Hospital Association of SA: briefing & Tobacco Products Control Amendment Bill: further deliberations

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10 June 2008
Chairperson: Mr L Ngculu (ANC)
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Meeting Summary

The Hospital Association of South Africa provided an overview of the industry. The entity represented the interests of more than 90% of private hospitals in South Africa. It was a not-for-profit organisation that existed solely to further the interests of its member hospitals. The entity expressed concern about the general state of healthcare in the country, the high barriers of access to affordable, quality healthcare and the diminishing numbers of healthcare professionals in training and those leaving the country. The report illustrated a comparative analysis of private hospitals and public hospitals in the country. This showed that the private health sector performed better in terms of expenditure, quality and access. Furthermore, the entity proposed a comprehensive set of solutions to address issues of skills shortage, access and affordability.

Members queried whether the Department of Health closed its doors and ignored the private healthcare sector. Members raised concern about the costs of private hospitals and the poor ranking received by the public healthcare sector from a survey produced by an international organisation. In addition the Committee interrogated the benefits of Public Private Partnerships, government spending on healthcare and whether the private hospital sector had agreed to be regulated. Issues pertaining to comparison in quality of service, transparency and training were scrutinised by the Committee.

The Committee continued its deliberations on the Tobacco Products Control Amendment Bill. Members unanimously decided to retain clause 7(a)(b) as reflected in the Bill. In respect of clause 8, the Committee debated whether to prescribe an alternative sentence for failure to pay a fine. The legal experts informed the Committee that this was not necessary because the Adjustments of Fines Act catered for such a scenario. Members also agreed that the Regulations should be presented to the Committee before their enactment, but that it was not necessary to specify this in the Bill. Instead a formal Committee Resolution would call upon the Executive to present the regulations to the Committee prior to enacting them. Finally, a further change was made to the amended definition of advertisement.

Meeting report

Hospital Association of South Africa (HASA): Issues affecting the Industry
Dr Nkaki Matlala, Chairperson, HASA, appreciated the opportunity to interact with the Committee on a range of issues affecting the industry. He explained that the Hospital Association of South Africa (HASA) represented the interests of more than 90% of private hospitals in South Africa. It was a not-for-profit organisation that existed solely to further the interests of its member hospitals. To this end HASA involved itself with national and provincial forums of the Department of Health, as well as their related committees and personnel. HASA also actively engaged both the public and private health professions on numerous issues and interests, such as quality and service issues, information technology, legislative developments, nursing and related interests in the industry as a whole.

Dr Matlala voiced concern about the general state of healthcare in the country, the high barriers of access to affordable, quality healthcare, the diminishing numbers of healthcare professionals in training and the high numbers of those leaving the country. Given the legacy of apartheid and its impact on healthcare system, great emphasis was placed on committing resources to initiatives that directly impacted on healthcare delivery. In keeping with Corporate Social Investment (CSI) best practice, the bulk of this CSI activity was dedicated to providing access to healthcare, particularly to the most underprivileged members of society. The private health sector also made a substantial contribution to skills development and training for health care professionals.

In addition, Dr Matlala provided a comparative analysis between private and public hospitals, based on their level of expenditure and total number of beds. South Africa had 27 beds per 10 000 people, which was below the emerging market average of 44 and the G8 countries average of 67.

Mr Koert Pretorius, Board Member: HASA and CEO of Medi-Clinic, articulated that the South African private healthcare industry was a national asset and that its standards and services were recognised internationally. He reviewed national and international patterns of expenditure for healthcare, which demonstrated that on the basis of expenditure per capita, South Africa did not rank well against international benchmarks. The study also showed that high private funding of healthcare was not uncommon in developing countries. Graphs were utilised to indicate that private hospital tariffs and annual increases were reasonable. To buttress this point, he referred to a Statistics SA study, which revealed that overall Consumer Price Index inflation was higher than private hospital inflation. Delivering an affordable service within the South African healthcare landscape would require innovative programmes and partnerships founded on both patient need and economic sustainability. Finally, he concluded that there was no evidence of supernormal profits in the hospital industry, either locally or abroad.

Mr Richard Friedland, Board Member: HASA and CEO of Netcare, discussed the private hospital sector’s role in making healthcare accessible and affordable. The thrust of his presentation focused on solutions to meet the country’s Millennium Development Goals.

