National Health Insurance (NHI) Bill: public hearings day 23

26 January 2022

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Meeting Summary

NHI: Tracking the bill through Parliament

In this virtual meeting, attended by the Deputy Minister, the Committee continued its public hearings on the National Health Insurance (NHI) Bill. It heard oral submissions from Mediclinic Southern Africa, the Hospital Association of South Africa (HASA), the provincial Department of Health of the Western Cape, the South African Local Government Association (SALGA), and Life Healthcare Group. The submissions endorsed the Bill’s commitment to universal health coverage and health system reform, but raised perceived deficiencies in the NHI model proposed in the current Bill.

Mediclinic argued that there were three grounds on which the Bill was potentially unconstitutional: its proposed procurement model was not compliant with constitutional standards; it did not provide reasonable certainty about the nature and scope of the NHI scheme; and it might breach the right of access to healthcare services. Mediclinic’s concern about the last point – the Bill’s possible damage to access to healthcare – arose from such factors as inadequate resources for implementation; the lack of a viable role for private hospitals in NHI; and the erosion of existing private medical aid cover.

HASA proposed various amendments to the Bill, especially to its governance framework. It suggested that, to avoid unintended consequences, government should reconsider the timing of the roll-out of NHI and of the various amendments the Bill effected to other acts. NHI should be implemented not on a time-based approach but on a milestone-based approach. Government should also consider shifting to a multi-funder NHI, to mitigate against the risks of a single-fund system. Finally, the Bill was narrow: it focused on financing mechanisms and neglected other obstacles to healthcare access, especially the structural shortage of healthcare workers.

The Western Cape Department of Health agreed with HASA that NHI, as proposed in the Bill, was a narrow financing mechanism and did not consider the other key building blocks of the healthcare system. Thus the Bill would not achieve universal health coverage. It also drastically and inappropriately reduced the powers of the provinces. The Department advocated for a single healthcare system with multiple entry-points, and for a strong role for the provinces in NHI, including as contracting units. This was preferable to the current proposal for centralised procurement, which carried the risk of corruption and which, as other submissions also noted, vested considerable powers in the national Minister.

SALGA was concerned that the Bill paid little attention to, and provided little clarity about, the role of local government in NHI. Local government provided environmental health and other non-personal health services, such as water and sanitation, and metropolitan municipalities were responsible for primary healthcare functions. If local government was to continue to play these roles under NHI, it would require additional funding. Infrastructure and human resources would also be crucial to implementing NHI.

Life Healthcare strongly believed that NHI should be administered through a single-fund, multi-payer system, which would reduce operational risk and encourage efficiency. Moreover, the objectives of NHI would not be met until the health system had been capacitated, especially in human resources and infrastructure, so NHI should be implemented through a milestone-based approach. NHI also required public-private collaboration, especially because the use of existing private-sector capacity could help accelerate implementation.

The ANC frequently challenged the opinions expressed in the submissions, leading to a brief verbal disagreement with opposition parties, who questioned whether its approach was appropriate for a public hearing. ANC Members asked whether the organisations, by criticising NHI, were implicitly advocating for the retention of the inequitable status quo. They also discussed deficiencies in the private health sector, including high fragmentation, geographic concentration, escalating costs, and even socioeconomic discrimination against members of the public. Opposition parties, however, took up the submissions’ emphasis on the capacity of the healthcare system. The EFF raised the paucity of healthcare infrastructure in rural areas, while the DA raised the skills shortage in the healthcare sector, and both expressed concern that the NHI Bill would fail to address, or would even exacerbate, these problems.

Members also asked the Western Cape Department of Health and SALGA about the envisaged role of local and provincial governments in NHI. They asked the Department why it was opposed to transferring control of the central hospitals to the national government, and how its avowed willingness to serve as a laboratory for piloting NHI was consistent with its reluctance to implement national proposals in the past. They asked SALGA whether it would be satisfied for the NHI Fund to contract directly with municipal clinics as service providers, and whether the metros would be willing to relinquish their healthcare functions and assets.

