In stark contrast to the draft black economic empowerment (BEE) Codes of Good Practice released two weeks ago, the draft healthcare charter has laid out aggressive ownership equity targets for the sector.
The Department of Trade and Industry launched its draft empowerment Codes of Good Practice recently, setting a target of 25,1% of black equity ownership within the next 10 years.
The Department of Health has set businesses within the healthcare sector a BEE ownership target of 26%, to be met as soon as possible, and targets of 35% by 2010 and 51% by 2014.
The head of advocacy and research at the Board of Healthcare Funders (BHF), Vishal Brijlal, points out the significant deviations in targets set by the draft charter and says the board will be seeking clarification over these differences.
“This is not to say that there should be no deviation, but we would like clarification on the need for, and the reason behind, those deviations,” says Brijlal.
Jonny Broomberg, a member of the executive committee of Private Healthcare Forum, says the forum does not have a specific position on the ownership targets, but admits that they are significantly higher than those specified in the trade and industry department’s Codes of Good Practice and other charters. The healthcare charter provides no justification for the divergence.
BusinessMap Foundation director of information services Reg Rumney says the ownership targets appear to be a bit ambitious and, by setting extremely high targets, the health department could be setting itself up for failure.
“One of the reasons for the 25,1% target in the Codes of Good Practice is because it is a practical level and more easy to achieve,” says Rumney. “In the healthcare industry we are talking about only a few big groups, so there could be some funding problems.”
Department of Health spokes-person Sibani Mngadi says that although the targets set out in the trade and industry department’s code of conduct are lower, there is nothing wrong with trying to aim higher. “We are taking a step forward. The idea is that these targets will be debated before they are finali-sed,” says Mngadi.
The health department has also come under criticism from industry stakeholders for the brief, month-long period for comment that ends in the middle of August, and the fact that only written submissions will be accepted. “It is vital that all stakeholders from every sector of the healthcare industry be intimately involved in further consultation and debate,” says Brijlal.
Mngadi says that, even though the department called for written submissions during the comment period, presentations before the department could not be ruled out if they were deemed necessary. He says it is important to get buy-in from all stakeholders.
Certain charter issues that need to be dealt with include how to incorporate drug companies that are overseas-owned and controlled, and that may have difficulty in selling stakes in South African operations.
The question of multinationals selling local stakes arose during the drafting of the Information Communication and Technology Charter.
A proposal under consideration by the minister of trade and industry is allowing multinationals to be exempted from selling local stakes on an individual basis, and making up for that by exceeding targets in areas such as skills development and enterprise development.
Mngadi also cites skills shortage as a challenge. “There are certain categories where, even if we wanted to meet certain targets, in terms of employment equity we couldn’t due to skills shortages in those areas.”
Brijlal agrees with the need to focus on the available skills pool and what is needed to meet the required targets. He said there is no point in just poaching qualified people from other sectors.
In addition to the ownership targets, the draft healthcare charter has specified that by 2010 all businesses in the sector must have a workforce that meets the targets of 60% black and 50% women. For 2014 these targets should have been raised to 70% and 60% respectively. It also specifies that 60% of all procurements in the sector should be from black-owned companies or black persons by 2010, rising to 80% by 2014.
The healthcare industry was worth about R107-billion in 2003/04, equivalent to 8,7% of the same financial year’s gross domestic product. However, spending in the sector is severely unbalanced, with the health department claiming that up to 80% of the population have limited or no access to health services.
According to figures supplied in the charter, the government spends R33,2-billion on healthcare for 38-million people while the private sector spends R43-billion on seven million people.