Dr Victor Litlhakanyane, Board Member: HASA, presented potential solutions to the skills crisis. He also advocated the benefits of effective Public Private Partnerships (PPP) and Public Private Initiatives (PPI). Such partnerships presented opportunities to strengthen the entire healthcare system and reduce the fragmentation in healthcare service delivery. They also ensured the efficient utilisation of available resources, the reduction of inequities and improved access to the benefit of all South Africans. Addressing infrastructural, clinical and training bottlenecks would be more effectively achieved by expanding existing problem areas. He noted that HASA reaffirmed its commitment to assist government in improving access and affordability to quality health services.
The Chairperson described the report as illuminating and stated that it raised a number of issues with which the Committee was currently seized. He further observed that the private healthcare sector had mentioned that they were prepared to assist government in many areas. As a result, he questioned whether the door had been closed to them in the past, and why the innovative proposals only seemed to be available now.

Dr Friedland assured the Committee that the private healthcare sector had been approaching the Department of Health for many years. The sector remained willing to participate in PPPs, in waiting list and training initiatives. He acknowledged that there was good collaboration at lower lever, especially between private and public hospitals. HASA continued to extend an honest and sincere approach to the Department to strengthen the national health system. Lastly, he commented that it was ironic that companies such as Medi-Clinic and Netcare had established effective PPPs in Britain and in Lesotho.

Dr Matlala confirmed that the private health sector had indeed been making approaches to the Department for some time. He indicated that he himself had been part of such attempts, and had even confronted the Minister of Health once, when he informed her that it seemed as if she did not want to listen to the private sector. In addition, he claimed that he had spent most of his adult life fighting for fair, equitable healthcare in the country. Moreover, he mentioned that it took him five months to secure a meeting with the Department. Lastly, he acknowledged that there was some animosity between the private hospital sector and the public health sector. Nevertheless, he remained hopeful that all the tensions would be resolved with the implementation of the Health Charter (HC).

Mr Thami Mseleku, Director General, Department of Health, verified that historically the relationship between the Department of Health (Department or DOH) and the private hospital sector had never been entirely cordial, and he cited that there were persistent legal challenges between the two parties. He denied that the private health sector had previously approached the Department generously with solutions. He claimed that these solutions had an element of expanding the private hospital sector businesses and were not so much about increasing the access to quality healthcare. Notwithstanding all of this, he insisted that the Department worked very well with the private hospital sector in the Health Charter. Lastly, he refuted suggestions that the Department’s doors remained closed to the private health sector.

An official from the Department of Health stated that he did not know of a situation where a private hospital entity had wanted to discuss a PPI with the Department and was denied a hearing.

Dr Matlala responded that it was “uncivilised for some of us to be called liars in a meeting like this”.

Dr R Rabinowitz (IFP) queried whether there was any legislation that provided for the management of public hospitals by the private hospital sector.

Adv Kurt Worrall-Clare, CEO: HASA, explained that there was no law that allowed private hospitals to manage public hospitals. As a result, he maintained that the regulatory environment was restrictive as opposed to empowering.

Mr Mseleku explained that the policy basis for PPPs and their oversight was located with National Treasury, because it had to do with issues of payment and budgeting. The Department was looking at whether these partnerships would not cost the Department more, such as was the case at Chief Albert Luthuli Hospital. Therefore, in its approach to PPPs, the Department remained cautious and thoroughly analysed any impact on health cost.

Dr Lithlhakanyane responded that PPPs were generally initiated by the provincial departments of Health and not by National Treasury. He stated that one could not compare PPPs because they were never the same; they all addressed different challenges. He admitted that the industry had learnt lessons from its experiences with Albert Luthuli Hospital.

Mr M Waters (DA) questioned whether private hospitals offered a better quality of service than public hospitals.

Ms M Madumisa (ANC) examined whether the Department agreed with the international ranking that was presented by HASA.

Mr Mseleku stated that the public sector was leading in the world from a clinical point of view. In addition, he did not dispute the ranking, but stated these rankings often differed depending on who did the evaluations.

Dr Matlala clarified that HASA did not do self-examination, and that the data was independently produced by the Monitor Group, which operated from Harvard University.

