Tag: private healthcare

Categories : Respiratory DiseasesTags :

Getting TB Care in the Private Sector is a Complicated Journey

On By ModernMedia
Depiction of tuberculosis bacteria. Credit: CDC

By Elri Voigt for Spotlight

Tuberculosis is mainly diagnosed and treated in the public healthcare system, but the private sector should also be able to deal with it.

Tuberculosis (TB) remains one of the leading causes of death in the country, claiming around 50 000 lives a year. Caused by a tenacious bug called Mycobacterium tuberculosis, it has plagued mankind for centuries.

In response, South Africa’s public healthcare system has devoted a lot of resources to TB and many public sector doctors, nurses, pharmacists, and community healthcare workers have years of experience with the illness. The country was ahead of the rest of the world in rolling out new molecular TB tests in the early 2010s. In the last decade South Africa introduced new treatments for drug-resistant forms of TB, before most other countries did so. Much important TB research has also been conducted at clinical sites in the country, like the recent BEAT-TB study published in the New England Journal of Medicine.

But what about the private healthcare sector? Indications are that it has not become similarly expert at combatting the age-old bug, even though people who use mainly private sector healthcare services also get TB. Spotlight recently reported on a PhD student who became ill with TB and was diagnosed in the private sector but received treatment in the public sector. That was not an isolated case. Up to 29% of TB patients across 13 high TB burden countries, which included South Africa, engaged with the private healthcare system when their symptoms first started, according to a 2017 study. In South Africa’s first TB prevalence survey, of the 1 726 participants surveyed who had TB symptoms and sought out care, 139 (8.1%) first sought care in the private sector.

However, finding information on TB care in the private sector has proven to be a challenge, and what Spotlight was able to find is at times contradictory and confusing.

Most cases of TB could be treated in the private sector

Let’s start with the basics. Does the private sector diagnose and treat TB at all?

Here a distinction between types of TB is important. Well over 90% of people who develop TB in South Africa have “normal” drug-susceptible TB, that is to say TB that can be successfully treated with the standard set of antibiotics. A much smaller group, fewer than one in 10, have drug-resistant forms of TB. Drug-susceptible TB can be treated in the private sector, while drug-resistant TB appears to be exclusively treated in the public sector.

“[T]here is a common misconception that tuberculosis (TB) can only be treated in the public healthcare sector,” Dr Noluthando Nematswerani, Chief Clinical Officer at Discovery Health, tells Spotlight. She says that there are many healthcare providers that can diagnose and treat TB in the private sector, since TB is part of the standard training medical doctors receive in South Africa. “Discovery Health does not maintain a dedicated network of healthcare professionals who exclusively treat TB, as TB care falls within the scope of practice of suitably trained medical practitioners across multiple disciplines,” she says.

Treating TB is covered under the prescribed minimum benefits – a list of benefits medical aid schemes is required by law to provide to their members, regardless of what plan they are on. According to the Council for Medical Aid Schemes, TB treatment can be made available to members of medical aid schemes through public sector clinics, but they should be given the option of getting their treatment through the private sector.

Medical aid schemes are prohibited by the Medical Schemes Act from saying that “they do not cover the costs of diagnosing, treating and/or the care of TB and that you can only get this cover in the public sector”. A member of a medical aid scheme may only be referred to a public sector facility if that scheme has a designated service providers arrangement with that facility. And a medical aid scheme cannot refuse to cover TB treatment.

“In line with these regulations, members across all Discovery Health Medical Scheme plans have access to comprehensive evidence-based TB care which includes consultations with the relevant healthcare professionals, the necessary diagnostic and follow-up laboratory and radiology investigations, and clinically appropriate medications for the effective management and care of TB,” says Nematswerani.

However, while the option is there for doctors in the private healthcare sector to diagnose and treat drug-susceptible TB, the majority of TB cases in the country are tested for and treated in the public healthcare sector, says Dr Francesca Conradie, a leading TB researcher. At the moment, drug susceptible TB in adults is treated with a six-month treatment course – consisting of four drugs for two months and then two drugs for the remaining four months.

Drug-resistant TB is likely only treated in the public sector

The picture for drug-resistant TB looks quite different. Conradie points out that some of the medications used to treat drug-resistant TB are only available in the public sector. This means patients with drug-resistant TB need to be referred to a public sector facility to get treatment.

While there does not appear to be any outright legal or regulatory prohibition on private sector pharmacies supplying these drugs (in fact, they have listed single exit prices), by all appearances these medicines are not available in the private sector.

The Council for Medical Aid Schemes does not plainly say that drug-resistant TB (sometimes subdivided into MDR-TB, pre-XDR-TB, or XDR-TB) cannot be treated in the private sector at all. It does however state: “Complex cases such as MDR-TB are often referred to specialised public TB hospitals or clinics, as the required drugs and monitoring may be unavailable or too expensive in private settings”.

“Discovery Health Medical Scheme members have cover for MDR-TB, including consultations, diagnostics and hospitalisations. However, there are limits in access to certain MDR-TB medicines in the private sector as they are only available in the public health sector. These medications would be funded as per the Scheme’s policy if they were made available in the private sector,” says Nematswerani.

How this works for Discovery members, Nematswerani explains, is those who have been diagnosed with drug-resistant TB will be referred by their private sector doctor to a designated public healthcare facility that offers the treatment under the National Department of Health’s MDR-TB programme.

“When designated facilities submit claims for MDR-TB services, Discovery Health assesses and Discovery Health Medical Scheme funds eligible claims in line with applicable Prescribed Minimum Benefit (PMB) requirements,” she says. “For example, members have received MDR-TB treatment at Nkqubela TB Hospital, a specialised facility near East London. All eligible claims submitted by the facility since 2025 have been funded in full by Discovery Health Medical Scheme under PMB requirements.”

