. The ultimate result is that providers compete on quality rather than price.

Overall, this type of system results in greater transparency and accountability. Moreover, once the debate is based on quality outcomes, it is easier to bring the public and private sector to the same table. South Africa’s private health care companies that are working with the state on the social compact are soon to begin contributing 0.75% after tax profits towards funding some public programmes and initiatives. Why not use a portion of these funds to help roll out the informatics behind an AQP-type model? This would dramatically reduce the burden on the government to build new infrastructure or invest in upgrades.

What have been some of the primary obstacles to successfully rolling out public-private partnerships (PPPs) in the health care market?

FRIEDLAND: Most of South Africa’s acute health care PPPs to date have been structured as build-operate-transfer projects, whereby private concessions are limited to building and managing facilities and do not extend to management of clinical services. This does not add much value in terms of increased access or changing the way health care is delivered as, essentially, a construction company could offer those services.

Successful hospital PPPs are more holistic, where the private partner employs doctors and nurses, manages clinical services and is held accountable for performance. A budget is set with annual inflation escalators, and providers are required to treat a fixed minimum number of patients each year. PPPs also work best if the concession encompasses more than just tertiary services, extending to include primary care and preventive medicine such as immunisations.