Mr A Madella (ANC) was pleased to hear that the Department’s door was open, albeit not as wide as the private hospital sector had wanted. He was particularly concerned about the poor treatment given to individuals with no or inadequate medical cover by the private healthcare sector, particularly in emergency situations. This claim was supplemented with anecdotal evidence.

Adv Kurt Worrall-Clare replied that section 5 of the National Health Act placed an obligation on the health establishment and health professionals not to deny emergency healthcare. Furthermore, he stated that it would be difficult to respond to anecdotal evidence but conceded that that there were probably some unfortunate cases.

Mr Waters sought clarity whether the private hospital sector asked the Minister to intervene and establish regulations for the industry during their Indaba with her in September 2007.

Mr Friedland clarified that the industry did not ask to be regulated and maintained that the industry was not self-sustainable.

Mr Waters questioned what government should spend on healthcare in terms of the Abuja Declaration.

Mr Friedland responded that governments were supposed to spend 15% of Gross Domestic Product (GDP) on healthcare. The government currently spent 8%. 60% was funded by the private sector. Lastly, he declared that it would be in the interests of achieving access and affordability if the government complied with the agreement.

An official from National Treasury clarified that the Abuja Declaration Agreement stipulated that 15% of government spending, and not of GDP, should be allocated to healthcare. He also indicated that South Africa currently spent approximately 13, 5% of its budget on health.

Mr Waters enquired what impediments prevented the private healthcare sector from training more nurses.

Dr Lithlhakanyane explained that private hospitals had their own internal staff that they trained and employed. In addition, they trained learners through learnership arrangements with the Sector Education and Training Authorities (SETAs). In his estimation, the problems existed with the latter group because private hospitals were not able to plan because there was not a consistent allocation of learnerships.

Mr S Dithebe (ANC) asked how the price structure was negotiated between the private hospitals and the medical aid schemes.

Mr Friedland replied that there were six administrators who negotiated on behalf of 76% of all medical schemes. This meant that, in effect, the annual tariffs were negotiated by six players.

Dr Rabinowitz recalled that the sector had previously made a statement that it would benefit from transparency with regards to hospital cost, pricing, administrative cost and medical devices. For that reason, she expressed disappointment that the presentation had mentioned nothing about all of this and the kickbacks between hospitals and medical schemes that pushed up prices.

Mr Friedland responded that there was a furore in the previous year about costs and that this had since been remedied. He asserted that there was complete transparency of costs, and agreed that medical manufacturers should be scrutinised.

Mr Mseleku suggested that it would be prudent for the Committee to hear other views at a later stage so that the total picture was presented. He maintained that the private sector called for regulations. He agreed that it was not pleasant to be accused of lying. Lastly, he reiterated that the Department had never closed its doors to the private healthcare sector.

The Chairperson stated that the Committee would endorse the proposal of the DG and engage other role-players in the future. He stated that the Committee still had many questions that it wanted to pursue but could not do so now because of time constraints.

Tobacco Products Control Amendment Bill
The Committee continued with its deliberations on the Tobacco Products Control Amendment Bill (the Bill)

Clause 7
The Chairperson reminded Members that the tobacco manufacturers had advanced differing views regarding advertising of tobacco products at the point of sale. He noted that the Clause currently provided that this matter should be dealt with in the Regulations.

Ms C Dudley (ACDP) proposed that the clause be maintained.

Mr Waters supported this view and reminded Members that the Department could be directed in the Bill to present the Regulations to the Committee before their enactment.

The Committee unanimously endorsed the view that the matter be left to the Regulations, as currently reflected in the Bill.

The Chairperson highlighted that there was a proposal to delete subparagraph (iii). He explained that this amendment was aimed at avoiding conflict with any South African Revenue Services (SARS) regulations

Mr Thami Mseleku, Director-General, Department of Health, concurred with the amendment. He reasoned that subparagraph (iii) did not fall within the mandate of the Department. (See Proposed Amendments Document).

The Committee endorsed this explanation.

Members approved all the consequential amendments in the remaining subclauses.

Clause 8
Ms R Mashigo (ANC) observed that subclause 8(2) was silent about what would happen to individuals who could not pay the stated fine, and speculated whether such individuals would be sent to prison.

Mr Mukesh Vassen, Parliamentary Legal Advisor, explained that such a decision was left to the discretion of the court.