Drug-resistant forms of TB are treated with anything from three to seven drugs and treatment can last anything from six to 24 months. Two of the drugs bedaquiline and pretomanid, which form the backbone of the drug-resistant treatment regimen, are monitored closely and can only be accessed through the National Department of Health in public sector facilities. This is according to Professor Keertan Dheda, Head of Pulmonology at Groote Schuur Hospital and the University of Cape Town. The reason for this, Dheda says is to “ensure antibiotic stewardship and so that we do not get acceleration of antimicrobial resistance to specific drugs through inappropriate prescription of such drugs used for DR-TB”.

“It’s because they [the drugs in the current DR-TB regimen] are pearls of great price,” explains Conradie, adding the restriction is to try and safeguard some of the drugs in the current drug-resistant TB regimen, particularly bedaquiline, against the development of resistance for as long as possible. Another reason is that drug-resistant TB patients need to be monitored quite closely for potential side effects, something Conradie says the public sector is well-equipped for.

Finding confirmation on the degree to which the private sector can or cannot access bedaquiline and pretomanid directly has proven challenging. When Spotlight asked about this, spokesperson for the National Department of Health Foster Mohale indicated that the department does not have information on these issues and that our questions could be better handled or addressed by the pharmaceutical industry and the private sector.

Spotlight contacted all the pharmaceutical companies that were listed on the South African Health Regulatory Authority’s website as having registered the DR-TB drugs bedaquiline, pretomanid, and delamanid.

“Viatris in South Africa is the Marketing Authorisation Holder (MAH) for pretomanid and delamanid, both registered for drug-resistant TB, available to the public sector through the national tender and to the private sector upon request,” says a spokesperson for the pharmaceutical company Viatris. “Drug-resistant TB treatment is predominantly coordinated through the public health system, where patient follow-up, pharmacovigilance and reporting mechanisms are established.”

Bedaquiline, from the pharmaceutical company Johnson & Johnson, is available in South Africa, including through the country’s private healthcare sector, a spokesperson for the company told Spotlight.

Two other companies responded that they are not directly involved in supplying the drugs and were only involved in the registration process.

Private sector prices for bedaquiline and pretomanid are listed in South Africa’s single Exit Price database, something that usually indicates at least some intent from the manufacturers to supply it to the private sector. UKZN pharmaceutical sciences expert, Dr Andy Gray, tells Spotlight that there is no legal reason for not making these medicines available in the private sector, but access is often constrained. “That the manufacturers have taken the trouble to submit a launch Single Exit Price to the National Department of Health Pharmaceutical Economic Evaluations unit is important, and indicates a willingness to supply a private market, even if availability is limited because demand is almost non-existent,” he adds.

Gaps in knowledge of TB in the private sector

Putting aside the complexities of drug-resistant TB, the option for testing and treatment of drug-susceptible TB in the private sector clearly exists on paper. Yet it is not clear how widely such care is actually available, and when it is, whether it is always up to scratch. Our impression is that it is a bit of a lottery as to whether or not your private sector GP has knowledge of TB.

“There are many gaps in knowledge amongst general practitioners, not only for TB,” says Dheda. “Unlike other countries where there are regular licensing exams that are undertaken, we have decided to use a different approach in South Africa and updating one’s knowledge in a particular field is achieved through their own reading and conference attendance, and through the CPD system where they need to accrue a certain number of points showing that they have attended continuing medical education meetings.”

From the limited information available, it appears that the private sector’s approach to testing for and treating TB is underdeveloped. A likely reason for this is because most TB cases are treated in the public sector, so there is little opportunity or need to develop these skills. A few recent studies on TB care in the private sector have shown that there are significant gaps in and among general practitioners in the private sector. “South Africa’s leading role in prioritising TB in policy and practice possibly contributes to its strong public sector performance,” notes a commentary in the South African Medical Journal. “However, it is unclear to what degree recent advancements in TB screening and care recommendations have permeated the private sector.”

One 2022 study looked at the quality of TB and HIV care in the private sector. The researchers used specially trained staff who would go to a general practitioner with one of three sets of symptoms and histories – all indicating possible or confirmed TB. Case one had typical TB symptoms and was HIV-positive; case two had a TB-specified laboratory report and was HIV-negative; and the third case had a history of incomplete TB treatment and was HIV-positive.

Among the 511 interactions the trained staff had with 212 general practitioners in KwaZulu-Natal and the Western Cape, TB was more likely to be ideally managed as per the study framework – meaning the patient was referred to the public sector or given the relevant tests – if the patient had a diagnosis of TB already or a history of TB. The researchers also found that the private sector GPs in their study did not perform as well as public sector doctors in South Africa.

Some of the public health experts we interviewed were sceptical about the private sector’s ability to provide TB care.

Some patients think they’ll get better TB care in the private sector but in reality, it’s been shown that quality of care is actually far poorer when compared to the public sector, Professor Renier Coetzee tells Spotlight. Coetzee is an associate professor at the School of Public Health at the University of the Western Cape.

Conradie has a similar view. Because of personal experience with family members not getting timely TB diagnosis or appropriate treatment, and anecdotes from other doctors and researchers stating similar scenarios, she tells Spotlight that she is not convinced that TB should be treated in the private sector at all.

Dheda disagrees with the idea that drug-susceptible TB shouldn’t be treated in the private sector. “Both the public and the private sectors prioritises patient care and wellbeing and improving outcomes in patients no matter what the disease. The same should apply for TB,” he says.

Strengthening TB care in the private sector

Strengthening these gaps in TB testing and treatment in the private sector is possible in theory, but according to Conradie will require significant investment by medical aid schemes to better equip general practitioners and private sector clinics. She advocates for strengthening referral pathways for the private sector to get TB patients linked to care in the public system. As well as strengthening education on TB for the private sector by improving awareness of how TB presents and how it should be diagnosed.

