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SA’s healthcare system in shabby state


With 2015 drawing to a close, the globe is readying to usher in the sustainable development goals, or Agenda 2030. But before gazing into the future it’s worth reflecting on the millennium development goals, a set of targets that had health at its crux, which expire at the end of the year.

That deadline should spur players, notably captains of industry and policymakers, to take a serious look at health outcomes. Pitifully, in South Africa, where government and private patients fork out about R400-billion a year on health, there continues to be a deficiency of introspection.

Assessing how this country has fared since the end of apartheid, University of Cape Town academics Bongani Mayosi and Solomon Benatar noted in the New England Journal of Medicine that “considerable social progress” had been made to reverse the “discriminatory practices that pervaded all aspects of life before 1994”.

The country’s health profile solicited a familiar but worrisome diagnosis. “[The] health and wellbeing of most South Africans remain plagued by a relentless burden of infectious and noncommunicable diseases, persisting social disparities, and inadequate human resources to provide care for a growing population,” the academics wrote, noting the worsening shortages of doctors.

“Appropriate responses to South African healthcare challenges would be to address the social determinants of health (which lie outside the health system) as a national priority, strengthen the healthcare system and facilitate universal coverage for healthcare.”

With South Africa continuing to fare shabbily in these areas and the dearth of human resources in public health facilities (serving, in the main, jobless and blue-collar sections of the society), it shouldn’t surprise anyone that poor life expectancy and maternal mortality continue to reflect what Kgosi Letlape, a veteran doctor, terms healthcare apartheid.

Benatar and Mayosi expanded on links between wealth disparities and health. The millennium goals called on governments to slash child and maternal mortality. At last count, South Africa’s child mortality stood at 45 per 1 000 births, more than the 20 prescribed by the millennium goals. The figure shrinks to seven in twice the United States and six in Cuba. At 140 for every 100 000 births, maternal deaths in South Africa are more than triple the 38 target of the millennium goals. Demoralised, uncaring nurses as well as poor infrastructure are to blame.

The Treatment Action Campaign recently marched to demand an end to ill treatment and deaths in maternity wards, but there is no evidence that health officials are probing this grievance. Instead, with the white paper on the national health insurance (NHI), or universal care, failing to materialise and despite Health Minister Aaron Motsoaledi’s assurances to the Hospital Association of South Africa’s annual conference that the document is finally ready, the spotlight is on costs as the healthcare market inquiry crawls ahead.

Hospital firms are often accused of overcharging. For one, the fact that 8.8-million medical aid members splurged R47-billion – more than a third of the national figure of R124-billion – in health benefits last year muddies the debate.

It doesn’t help that the industry is dominated by a three-way oligopoly: Life, Mediclinic and Netcare, worth a combined R200-billion on the JSE. Minnows account for just a quarter of the market share. In total, private hospitals claim north of 35% of the relevant medical aid expenditure every year, and specialists trouser almost a quarter or R30-billion.

The funding industry, which collects R140-billion from 3.9-million principal members (an average of R3 000 a person a month), is also concentrated. That oligopoly, featuring JSE-listed Discovery, Metropolitan and Afrocentric-held Medscheme as administrators, controls three-quarters of the market.

Smaller hospital groups accuse these schemes of bullying them into unfair agreements or paper-thin margins. Pharmacists blame administrators and schemes for foul play to, in part, elbow them out. The regulatory Council for Medical Schemes has given up asking why economies of scale in large schemes don’t drive prices lower.

In contrast, the advent of the NHI is expected to drive administrative costs lower. If, like Gems, the scheme for civil servants, it is successful, it could emaciate not-for-profit medical schemes. That, or the fact that third parties behind schemes stand to lose, could be why medical aid funds seem to be fretting right now.

But hospitals could gain by way of NHI-linked additional traffic that Lighthouse, an actuarial consultancy, pegs at two million patients. “We will utilise both the public and private sector to provide healthcare,” Motsoaledi said at the Hospital Association conference.

Medical schemes, unhappy with tariffs, tend to cite the chunk claimed by hospitals and specialists. This also backs their claim of exorbitance and serves as ammunition for refusing to settle members’ bills in full.

