Investigations into R182 Million Misallocation – Can NHI Avoid the Same Mistakes?
Recent investigations into R182 million in healthcare fund misallocations have called into question not only the security of the Department of Health’s tendering system but also highlighted the potential for waste and abuse under the National Health Insurance (NHI) Act. In late September, News24 broke the story of its investigation into how uncapped NHI funds were drawn from funds earmarked for critical health programmes as well as NHI were allocated to advertising campaigns.
On Friday, Minister of Health, Dr Aaron Motsoaledi, denied diverting these funds and states that the reallocation of funds was all above board, without no patients harmed.
“No money was taken from any so-called critical health project to advertise NHI; it’s the other way around. Money was taken from NHI to help departments communicate; departments that did not have a budget.”
The Department has referred the matter to the SIU, Auditor-General and Public Protector, if necessary. Parliament’s health committee led by Chairperson Faith Muthambi has said that Health Department should use the Government Communication and Information System (GCIS) – but the Minister argued that they are not up to the task.
The committee is nonetheless unrelenting in its criticism, and today [Monday] demanded documents that proved funds were reallocated correctly and that the tenders awarded were above board. Faith Muthambi stressed that health funds must stay in the public health system, saying that Minister Motsoaledi should have ordered a initial internal probe while the external investigations were ongoing.
Echoes of ‘Digital Vibes’
About R146 million of the funds were allotted to KMTV Media on an uncapped “R1 620 per transaction” appointment and ~R35–39 million went to Dots Design Agency. These funds were reportedly drawn from HIV/AIDS, TB, child nutrition and an NHI-related GP-contracting allocation.
Action SA has raised concerns over how such small contracts to snowball to such expenditures without the apparent knowledge of the Minister. They also emphasise that South Africans have the right to know exactly how much has been spent on NHI implementation.
The infamous Digital Vibes scandal from the COVID pandemic. A forensic investigation by the SIU and independent auditors found the procurement process to be “irregular, fruitless and wasteful“. While this resulted in a suspension of the Director-General, and convictions of state employees, key figures in the case have yet to be prosecuted.
Although the Minister says that no impropriety, this reflects the current situation: no total contract value, vague pricing that later bore little relation to invoices, funds redirected from core programmes, and limited apparent checks until media exposure.
For the NHI, this is a clear warning sign of a problem that has been repeatedly raised by its critics.
NHI’s Vulnerable Single Pot
Under the NHI, all healthcare funds are centralised in a single NHI Fund, pooling tax revenue (including redirection of medical scheme tax credits). This fund would as the sole purchaser of services from both public and private providers. Oversight would sit with an 11-member Board under the Minister. A Chief Executive Officer would oversee the day-to-day function of the NHI Fund and would be accountable to the Board.
All of this remains in abeyance as the NHI Act has not yet been promulgated while numerous Constitutional Court challenges are being heard.
As currently envisioned, the NHI would cost anywhere from the government’s mooted R457 billion to a more realistic (if conservative) figure in the region of R1 trillion. This would pay for, in an estimate from Genesis Analytics, increasing GP numbers by 113%, specialists by 80%, and beds by 113%. To fund this would require combining the total current public and private healthcare expenditure in South Africa and increasing that amount by 77% – and this all done with benchmark private sector efficiency. Only massive tax hikes would be able to cover this amount, which would have serious consequences for the economy.
The question has to be asked – if NHI’s spending oversight is centralised to such a degree, how can such vast public funds be reliably accounted for?
Public–Private Partnerships
Public–private partnerships (PPPs) have been suggested as an alternative model for the delivery of universal healthcare. In these, public funds are allocated via contracts for services or infrastructure. Private parties typically provide capital, management or specialised capacity in return for availability- or performance-based payments.
In KwaZulu-Natal, Inkosi Albert Luthuli Central Hospital was developed under a PPP and has been running since 2002. In the PPP, a private consortium is paid for making facilities and equipment available, with key infrastructure-related operational risks are transferred to the private party. Payments are indexed and subject to contractual penalties.
One example is the Northern Cape radiotherapy collaboration, where NC patients who would normally be transferred a great distance to Bloemfontein for their two to six week treatment are instead treated at Icon Oncology’s clinic in Kimberley. This proven model could be extended to other provinces.
Unlike the NHI, funds are not constrained to a single pot, but governance is key to ensuring that dozens or hundreds of smaller ‘pots’ just get defrauded. Nor they do not automatically deliver healthcare equity. Still, examples such as the Northern Cape radiology show that strong, interdependent relationships can develop with regular management meetings to discuss patient experience, statistics, billing and other operational matters.
But perhaps the more closely the funds are tied to the communities and the services who are investing in delivering healthcare to them, the better it will be accounted for and used.