One way to potentially strengthen the TB response in the private sector is through stronger partnerships with the public sector, particularly around testing for TB. This 2025 pilot study conducted in KwaZulu-Natal linked 158 General Practitioners to free public sector TB testing using an existing medical referral application (Vula). 61 of the doctors (38.6%) submitted at least one sputum sample collected at their practise to be tested for TB. As a result, 107 people who had TB were identified and almost all were linked to care in the public sector. This showed, according to the researchers, a workable public-private mix model for TB management in a high TB burden setting, but more research is needed in this area.

There are some references to including the private sector in the National TB response, the current National Strategy Plan for HIV, TB and STI’s does list the need to engage with all stakeholders, including the private sector, on the policies and guidelines on TB prevention and management. It also vaguely references a multisectoral collaboration that will be guided by the 2017 Moscow Declaration on multisectoral accountability framework for TB.

But how this is playing out in reality, is not clear.

The role of pharmacists

A reoccurring theme in our research for this article is the notion that TB treatment in general could be improved by leveraging pharmacies – both private and public – to make it easier for people to get their medicines.

“More pharmacies in each locality should be designated to carry TB treatment,” says Dheda. “From my experience, often TB treatment is only available at certain designated private pharmacies, and it is not easy to find.”

This experience is echoed by private sector pharmacists interviewed for a recently completed master’s thesis. The thesis has not yet been published, but the author, Brenda Knipe, a pharmacist and master’s student at the University of the Western Cape’s School of Pharmacy shared some general findings with Spotlight.

Her observations are based on interviews with 14 pharmacists from seven provinces (KwaZulu-Natal and the Northern Cape were not included), working in private hospitals or community pharmacies. She says how often pharmacists reported TB patients varied. Some saw many TB patients who come to them to get their treatment, while others never or rarely did.

For those pharmacists interviewed by Knipe who needed to refer patients to the public sector for treatment, some relied on informal networks based on contacts they’ve made in the public sector. This was due to a reported lack of clear guidelines on how or where to refer patients. Knipe says these networks were essentially based on “who you know”. The pharmacists who didn’t have these contacts or informal networks expressed uncertainty about what to do to assist their patients.

The pharmacists, according to Knipe, were eager for more consistent training and continuing professional development on TB so they can assist patients better.

The pharmacists in the study who had to provide TB patients with treatment, according to Knipe, reported sometimes having difficulties in finding stock of drug-susceptible TB treatment. Most community pharmacies don’t normally keep a supply of TB drugs. If a patient does come to the pharmacy with a doctor’s script for TB medicines, the drugs have to be ordered from suppliers. If the drugs are in stock, the pharmacists would then order the full course for that patient, dispense one month’s supply and keep the rest at the pharmacy specifically for that patient.

However, not all the suppliers keep a lot of stock of the drugs on hand, likely due to low demand for TB medicines in the private sector, resulting in some pharmacists in the study reporting that at times they had to phone several suppliers before finding stock. The pharmacists interviewed who were working in private hospitals also had some difficulties sourcing stock of TB medicines, according to Knipe.

Nematswerani points out that Discovery has had similar challenges.

“Discovery Health continues to see a decline in the availability of TB medicines within the private healthcare sector. This is largely attributable to the relatively small number of TB cases managed privately,” she says. “South Africa has a well-established public-sector TB treatment and monitoring programme, and many private healthcare practitioners refer patients to public healthcare facilities for ongoing treatment and follow-up. As a result, demand for TB medicines in the private sector has progressively decreased, contributing to their limited availability through private healthcare channels.”

*This article was first published by Spotlight – health journalism in the public interest. Sign up to the Spotlight newsletter.

Categories : Healthcare Politics and Regulations Medical IndustryTags :

In-depth | Will the Latest Private Health Reforms Bring Down Prices?

On By ModernMedia
Photo by cottonbro studio

The government took its first steps towards the implementation of the recommendation of Health Market Inquiry into the private healthcare sector.

By Chris Bateman

Medical aid schemes will be given collective power to negotiate prices, according to draft regulations published last week. While some see the move as an important step toward reining in private healthcare prices, others argue that they do not go far enough and are legally unsound. We spoke to several leading experts about the proposed reforms.

Complaints about the high cost of private healthcare services in South Africa are nothing new. For the last two decades, above inflation increases to medical aid scheme premiums have been the norm. Added to this, many of the 16 or so percent of the population who are members of a scheme will have been asked to pay unexpected out-of-pocket co-payments at some point.

To understand why all this is happening, the Competition Commission launched a Health Market Inquiry (HMI) in 2014. The final HMI report, published in 2019, found that government had failed in its duty to regulate the private health sector, which it described as “neither efficient [nor] competitive”.

This failure in regulation has resulted in a private healthcare market that is “highly concentrated”, “characterised by high and rising costs of healthcare and medical scheme cover, and significant over utilisation without stakeholders being able to demonstrate associated improvements in health outcomes”, Justice Sandile Ngcobo, chairperson of the HMI panel, said at the time.

A key regulatory failure identified by the HMI  was the absence of any effective mechanisms to keep prices under control. Medical aid schemes would set a price that they would cover – but there is nothing stopping healthcare providers from charging much higher prices. This is particularly a problem for prescribed minimum benefits (PMBs) – a set of healthcare services that schemes have to cover in full.

The HMI recommended the establishment of a supply side regulatory authority (SSRA) that would be independent from both government and the private sector. Among others, the SSRA would set maximum tariffs for PMBs as well as reference tariffs for all other health services.

In September 2020, around a year after the HMI report was released, the Competition Commission published a notice that seemed to set the ball rolling on establishing a new tariff negotiating framework along the lines of the HMI recommendation. Their proposed multilateral negotiating forum would have been governed by the Council for Medical Schemes until the SSRA could be established.  But things then largely went silent, until earlier this month.