Meeting report

The Committee noted apologies from Dr S Thembekwayo (EFF), Ms M Hlengwa (IFP), Ms M Sukers (ACDP), and Mr P Van Staden (FF+).

The Chairperson reminded Members of the parliamentary rules for virtual meetings.

Submission: Mediclinic Southern Africa
Mr Koert Pretorius, Chief Executive Officer, Mediclinic Southern Africa, said that Mediclinic Southern Africa was fully committed to the imperative of universal access to quality health care and supported the objectives of the National Health Insurance (NHI) Bill. Importantly, the Bill included proposals for strategic purchasing principles, a purchaser-provider split, and a package centred on primary healthcare, all of which Mediclinic supported. However, Mediclinic believed that there were rectifiable shortcomings in the current Bill which could prevent the legislation from achieving its objectives.

Constitutional concerns

Adv Karrisha Pillay SC said that Mediclinic was concerned that the Bill was potentially unconstitutional, on three main grounds:
Certain provisions of the Bill, governing the procurement of services by the NHI, did not comply with the procurement standards set out in section 217 of the Constitution;
The Bill did not indicate with reasonable certainty the nature and scope of the NHI scheme; and
The Bill might breach the right of access to healthcare set out in section 27 of the Constitution.

On the third point, Adv Michelle Norton SC discussed the key reasons that NHI threatened access to healthcare. These were:
-There were inadequate financial resources and human resources for the effective implementation of NHI;
-The Bill offered virtually no role (or no viable role) to private hospitals; and
-The Bill eroded private medical cover, especially by limiting it to “complementary cover,” a phrase whose meaning was not clear.

Recommendations

Mediclinic proposed the following measures to address its concerns with the Bill:
-Stagger implementation based on costing and human resources estimates;
-Ensure a comprehensive and sustainable role for private providers; 
-Remove the limitations on medical scheme cover;
-Clarify various issues, including the nature and scope of services available under and outside the NHI scheme;

-Provide for a fair and transparent methodology for reviewing the scope of services covered by NHI;
-Amend the procurement model, with decision-making entrusted to an independent body; and
-Establish an independent body to determine reimbursement models and tariffs.  

(See presentation.)

Discussion
The Chairperson reminded Members of the Committee’s time constraints – the Committee had allocated 30 minutes to discussion, instead of the 45 minutes allocated at earlier stages of the public hearings.

Mr T Munyai (ANC) said that the Bill was controversial and all organisations making submissions should be treated equally. He therefore proposed that the time allocated for discussion should not change.

The Chairperson replied that the Committee was attempting to accommodate more submissions per day, so that it could finalise its work timeously. However, one organisation which had been scheduled to make a submission had withdrawn from that day’s agenda. In fact, the Committee secretary now informed him that the time allocation had not in fact changed. The Committee would continue to allocate 45 minutes for discussion.

Ms A Gela (ANC) noted Mediclinic’s concern about microeconomic factors. Given its experience in the industry, did Mediclinic believe that there were likely to be efficiency benefits from the monopsony purchasing power and economies of scale envisaged under NHI?

Mr Pretorius replied that bigger schemes certainly did achieve economies of scale and therefore were more efficient. That would be one of the benefits of NHI.

Ms Gela noted Mediclinic’s concern that there was uncertainty around the nature and scope of services to be funded by the NHI Fund, as well as its concern about the role of the Benefits Advisory Committee in determining the services funded. Was Mediclinic aware of clause 15(3)(b) of the Bill, as well as clauses 25 and 57(5)(c)?

Adv Norton replied that Mediclinic’s main concern was that there was currently no certainty: the Bill did not make it clear what the scope of NHI benefits would be. There was also a possible contradiction as to who was to determine the scope of benefits – whether it would be the Minister of Health or the Benefits Advisory Committee. These were not questions that could be left until later – the legislation had to provide reasonable certainty to all users and to all service providers.