Mr Dithebe maintained that there was other legal precedent that addressed the issue of whether people could be imprisoned if they failed to pay a fine. He felt that the Committee need not be so specific in the Bill, and encroach into an area that was outside its jurisdiction.

The Chairperson countered that there were several pieces of legislation that provided for a fine or alternatively imprisonment or both. In addition, he argued that the latitude of the court’s discretion should be limited in this regard.

Mr Mseleku explained that the clause was not being prescriptive, but was providing a limit regarding the amount of the fine that could be imposed.

The Chairperson indicated that one of the reasons why the fine was augmented was precisely because of the blatant violation of the prescriptions.

Ms Xolisa Mdludlu, Principal State Law Adviser, Office of the Chief State Law Adviser, explained that the Adjustments of Fines Act catered for anything that the specific legislation had not provided for.

Mr Mseleku mentioned that in the 1999 Act, there was a clause that provided for a fine of R10 000 and also included the words “or to such imprisonment as may be determined”. In this instance, it was clear that the courts were being presented with two options, either to fine or to imprison a person. This clause was amended so that the courts could use whatever alternative type of punishment they believed to be appropriate.

Mr Waters commented that he would be against the inclusion of imprisonment as an alternative sentence. Instead, he favoured community service as an alternative because it would have greater impact on a transgressor.

Ms Dudley wondered whether the legislation referred to by the State Law Adviser, would guide the courts to the degree that the Committee wanted.

Ms Mdludlu reiterated that the Adjustments of Fines Act, which was continuously reviewed by the Minister of Justice, took care of everything.

Dr R Rabinowitz (IFP) suggested the insertion of community service into the subclause

Mr Dithebe remarked that the Committee should not be oblivious to the objectives that it wanted to achieve. Accordingly, he was not convinced that community service was a sufficient deterrent for potential transgressors of the law.

Dr Rabinowitz disagreed with the claim that community service was not an adequate deterrent, and asserted that for some people it was worse than prison.

Mr Waters mentioned that the increase of the maximum fine to R100 000 gave the courts an indication about how seriously the legislators viewed this matter. He was convinced that the courts would apply their minds and take this into account when considering the appropriate punishment.

The Chairperson repeated that the very fact that there was an increase in the fine indicated the seriousness of the matter. As a result, he proposed that the clause be retained in its current form.

The Committee acceded to this recommendation.

Mr Mseleku pointed out that reference to clause 3(7) should be deleted because that particular clause was excised by the Committee. Moreover, he proposed that reference to clause 4(4) in subclause 8 (3) should be omitted, because it was already listed as an offence under subclause 8 (2). (See Proposed Amendments Document).

This was agreed to

Clause 9
The Chairperson enquired whether Members wanted to legislate that the Regulations must come to the Committee before their enactment. On a personal note, he declared that he would not necessarily wish to prescribe this in the law but would take it as part of the good will that the Department would brief the Committee when the Regulations were in place.

Mr Dithebe stated that the Committee should be apprised of the content of the regulations. However, he agreed with the Chairperson that the Committee did not need to legislate for this.

Ms R Mashigo (ANC) insisted that the Committee should have something to do with the Regulations.

Ms Dudley mentioned that the Committee could call for the Regulations, without putting it into the legislation.

Mr Waters affirmed that the Committee must see the Regulations before their enactment.

Dr Rabinowitz suggested that the Committee should put the onus on the Executive to come to the Committee with the regulations before enacting them. She proposed that such an instruction could be in the form of a formal resolution of the Committee.

The Committee decided that a formal resolution, which instructed the Department to present the Regulations to the Committee before their enactment, would be drafted.

Clause 1
Ms Dudley identified a loophole in the Department’s proposed amendments to the definition of advertisement. She recognised that there should be an exclusion for commercial communication within the industry. However she felt that this could be exploited in the clause as it was currently worded. In light of this, she recommended the insertion of an additional clause to qualify such communications. Her proposed clause read as follows: “A commercial communication between a tobacco manufacturer and its third parties, employees and shareholders should not be directed either directly or indirectly at consumers and only contain factual information about the product, its characteristics and price”.

Mr Mseleku voiced his support for this proposal.

It was agreed that the proposal be reformulated as suggested by Ms Dudley.

Due to time constraints, the Committee concluded their deliberations at this point.

The meeting was adjourned.


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