A new tariff-setting framework

On 14 February 2025, draft regulations published by the Minister of Trade Industry and Competition, Parks Tau, set out a new tariff determination framework for private healthcare in South Africa. At its core are two structures. The Tariffs Governing Body (TGB), consisting mainly of experts responsible for providing oversight in the tariff determination process, and the Multilateral Negotiating Forum (MLNF) made up of multiple stakeholders “which shall serve as the primary forum for collectively determining the maximum tariffs for prescribed and non-prescribed minimum benefits for healthcare services”.

In short, the work of negotiating and determining tariffs will be done by the MLNF, with the TGB providing some oversight and support. The TGB is also empowered to make a tariff determination when the MLNF fails to reach agreement.

The National Department of Health will have substantial control over both structures. Members of the MLNF will be appointed by the Director General of Health, and will include representatives of government, associations representing healthcare practitioners, healthcare funders, civil society, patient and consumer rights organisations, and any other regulatory body within the healthcare sector. The TGB will be located in the National Department of Health and will be chaired by an official of the department.

The regulations came in the form of a draft interim “block exemption” from certain provisions in the Competition Act. Such an exemption is required in order to enable the tariff governing body and the multilateral negotiating forum to function legally. The stated purpose of the exemption is to “contribute to the affordability of quality healthcare services…reduce costs and prevent the overutilization of healthcare services”.

In addition to the “collective determination of healthcare services tariffs”, the exemption also provides for “the collective determination of standardised diagnosis, procedure, medical device and treatment codes”, and “the collective determination of quality measurements/metrics, medicines formularies and treatment protocols/guidelines with the purpose of contributing to affordability of quality healthcare services across both PMBs and non-PMBs, contributing to reducing costs and contributing to the prevention of overutilization of healthcare services”.

The exemption doesn’t apply to everyone in the health sector. While healthcare providers like GPs and specialists are included, hospitals are not included.

Not an independent entity

While generally in favour of implementing the HMI recommendations, several experts Spotlight consulted are critical of how the government is going about it.

One line of criticism has been that the new framework is not sufficiently independent from the health department, as recommended in the HMI report.

Professor Alex van den Heever, Chair of Social Security Systems Administration and Management Studies at the University of the Witwatersrand (Wits), said the regulations deviate from the requirement for independence of any price regulator from political interference – which he points out is expressly addressed by the HMI.

In a media conference on Monday, Health Minister Dr Aaron Motsoaledi cited financial constraints for failing to set up an independent regulatory body. He also said that the department had a “mandate to manage healthcare systems”.

“We’re still looking at various options on an independent regulator, but National Treasury has severe constraints,” he said.

The exemption is for a period of three years and has been described as an interim measure.

Piecemeal implementation?

Another line of criticism is that only some HMI recommendations are being implemented, whereas the HMI stressed the need for an “inter-related” approach. While the tariff-determinations may bring down prices, it will not prevent doctors from, for example, sending people for medically unnecessary scans (a form of overutilisation).

Sharon Fonn, a professor in the School of Public Health at Wits and who was part of the HMI panel, said implementing aspects of the HMI piecemeal will neither foster competition nor protect the consumer.

“Controlling prices achieves little in the absence of the recommended holistic framework, which addresses the incentives of schemes to contract on cost, quality and demand,” she said.

Costs are influenced by both price and demand. The HMI did extensive work to show that supplier-induced demand was a problem – clearly indicating that price controls would achieve nothing in the absence of broader interventions, said Van den Heever.

“You’ll be hard pressed to find tariffs rising much faster than CPI (Consumer Price Index),” said Van den Heever. “Costs rise because of claims volumes, not the tariffs. This is because the frequency of patient consultations or in-patient days can rise in response to a fixing of prices. Providers are in a position to influence this demand. Annually you could have a 3% actual cost increase, with only a third of the increase (one percentage point) due to original price (tariff) changes. This is fully addressed in the HMI,” he added.

In response to criticism over the piecemeal implementation of HMI recommendations, Motsoaledi stressed that the HMI conceded that its recommendations would be implemented in phases.

Questions of scope

Elsabe Klink, an independent healthcare legal consultant and former advisor to the South African Medical Association, said government is mixing up the coding, protocols and Health Technology Assessments (HTA) which, on the HMI recommendations, are not up for negotiation in the MNLF.

“The HMI recommended that those functions be separate. How on earth can people negotiate on how a diabetic patient can be treated. That is a scientific question,” she said.

Klink said the HTA seems to be a veiled attempt at price control, directly for healthcare professionals and indirectly, to bar from the market devices and medications that did not make it onto the protocols or formularies.

“It [the draft regulations] purports to implement Health Market Inquiry recommendations but seems to stray into issues that are integral to NHI implementation as well, notably the HTA Committee,” said Dr Andy Gray, pharmaceutical sciences expert at the University of KwaZulu-Natal and Co-Director of the WHO Collaborating Centre on Pharmaceutical Policy and Evidence Based Practice.

Justifying the HTA measures, Motsoaledi said it was to prevent “the medical arms race” where healthcare practitioners prioritised patient volumes to enable them to beat their opponents in offering the latest technology. “This behaviour ruled by a medical arms race must end,” he said. He did not specifically explain why HTA was included in the exemption and not addressed through other regulations.

Questions of legality

Questions have also been raised over the legality of the regulations and whether or not they’d be vulnerable to litigation.

Van den Heever described the new regulations as “quite strange and extremely untidy, exposing the entire enterprise to legal challenge from the outset”. He said that the exemption bypasses normal legislative processes, that require evidence-based motivations and wide consultation.

He said the exemption went beyond competition concerns by establishing new governance structures that resembled a regulatory framework rather than a competition-related exemption.