Ms H Ismail (DA) noted Mediclinic’s warning about the extent of the Minister of Health’s influence over the NHI Fund, which increased the risk of governance failures. Could Mediclinic recommend mechanisms which could be used to prevent corruption and mismanagement at the fund? What specific amendments should be made to the Bill? Moreover, Mediclinic wanted the private sector to be fully included in the Bill – how, specifically, should the Bill be amended to achieve that? Finally, did Mediclinic support or agree with NHI as envisaged by the Bill in its current form?

Ms M Clarke (DA) said that Mediclinic had raised interesting points which the Committee should consider. Mr Pretorius had said that the pursuit of universal health coverage should be “informed by the South African context” (see slide 9). Could he elaborate on that point? What implications would the current economic climate have on the implementation of NHI? How would the implementation of NHI be affected if there were critical shortages in financial and human resources? Would that decrease access to essential services?

She asked why, in Mediclinic’s view, NHI was not based on a hybrid financing model. Mediclinic was concerned that the Bill would decrease access to healthcare services – why would it have that effect, rather than its intended effect of expanding equitable access? Did Mediclinic believe that an independent ombudsman could improve the transparency and accountability of NHI? How did Mediclinic think that the “wellness” aspect of health should be pursued under NHI? What was its view on a parallel health system, as opposed to a blended approach? Discovery had made important points on that issue in its submission the previous day. Finally, did Mediclinic think that the NHI Bill would be successful and achieve its outcomes if implemented, given the current status quo in public hospitals?

Mr Pretorius replied that Mediclinic fully supported a hybrid financing model. In the national health system of the United Kingdom, there was excellent cooperation between the public and private sectors – the National Health Service (NHS) often outsourced services to private hospitals. In South Africa, the reality was that no NHI system would be successful unless it fully utilised the resources of both the public sector and the private sector. Any system that harmed either sector would not achieve the objectives of NHI. Mediclinic would also support proposals such as an independent ombudsman and independent quality measurement – some of these measures had already been recommended in the report of the Competition Commission’s Health Market Inquiry.

Ms X Havard (ANC) said that Mediclinic had mentioned several concerns about the Bill’s constitutionality, including concerns about the reimbursement framework set out in the Bill. Was it aware of clause 26, which required the establishment of Health Care Benefits Pricing Committee? Was it aware of clauses 10(1)(e) and 25(5)? Had the delegates read the White Paper on NHI, which outlined reimbursement mechanisms based on the level of care?

Adv Norton replied that Mediclinic would respond in writing once its legal team had looked more closely at the relevant clauses.

Ms Havard noted Ms Pillay’s point that section 27 of the Constitution imposed a negative obligation on the state not to take steps which were retrogressive with respect to access to healthcare (see slide 13). What was the basis for Mediclinic’s concern in this regard? In its understanding, when could certain rights justifiably be limited?

Ms N Chirwa (EFF) said that one of the key points in Mediclinic’s submission was about the effect of NHI on access to healthcare. This point had been raised in the past. NHI did not resolve the problem of inadequate access to healthcare in rural areas and townships, because there were no private healthcare facilities in those areas. Residents of those areas would remain reliant on public facilities in their current form and current condition. There was no clear plan on the issue of infrastructure and broadening access to healthcare in rural areas, especially in the Eastern Cape – NHI did not address these problems. The problem of inadequate access had been apparent during the COVID-19 pandemic. In Mediclinic’s view, which bodies and people should be involved in a prospective investigation into the question of NHI’s likely effect on access to healthcare? Personally, she would like to pursue this question further.

Mr M Sokatsha (ANC) said that Mediclinic was anxious about a potential conflict between the Benefits Advisory Committee and the Minister in the determination of healthcare services. He asked Mediclinic to clarify its concern, drawing on its industry experience and with reference to prescribed minimum benefits (PMBs). There were challenges with PMBs, such as limited funding for primary healthcare.

He said that Mediclinic had observed a contradiction between clause 6(o) and clause 33 of the Bill. According to clause 6(o), if a healthcare service was not covered by the NHI Fund, a patient could purchase that service through a “complementary voluntary medical insurance scheme,” through any other private health insurance scheme, or out-of-pocket. According to clause 33, once NHI had been fully implemented, medical schemes could “only offer complementary cover to services not reimbursable by the Fund.” Where was the contradiction?