Proposals to amend sections of the law on prescribed minimum benefits (PMBs) – a basket comprising 270 conditions (and emergencies) and 27 chronic illnesses – that would enable funders not to settle providers’ bills in full would expose insured individuals to financial hardships and could make schemes less appealing. Since the introduction of PMB rules, Bestmed’s Dries la Grange argues that schemes have “been forced to increase fees to bridge the cost gap” created by this basket.

In contrast, the Council for Medical Schemes sings the praises of PMBs. In his 2013-2014 report, chairperson Yosuf Veriava scoffed at those who said PMBs hurt the industry.

“In fact, all evidence suggests that the medical schemes industry remains financially solid. PMBs are certainly playing a critical role by providing beneficiaries with a minimum level of cover, protecting them from financial disaster in the event of a healthcare crisis.”

Based on Veriava’s assertion, changing the relevant rule would punish members, exposing them to “financial disasters”. So, instead of promoting primary and preventative care, an element that should drive costs lower (which is how Cuba does it, on a shoestring budget), the government, egged on by medical aid bosses, outsourced the problem to individual members who lack the skill, scale or power to negotiate tariffs.

On the other side of the pricing coin, Motsoaledi, convinced the private sector is to blame for “overcharging”, has spoken of the need to regulate tariffs. Medical schemes that, despite governance failures and mismanagement, fail to jolt the minister into action, also frown at ever-rising hospital bills. Who is diagnosing root causes?

To paraphrase British medical scientist Mark Walport, competent usage and structure rather than high costs determine outcomes. In spite of the US having “an enormous GDP [gross domestic product]” and health budget, its populace has a low lifespan, he said during a debate hosted by the Financial Times. “Even more interesting are two dramatic exceptions. One is Cuba, which has a low GDP but a high survival [rate], and the other is South Africa, which has a mid-level GDP that ought to mean a long lifespan but, in fact, the life­span is low. That tells you interesting things about health systems in relation to money.”

Tackling the ever-escalating bill due to hospitals and specialists, Melanie da Costa, chair of the Hospital Association and an executive at Netcare, insisted at the association’s conference that increased usage, not pricing, is the issue. “In South Africa the debate has been very, very mediocre. We have stagnated around price, price, price – year in, year out,” she said. “Really, is that what we’re debating?”

According to Redefining Health Care, a book by Michael E Porter and Elizabeth Olmsted Teisberg, it’s the structure of delivery that drives the cost and, ultimately, the medical aid premiums. Motsoaledi acknowledges the “quadruple burden of disease”, spanning lifestyle diseases such as hypertension as well as HIV, tuberculosis, and child and maternal mortality.

Kurt Worrall-Clare, chief executive of the National Hospital Network, an umbrella of smaller groups and independents, moans that some of the problems under discussion have been on the agenda for years but little or no action has been taken. “[Meanwhile,] we have patients that require care, but are made to wait. Things can’t go on like this. Critical issues include staff shortages and the overall burden of disease,” he said.

“Do we really have the luxury of time to sit and engage on the principles of debate?”

This point resonates with Motsoaledi, who contends that South Africa has been in a zama zama mode – papering over cracks on the wall – rather than offering a holistic and sustainable cure.

Regarding the pricing inquiry, whose November deadline has gone, Worrall-Clare says it is critical “to get things right the first time”. The market doesn’t look anxious, either. Unlike Life, which has, since January, lopped off a fifth of its value to trade at about R35 a share, Mediclinic and Netcare stocks are in rude health. Also upbeat, Da Costa says the inquiry enables players to sift facts from noise. “Until now, lots of people have been making noise but haven’t been able to substantiate their points specifically around [tariffs]. Now we have facts on the table.”

What a pity, then, that attitudes are so entrenched. Government officials fight the private sector, and captains of the industry fight back.

To borrow from Goethe, knowing is not enough. Skirting the issues will, far from treating the malady, worsen healthcare apartheid. Whatever the outcome of the pricing inquiry or the contents of the white paper, as long as focus continues to elude infectious and noncommunicable diseases, what’s the point? Agenda 2030 is not going to save our children and mothers nor extend life expectancy. Attitudes will. It’s time for introspection.

Shoks Mnisi Mzolo is an independent researcher and writer.

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