“Furthermore, the structures and framework apply to a different minister (Health) – who has the legal authority to establish such a framework – not the Minister of Trade Industry and Competition. The Competition Act provides for exemptions, but only to facilitate competition-related objectives,” he said.

Dr Rajesh Patel, the Head of the Health System Strengthening Department at the Board of Healthcare Funders, had similar concerns. He said he finds it strange that “you need the Department of Trade Industry and Competition to tell the Department of Health to do their work”.

Could providers opt out?

Another contentious, and not entirely clear, aspect of the new framework is whether healthcare providers will be able to charge higher prices than those agreed through the MLNF.

“Perhaps one of the most problematic elements is that to protect patients, there needs to be some system to prevent opting out. It is likely that providers will opt out of this system and pass on additional costs to patients,” warned Fonn.

But, when asked about healthcare providers potentially opting out, Motsoaledi said that if that happened, “we’d be back to square one where everybody can charge whatever they want. I don’t think the HMI wanted that.” He didn’t specifically clarify how the current reforms would prevent healthcare professionals from opting out.

According to the draft regulations, the tariffs determined by the MLNF are “binding on all parties to the agreement”. It does however leave the door open for bilateral negotiations outside of the MLNF, but “only for the purpose of concluding an agreement on reductions, but not increases, on the tariffs for PMBs and non-PMBs as determined by the MLNF process”. There appears to be nothing in the regulations that would prevent healthcare providers from opting out altogether and charging what they like – although it is unclear to what extent, if at all, schemes would reimburse in such instances.

Concerns over timing

On timing, there are both concerns over how long the process has taken so far, and how long it might take going forward. This month’s draft regulations were published roughly five and a half years after the publication of the HMI report. For most of this period, Motsoaledi was not health minister.

Motsoaledi blamed the COVID-19 pandemic and the national elections that followed shortly afterward for the delay.

Health Minister Dr Aaron Motsoaledi. (Photo: Kopano Tlape/GCIS)

Patel expressed serious reservations about the ability of the health department to implement the block exemption process. “If their history is anything to go by, we will see similar delays and consequently, rising healthcare costs,” he said.

Patel said that the quickest solution to render private healthcare more affordable would be if the Competition Commission granted exemptions to allow medical schemes to collectively negotiate tariffs with willing healthcare providers. The health department, he said, need not be involved at all.

“We have serious reservations about the Department of Trade, Industry and Competition putting the power in the Department of Health’s hands to manage the block exemption process. They have actively kept private healthcare expensive and inaccessible to justify the implementation of the NHI,” he claimed.

Spotlight sent written questions to the Department of Health last week and during Monday’s media conference. Though some of our questions were addressed in the media conference, others had not been responded to by the time of publication.

– Additional reporting by Marcus Low.

Republished from Spotlight under a Creative Commons licence.

Read the original article.

Categories : Healthcare Politics and RegulationsTags :

Pressure Grows for NHI Compromise Ahead of Cabinet Lekgotla

On By ModernMedia

By Chris Bateman

Whether or not the ANC and DA can find common ground on the future of medical schemes is set to be a major test of South Africa’s Government of National Unity. Ahead of a Cabinet lekgotla where the issue is expected to be on the agenda, momentum has been gathering behind a compromise option. 

Little more than a month after President Cyril Ramaphosa signed the National Health Insurance (NHI) Act into law in May last year, the ANC entered into a government of national unity (GNU) following a large drop in their share of the vote in South Africa’s 2024 elections. This raised questions over the future of NHI, given that the second largest party in the GNU, the DA, is vehemently opposed to NHI.

The NHI Act has not yet been promulgated and could be amended if the ANC and DA agree to do so. But whether the parties can agree to a compromise remains unclear, especially since there appears to be a hardline faction in the ANC that is committed to NHI as currently encapsulated in the NHI Act. As it stands, the Act foresees a dramatically reduced role for medical schemes whereby they will not be allowed to cover services that are already covered by the NHI fund.

Also in play are at least four High Court challenges to NHI legislation – by the Board of Healthcare Funders (BHF) challenging Ramaphosa’s assent to the NHI Bill just before the elections last year, Solidarity, and the SA Private Practitioners Forum, both claiming government overreach which impacts on people’s right to choose their own health cover and run their own businesses. The South African Medical Association (SAMA) is also preparing a legal challenge.

Two proposals

Meanwhile, momentum has been growing with two compromise proposals: one from Business Unity South Africa (BUSA), the country’s apex business organisation broadly representing the banking, mining and retail sectors, but more pertinently here, the Health Funders Association, the Hospital Association of South Africa, and the Innovative Pharmaceuticals Association of SA. The other is from the United Healthcare Access Coalition (UHAC), a large coalition of healthcare worker groups including, among others, SAMA, the South African Private Practitioners Forum, and the Progressive Healthcare Forum.

BUSA last year met with Ramaphosa and, on his request, provided a detailed yet currently “confidential” proposal, wanting key sections of the NHI Act amended and/or thrown out to enable medical schemes to remain in play by punting mandatory health insurance.

“The BUSA proposal is being processed by the Department of Health and National Treasury. Once processed, a response to BUSA will be formulated accordingly,” presidential spokesperson Vincent Magwenya told Spotlight this week.

The fundamental difference between the two objecting groups is that the UHAC thinks the NHI Act should be thrown out completely and replaced with their detailed blueprint, while BUSA wants the existing Act amended to accommodate private funders. In its proposal, the UHAC urges implementation of long delayed fundamental systemic reform in both healthcare sectors to enable what they say would be efficient, pragmatic and more politically neutral, consultation-driven universal healthcare measures.

We understand that in a meeting between the two groups, shortly before BUSA lodged its proposal with the Presidency, not enough common ground could be found to join forces.

But there are significant overlaps in their proposals. Both groupings embrace mandatory health insurance and dismiss a single central fund as envisaged under NHI as dangerous and financially unfeasible.