Adv Norton reminded Members of the distinction she had drawn between covered paid services, covered unpaid services, and precluded services (see slide 19). Clause 33 said that medical schemes would be restricted to covering “services not reimbursable by the Fund.” Clause 6(o) referred to “services that are not covered by the Fund.” It was crucial to establish the meaning of these two phrases: “not reimbursable” and “not covered.” Why had different phrases been used in each of the clauses? It was important if there were covered unpaid services – those normally covered by the Fund but not reimbursed in specific instances – which private medical schemes were prohibited from covering.

For example, suppose she, a user of the NHI Fund, needed a hip replacement, a service that the Fund covered in principle. Suppose that it denied to cover the service in her case for some medical or procedural reason. The hip replacement was then a covered unpaid service. Could she rely on private medical cover for such a service? She needed to know at the outset, so that she knew what kind of cover she could and should take out to shield against the eventuality of NHI denying to cover the service. Precluded services were not reimbursable and never covered by the NHI Fund –cosmetic surgery might be an example. One clearly had to pay for precluded services out of pocket or through private medical aid. In the case of covered unpaid services, however, one might be left “high and dry” if at a later point the NHI Fund declined to pay for the service.

On Mediclinic’s concern about the limited role of private hospitals in NHI, Mr Munyai said that the submission did not provide “the whole picture” of the challenges faced in the private sector. What regulatory dispensation currently governed private hospitals, and what was Mediclinic’s view of the regulatory process? What was Mediclinic’s position on the findings of the Health Market Inquiry? The inquiry had reported on market concentration, vulnerability to collusion with formal and informal cartels, benefits from excessive utilisation, a lack of scrutiny of the quality of services, and barriers to entry in the sector. According to the inquiry, these factors had contributed to the high cost of private healthcare. Mr Pretorius had mentioned increased collaboration between the public and private healthcare sectors during the COVID-19 pandemic (see slide 10), but that had arisen because both sectors had been overwhelmed, making collaboration unavoidable.

Mr Roly Buys, consultant and former Chief Strategy Officer, Mediclinic Southern Africa, sought to clarify the Health Market Inquiry’s findings about the private sector. It had not found any evidence of collusion or cartels, nor had it found excessive profits in the hospital groups – their profit margins were evidently reasonable. The inquiry had found a few disciplines in which there had been an unexplained increase in utilisation, but private hospitals had not contributed to that – the increased utilisation was due to arrangements between the doctors and patients in question.

On quality standards, he said that oversight was provided by the Office of Health Standards Compliance and by the provinces, who carried out inspections. The inquiry had, however, recognised deficiencies insofar as high-quality data was not made public. In fact, Mediclinic was already publishing its own data on its website, but there was no industry-wide reporting. Establishing such a reporting system required enabling legislation or regulations from the national Department of Health (NDoH) or the Minister. To address the inquiry’s findings, the Minister should find an organisation to collect the desired data, and should then evaluate and publish it regularly, so that there were public benchmarks for the industry.

Finally, on market concentration, Mr Buys said that it was difficult to measure the size of the market without a complete data set. However, currently, 34% of the market was owned by small or independent players, not by Mediclinic, Netcare, or Life Healthcare. Thus, over the last four or five years, a significant degree of competition had emerged in the market. Overall, the Health Market Inquiry had not made any significant negative findings about the private hospital industry. Mediclinic was prepared to accept and work with any of the inquiry’s recommendations.

Mr Pretorius confirmed that the Health Market Inquiry had not made any negative findings about profit margins or tariffs in the private hospital sector in South Africa.

