The latest Health System’s Trust annual report is an exposé of the unsustainable, inefficient and inequitable state of the nation’s health systems, looking specifically at the impact of the private sector. Minister of Health Manto Tshabalala-Misimang’s stewardship of the national health system is also described as ‘sub-optimal†given the stark inequity in access to healthcare between the public and private sectors.
Written and reviewed by a range of public and private sector researchers and analysts, the 2007 South African Health Review provides an oversight of the principles and policies of South Africa’s healthcare; the purchasing and delivery of healthcare; and indicators of the successes and failures of the health systems.
South Africa spends about 8% of its gross domestic product on health (about R100-billion in 2005). Despite spending more on healthcare than the majority of other countries at similar levels of economic development, the health status indicators are far worse than in other upper-middle-income countries.
The authors of the report say there is an argument that ‘the key challenge facing the South African health sector is not one of lack of resources, but rather a great need to use the existing resources more efficiently and equitablyâ€.
Only 44% of healthcare spending goes through the public sector — a proportion that is set to fall if the ‘spiralling costs in the private sector are not containedâ€, says the report. Three-quarters of the specialists and almost two-thirds of general practitioners work in the private sector, which is also siphoning off nurses. Yet only about a fifth of the population has regular access to private healthcare.
Many state resources are spent on supporting the expensive private medical sector. Tax deductions for medical scheme contributions are estimated to remove about R10,1-billion a year from government income.
The report points out that promised budget increases will still barely keep pace with population growth. ‘Public sector healthcare expenditure has been stagnant in real per capita terms for a considerable period of time, despite the fact that the demands on public sector services have increased dramatically due to the Aids epidemic.†The health sector’s share of total government expenditure has declined from 11,5% at the beginning of the decade to 10,9% in 2007/08, as government resources freed by reduction in debt repayments have been allocated to other welfare and social services.
In contrast private healthcare expenditure has continued to outstrip inflation. As a result medical scheme cover is becoming increasingly unaffordable, with just less than 15% of the population members of medical schemes in 2005 compared with 17% in 1992.
The report says that evidence of the failure of market forces in healthcare lies in the rapid consolidation of the private hospital market in the hands of three major market players ‘who have little need to engage in price competition and instead compete largely for the allegiance of doctorsâ€.
The behaviour of private hospitals in South Africa supports the medical arms-race hypothesis that hospitals invest in expensive medical equipment primarily to attract medical specialists and the use of services that they bring with them, the report argues.
Two of the biggest cost drivers in terms of real expenditure per beneficiary have been specialists (up 53% between 1997 and 2005), and hospitals (74% increase over the same time period).
Non-healthcare items including administration and broker fees are also pushing up costs: in 2005 these items consumed more funding than the combined medical scheme payments on dentists and general practitioners. Although only legally recognised in 2000, medical scheme brokers have been a growth business. By March 2007 there were significantly more accredited brokers than there were registered general practitioners.
Employers have also contributed to the stagnant pool of medical scheme members by transferring the risks of healthcare increases to employees by subsidising only a fixed amount of benefits or contributions.
Pensioners are also being left to take responsibility for their own healthcare post retirement. According to a survey by Old Mutual in 1994, 89% of companies provided health benefits to pensioners, but this fell to 29% in 2005.
The report says there is a need for greater stewardship of healthcare in South Africa and that while there have been laudable legislative and policy changes, implementation has been problematic.
The report quotes the 2007 report of the Public Service Commission, which concluded that ‘skills shortage in the department of health is at the centre of the public service’s inability to implement policiesâ€.