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DA spokesperson for health, Michelle Clarke, said her party backs mandatory insurance. She also said the party agrees with the UHAC proposals – and would not hesitate to mount a legal challenge should the NHI go ahead without substantial amendments.

Mandatory health insurance was part of government’s longer term health reform plans until the pendulum swung in favour of NHI at the ANC’s national conference in Polokwane in 2007 when Jacob Zuma became president of the party. The idea was placed back in the spotlight last September when Dr Richard Friedland, immediate past CEO of the Netcare Hospital Group and a key member of BUSA’s health delegation, made the case for it at the HASA conference.

Under mandatory health insurance, everyone who is in formal employment, or who earns above a certain threshold, would be forced by law to be a member of a medical scheme. This, it is argued, would result in medical scheme membership swelling substantially and pressure being taken off the public healthcare system. It is also expected to result in medical scheme premiums being reduced because more healthy, younger people will join the schemes. People who are unemployed or who cannot afford health insurance will still be taken care of by the public healthcare system, which would also take paying medical aid members.

Friedland said at the time that mandatory healthcare insurance would triple the medical scheme market from 9.2 million to potentially 27.5 million beneficiaries over time and reduce those dependent on the state from 53.8 million to 35.5 million.

This week Friedland declined to reveal the contents of the BUSA proposal, saying it was with Ramaphosa and thus confidential.

Meanwhile, Health Minister Dr Aaron Motsoaledi last week rubbished media reports that the cabinet lekgotla scheduled for month end would be taking on board the BUSA proposal. He did however confirm that he will shortly announce which of the far-ranging and long-outstanding recommendations of the Competition Commission’s Health Market Inquiry (HMI) into the private healthcare sector will be implemented, something many have been calling for in recent years.

Far-reaching reforms

Adjunct Professor Alex van den Heever, Chair of Social Security Systems Administration and Management Studies at the University of the Witwatersrand, who with Dr Aslam Dasoo, founder and chair of the Progressive Health Forum, forms part of the UHAC, said their fundamental point of departure is that the status quo is unacceptable.

According to the UHAC report, irregular provincial health expenditure levels provide a proxy indicator for corruption. The combined irregular expenditure for eight of the nine provinces from 2017/18 to 2022/23 consistently averages around 12.3% (around R9 billion per annum) of non-personnel expenditure compared to 0.1% for the DA-run Western Cape.

“The difference in performance between the Western Cape and the other eight provinces is reasonably attributable to governance differences,” the report reads.

Observes Van den Heever: “We’re losing an enormous amount of performance in the public sector because of political appointments into the system. It compromises leadership and results in a massive waste of resources. The Western Cape shows you the difference governance can make.”

He said that in the “dismally” regulated private sector, funding the pooling system was identified as a problem even before 1994, “but you don’t now disrupt the system to amalgamate into a monopoly fund to solve this (i.e. NHI). Risk equalisation would force medical schemes to compete on the value of what they cover, and nobody would be discriminated against in accessing healthcare.”

Van den Heever says the NHI intention to increase taxes and move funding money from the private to the public sector is “unworkable”.

He added: “The way to address pooling problems is to separate pooling from purchasing. The NHI process has pooling and purchasing in the same organisation, centralising everything – which is highly inefficient, unworkable and with negative consequences all the way through.

“The UHAC proposal separates them out with the provinces and medical schemes remaining as purchasers while strategic pooling or resource allocation is a national function. So, risk equalisation and taxation form part of strategic national pooling functions, while the purchasing and provision of health services are protected from political appointments – including national ministers and provincial MECs.”

Dasoo, who is also a founder member of trade union NEHAWU, said the UHAC collaborative proposal draws on all the research developed over several decades including the Taylor Commission, which made recommendations on an effective social security system for South Africa, the HMI, and numerous other official inquiries.

Dasoo described the UHAC report as “everything that the NHI is not. This health pathway requires easy legislative changes and is within current fiscal constraints. We can start the process immediately. It requires a change in governance structure of the provincial health systems where politicians relinquish all direct authority they have over health care institutions and instead focus on strategic policy.”

BHF hearing in March

A spokesperson for the BHF, Zola Mtshiya, confirmed their NHI legal challenge, set for hearing in March, but said the BHF was only invited to sign up to the UHAC proposal after it was made public. The BHF represents most medical aid schemes – except for the largest, Discovery Health.

BHF Managing Director, Dr Katlego Mothudi, said his organisation is “engaging the association [UHAC] on the document”. he added: “We welcome the willingness to collaborate as an industry as strengthening health systems is everybody’s business.”

Cabinet lekgotla next week

Despite all these developments, whether the ANC is open to a potential compromise on NHI remains unclear. On the one hand, the presidency says they have asked Treasury and the Department of Health to consider the BUSA proposal, on the other, Motsoaledi has rubbished suggestions that the ANC’s position on NHI has shifted and appears committed to an NHI system that dramatically limits the role of medical schemes. His position is thus incompatible with that of the DA.

According to media reports, things got very heated between Motsoaledi and DA ministers when NHI and the future role of medical schemes were discussed at a Cabinet meeting last October.

The matter is likely to again be on the agenda at the Cabinet lekgotla set to take place next week.

Asked about how the GNU might eventually influence universal healthcare, Clarke said: “ANC arrogancy has tapered down a lot compared to what I’m used to. There’s a lot more transparency – but we cannot allow for a very badly written law with huge implications for people’s lives and the economy to go ahead.”

Foster Mohale, spokesperson for the national health department, declined to provide comment for this article, referring Spotlight to the Presidency and Motsoaledi. “What I can say is we’re still working on the Health Market Inquiry recommendations and will let you know when there’s an announcement,” he said.