Mr Munyai asked whether Mediclinic was afraid of this democratic process, by which Parliament was seeking to reform the “skewed, racial,” and “two-tiered” healthcare system currently in effect in South Africa. Under the current system, the private sector received 8% of GDP, or over R400 billion. Section 27(2) of the Constitution obligated the state to “take reasonable legislative and other measures, within its available resources” to achieve universal access to healthcare. Laws were often passed without the state having money in its “pocket” for their implementation – for example, the government had recently accepted a loan from the World Bank. How could it be unconstitutional for everybody to have access to healthcare services, and for the state to take reasonable measures to ensure the same? How could it be unconstitutional for everybody to have equality, dignity, and the right to life, as provided for by the Constitution? Was Mediclinic’s submission, and its interpretation of the Constitution, “based on greed” rather than on genuine concern for the collective interests of the citizenry? In his view, the submission reflected the interests of “big business” and “monopoly.”

He said that the COVID-19 pandemic had demonstrated the insufficiency of the infrastructure in the public healthcare sector, and, as reported by the Health Market Inquiry, there were also various problems in the private sector. Was this not precisely the reason that NHI was needed? Also, the state, not the private sector, had procured the COVID-19 vaccine on behalf of all citizens. That had been successful, and the courts had defeated legal challenges to that model. In his view, the correct approach was to pool the country’s collective resources to address the health needs of all citizens. In another example, he and his brother had been involved in a car accident. His brother had been more severely injured than him, but the technicians in the ER24 ambulance had wanted to attend only to him, and not to his brother, because only he had private medical aid coverage. NHI sought to address such issues.

Mr Pretorius replied that Mediclinic was not defending its narrow interests, but rather was concerned about the delivery of healthcare to all South Africans. Its argument was that the private sector had very good resources and wanted to be part of the country’s future healthcare dispensation. The public and private sectors should work together, and NHI should leverage the strengths of both sectors.

Adv Pillay thought that the constitutionality of the Bill had been a common thread running through many of Members’ questions, in various forms. She agreed with Mr Munyai that the purpose and objectives of the Bill – to promote equitable access to healthcare – were unlikely ever to be found unconstitutional by a court. Where the Bill was possibly unconstitutional was in the mechanisms by which it proposed to meet its objectives. The Constitutional Court had found that such mechanisms had to be rational, had to be capable of meeting the ultimate objective, and had to provide sufficient certainty and detail so that people could arrange their affairs in accordance with the legislation. Mediclinic’s primary concern was that the Bill did not provide sufficient clarity. It was unclear what services fell inside or outside NHI, and therefore it was unclear how people could regulate their affairs to ensure that they could access healthcare services, as provided for by section 27 of the Constitution. The Bill said that NHI users would get services which did not exceed the available and appropriate resources, according to the formulary; those services could not be denied “on unreasonable grounds” and would be dispensed “within a reasonable time period.” Yet there was no certainty, on any of those points, about the criteria and about the likely outcome in a given situation.

The Chairperson asked for further information about Mediclinic’s operations in the United Kingdom, whose NHS was predominantly publicly funded. How did conditions in the United Kingdom compare to those in South Africa?

Mr Pretorius replied that the difference between the NHS model and the NHI model currently proposed in the Bill was that, in the United Kingdom, a contributor to the NHS fund was still allowed to take out private medical scheme cover, and the private cover did not have to be limited to complementary cover only. It was a hybrid financing model, and patients had freedom of choice. Also, one could not opt out of contributing to the national health fund in the United Kingdom. Mediclinic supported that principle and thought it should apply in the NHI system.

The Chairperson noted that Mediclinic’s submission quoted the White Paper on NHI, which called NHI “a substantial policy shift that will necessitate massive reorganisation of the current healthcare system.” Mediclinic had questioned the state’s intention to effect such a shift, warning that it constituted a “far-reaching upheaval” (see page 13). Could Mediclinic elaborate on the “upheaval” it anticipated? Would it prefer the status quo to such an upheaval?

Mr Pretorius replied that Mediclinic was not, in principle, opposed to the shift. It merely intended to point out that NHI would constitute a “radical overhaul” – the country would move from its current budget system to a system where funds would be pooled, with taxpayer contributions, and dispensed with a purchaser-provider split. Mediclinic also intended to point out that the new system would require rigorous governance.