Magwenya did not provide responses to most of Spotlight’s questions, other than saying that both Treasury and the health department are considering the BUSA proposal and confirming that the President had met with BUSA.

Republished from Spotlight under a Creative Commons licence.

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Categories : Hospitals Medical IndustryTags :

Netcare Reports Strong Growth in its 2023 Earnings Report

On By ModernMedia

For the year ended 30 September 2023, the Netcare Group’s profit after tax and exceptional items increased by 27.2% to R1 336 million (FY 2022: R1 050 million) and adjusted HEPS increased by 27.0% to 105.7 cents (FY 2022: 83.2 cents). A sustained improvement in activity, off a largely organic base, supported revenue growth of 9.5%. Coupled with tight cost control notwithstanding the high inflationary environment, this has resulted in excellent operating leverage, reflected in the 23.9% growth in operating profit.

Group chief executive officer, Dr Richard Friedland commented, “We are encouraged by the ongoing normalisation and resilient demand for private healthcare services, allowing the Group to continue on the solid trajectory reported during the first half of this past financial year.”

Total paid patient days (PPDs), inclusive of acute and mental health, increased by 6.7% with improved occupancies of 64.4% for FY 2023 (FY 2022: 60.1%).

Dr Friedland continued, “It is also very pleasing that we have made excellent progress in implementing our key strategic projects. The CareOn digitisation project is nearing completion and has been successfully rolled out at 38 acute hospitals to date, covering 90% of beds. The project is delivering tangible benefits for patients across the Netcare ecosystem, and the gross financial benefits of R104 million in FY 2023 have exceeded expectations.”

Similarly, Netcare’s environmental sustainability strategy continued to deliver financial savings and plays a pivotal role in reducing exposure to the impacts of the instability of the national electricity grid. In line with the 2030 sustainability strategy, the Group concluded an agreement for a renewable energy (RE) supply arrangement with NOA Group Trading, a renewable energy trader. This agreement will increase the proportion of Netcare’s total energy consumption derived from RE sources to c26% and represents an important step towards Netcare’s goal of achieving 100% reliance on RE sources by 2030. Netcare is currently exploring further grid-wheeling opportunities that will potentially increase RE-derived energy to c.40%. 

In order to address the growing demand for mental healthcare services in South Africa, Netcare successfully commissioned Netcare Akeso Gqeberha (72 beds) in May 2023. Sales of NetcarePlus products to the retail and corporate segments continue to gain traction, contributing to the Netcare ecosystem through increased access to private healthcare beyond traditional medical schemes and the increased use of its services. Netcare Diagnostics progressed with the rollout of validated and quality assured point of care devices across Netcare’s intensive and high care units, theatres and emergency departments as well as Medicross medical and dental centres.

Dr Friedland said, “We remain committed to our Consistency of Care strategy, broadening the measurement of clinical outcomes and patient experience to ensure we deliver on our core purpose of providing the best and safest care to our patients.”

Cash generated from operations was strong, increasing to R4 135 million (FY 2022: R3 950 million), and the cash conversion ratio amounted to 100.5% (FY 2022: 113.0%). In line with the capital allocation strategy of returning excess cash to shareholders, the Group executed a share buyback programme that, collectively, entailed the repurchase of 33.7 million shares at a cost of R444 million.

Similarly, in line with the dividend policy, which aims to provide shareholders with a sustainable dividend of 50% – 70% of earnings, the Board declared a final dividend of 35.0 cents per share. This, together with an interim dividend of 30.0 cents per share represents 61.5 % of adjusted HEPS and an increase of 30.0% over FY 2022.

Netcare is encouraged by the ongoing improvement in the Group’s financial performance as demand continues to normalise from the impact of the COVID-19 pandemic. The higher activity levels, coupled with ongoing efficiencies, resulted in strong operating leverage and an improvement in Group EBITDA margins of 120 basis points to 17.4%, from 16.2% in FY 2022.

Total capex, including strategic projects, amounted to R1.5 billion for the year, of which R136 million related to expansionary projects, including the completion of construction of the new Netcare Akeso Gqeberha facility and R82 million invested in the hospital digitisation project.

The Group incurred operational costs relating to strategic projects of R258 million (FY 2022: R249 million).

Netcare experienced an average of Stage 3.6 loadshedding across its facilities during the year, resulting in a sharp increase in generator diesel costs to R124 million from R37 million in FY 2022.

At 30 September 2023, the Group‘s cash resources and available undrawn committed facilities amounted to R3.7 billion.

DIVISIONAL REVIEW

Hospital and emergency services

The segment delivered a steady performance for FY 2023, driven by continued recovery in demand and further normalisation of the post COVID-19 operating environment.

Revenue for the segment increased by 9.6% to R23 050 million (FY 2022: R21 024 million) and total patient days increased by 6.7% to 2 447 494 days in FY 2023 (FY 2022: 2 293 344 days). The steady increase in activity contributed to higher occupancy levels with total occupancy of 64.4% (FY 2022: 60.1%).

Notwithstanding the changes in various networks that were effective from January 2023, a milder flu season and extended vacations by specialists, acute hospital patient days increased by a solid 6.1% against FY 2022, equating to 95.1% of FY 2019 with ICU and high care PPDs being 10.1% higher than pre-pandemic levels.

In line with the trend reported in H1 2023, year-to-date growth in medical PPDs of 8.5% continued to outpace surgical PPD growth of 3.9%. Medical PPDs have recovered to 99.0% of 2019 levels, while surgical PPDs continue to be impacted by sector trends, inter alia, declining maternity cases, as well as an outmigration of lower margin day cases, and have recovered to 91.7% of pre-pandemic levels. Total surgical cases comprised 51.5% of patient days (FY 2022: 52.6%; pre-pandemic levels: 53.4%) and medical cases 48.5% (FY 2022: 47.4%; pre-pandemic levels: 46.6%). Surgical cases continue to contribute more than 70% of revenue.

Demand for mental healthcare remains strong with mental health patient days increasing by 12.7% compared to FY 2022. The newly opened Netcare Akeso Gqeberha facility contributed 2.3% of this growth. Activity has surpassed pre-pandemic levels by 5.4% (same store) and 11.6% inclusive of the 36-bed Netcare Akeso Richards Bay facility (commissioned in May 2022) and the 72-bed Netcare Akeso Gqeberha facility (commissioned in May 2023).

The strong increase in mental healthcare activity has resulted in occupancies improving to 72.7% (73.5% excluding Netcare Akeso Gqeberha) in FY 2023 from 68.1% in FY 2022 (FY 2019: 71.6%).

In 2023, Netcare Christiaan Barnard Memorial Hospital received Level 1 trauma accreditation from the Trauma Society of South Africa, which is aligned to the American Trauma Society accreditation principles. There are only four hospitals in South Africa that have achieved this status, all of which are in the Netcare Group.

Netcare’s geographic footprint, electronic medical records (EMR) offering, and highly accredited facilities, allow the Group to continue attracting specialists and a net 124 doctors were granted admission rights at acute and mental healthcare facilities during FY 2023.

Primary care

Total GP and dental visits decreased by 3.1% in FY 2023 compared to FY 2022. The decline in visits is predominantly attributable to the higher base in FY 2022, which was boosted by increased COVID-19 GP visits during the Omicron-driven fourth wave. Revenue increased by 4.6% to R663 million. EBITDA margins were adversely impacted by diesel fuel costs.

Strategic update

Netcare has made excellent progress in the implementation of its key strategic projects and is now well placed to benefit from the rapidly changing dynamics driving demand in the healthcare sector.

Digitisation: Significant progress has been made in the implementation of the CareOn hospital EMR offering, which is a major focus of the digitisation strategy. This new way of care has been successfully implemented at 38 of the 45 Netcare hospitals to date, comprising 8 645 beds (90% of registered beds). In addition, over 28 000 healthcare professionals, comprising nurses, doctors, allied health professionals and pharmacists are actively using the system. Rollout to the final seven hospitals (943 beds) will be completed by April 2024. Dr Friedland said, “We remain confident that this investment will create a sustainable competitive advantage for the Group and will prove pivotal in laying the foundations in achieving our strategy of person centred health and care that is digitally enabled and data driven.” Digitisation has now been completed across all ancillary businesses in the Netcare ecosystem spanning across Netcare Akeso, Netcare Medicross, Netcare 911, National Renal Care and Netcare Cancer Care radiotherapy.

Netcare App: Netcare successfully launched its App in July 2023, which represents the next phase of the strategy to enable digital engagement with patients and clients. There has been a robust take-up of this App, which allows online pre-admissions, doctor appointments, the ability for Netcare 911 to geolocate someone in an emergency, access to a Summary of Care, and the ability to purchase NetcarePlus policies, with further services to be added in future.

Promoting access to healthcare: NetcarePlus has a portfolio of innovative healthcare products and funding solutions that promote access to affordable, quality healthcare in South Africa. In FY 2023, Netcare launched additional pre-paid procedures, completed enhancements to NetcarePlus GapCare and NetcarePlus Accident Cover, and also launched a new primary care offering.

Netcare Diagnostics: Netcare Diagnostics, which supports a Black female owned pathology service provider, Dr Esihle Nomlomo Inc., is gaining traction and made a positive contribution to EBITDA. The first stage rollout of 122 blood gas analysers at Netcare’s intensive care and high care units has been completed, with a further 70 point of care devices commissioned at ten emergency departments. Additionally, the service has been rolled out at ten Medicross facilities to date and will be extended to further sites in FY 2024.

Environmental sustainability: The first phase of the Group’s environmental sustainability strategy commenced in 2013. Since then, energy intensity per bed has reduced by 39%, exceeding the initial 10-year target. Similarly, the Group has exceeded its 2023 financial targets, achieving cumulative operational savings and benefits of more than R1.5 billion to date, yielding an IRR of 40%. In FY 2021, Netcare embarked on the second phase of its strategy, with a primary target of reducing Scope 2 emissions to zero by 2030 and Scope 1 and 3 emissions by a combined 84%. The Group’s 2030 strategy aims to achieve 100% utilisation from renewable sources, with zero waste to landfill and an additional 20% reduction of impact on water sources.

Outlook and guidance

Although the macro environment remains impacted by national power grid load shedding, global supply chain limitations, constrained consumers, and high levels of unemployment, Netcare has a number of measures in place to mitigate these challenges and remains focused on optimising the progress made in FY 2023. Furthermore, the environmental sustainability projects will continue to mitigate the significant escalation in costs associated with increased reliance on diesel powered generators resulting from the instability of the national electricity grid.

Although there has been limited growth in medical scheme membership, the pool of covered lives remains resilient and underscores the sustainable demand for quality private healthcare, which is exacerbated by the growing disease burden and ageing insured population.

For FY 2024, the Group expects revenue growth of between 7.5% and 9.5%. Total patient days are expected to grow by between 2.5% and 3.5% off a largely normalised base. The increased activity will drive further EBITDA margin expansion, improved earnings and a higher ROIC.

Netcare will continue to maintain an optimal capital structure, and the strength of the statement of financial position and the ongoing improvement in operational performance in the underlying businesses will continue to support dividend payments in line with the Group’s dividend policy.  Netcare will also continue to return excess cash to shareholders by way of share buybacks or special dividends.

Dr Friedland concluded, “We are confident that our strategy remains relevant, and we are firmly committed to realising growth opportunities, improving returns and the successful execution and completion of our key strategic projects. Notwithstanding the fluid economic environment, we expect ongoing improvements in the operational and financial performance of the business in FY 2024 and beyond.”