He said that, due to time constraints, Mediclinic would reply in writing to all of Members’ unanswered questions. He reiterated that Mediclinic supported universal health coverage and the objectives of NHI. It had concerns about some details of the current draft Bill, but it thought that the problems could be solved, and it was willing and able to participate. He wished the Committee good luck with the process.

The Chairperson said that Members learned from the submissions and he thought that those making submissions also learned from Members’ questions. The Committee would await Mediclinic’s written responses.

Submission: Hospital Association of South Africa
Mr Dumisani Bomela, Chief Executive Officer, Hospital Association of South Africa (HASA), said that HASA agreed with the objective of universal health coverage, with an iterative NHI expansion, and with the Bill’s subscription to the social solidarity principle. However, HASA believed that various provisions should be amended to avert unintended consequences, and that the Bill was overly narrow, focusing on the financing system and neglecting other obstacles to healthcare access and universal coverage.

Ms Melanie Da Costa, board member, HASA, discussed in general terms the “human-centred” approach to healthcare, and some key obstacles to equity and sustainability in South Africa. Key were structural shortages of doctors, nurses, medical schools, and hospital beds, with the expansion of medical training failing to keep up with population growth. She also discussed the purchasing model proposed in the Bill, particularly raising concerns about the phasing in of NHI and the phasing out of tax credits, and about the importance of transparent and scientific pricing under a monopsony system.

Recommendations

She outlined various proposed amendments to the Bill, including to:
-Stipulate that quality and sustainability should be considered when the NHI Fund procures healthcare services;
-Clearly set out the conditions, timing and guarantee of reimbursement to service providers;
-Stipulate that the Benefits Pricing Committee should be independent and incorporate various additional areas of expertise;
-Consider shifting to an integrated multi-funder NHI and removing the restrictions on additional funding after contributing to NHI, especially to mitigate against the systemic and financial risk of a single-fund system;
-Replace the dates in clause 57 with clear and measurable milestones, in dimensions including the expansion of priority services and population coverage; and
-Refrain from immediately effecting the legislative amendments in clause 58 and the schedule, but rather effect such amendments following public participation once the NHI Fund was practically established.

Dr Bomela said that HASA agreed with previous submissions about various governance concerns, including in regard to the separation of responsibilities in the Bill and the concentration of powers in the Minister’s office. He outlined various additional proposals, including:
-The NHI Fund should not be exempt from the Competition Act;
-The board should be appointed by Parliament, following consultation with the Minister;
-The Stakeholder Advisory Committee should include business; and
-The delegation of ministerial powers should not apply to the appointment of structures and committees.

(See presentation.)

Discussion
Ms Gela said that HASA had proposed amendments to clause 55 which appeared to insist on continuing to define the South African health system in terms of the segregations that currently existed in the system. Clause 55 addressed healthcare establishments such as hospitals without distinguishing between public and private facilities. What was missing from the clause? What phrase should replace “accredited and contracted health care service providers” in the Bill?

Ms Da Costa replied that HASA had mentioned clause 55 (see slide 16) only to acknowledge that purchasing from private hospitals might be implemented at a later phase of the implementation of NHI.

Mr E Siwela (ANC) asked for HASA’s views on the certificate of need as it applied to NHI. One of the things that had to be addressed in the private hospital market was the concentration of private facilities in metropolitan areas – the distribution of private facilities did not always align with healthcare needs, especially in the rural provinces.

Ms Clara Findlay, board member, HASA, replied that the draft regulations on certificate of need had been published the previous year. The draft regulations affected a huge number of healthcare institutions. They covered both health agencies and health facilities, and thus spanned every kind of healthcare facility in both the private sector and the public sector. HASA, and many of its members, had submitted comprehensive comments on the draft regulations, and wanted to engage with NDoH. To her knowledge, there had not been any developments since then. The regulations certainly had to be debated and considered very carefully, considering the number of institutions that they would affect.

In reference to Dr Bomela’s concluding remarks (see slide 33), Mr Siwela asked whether HASA was aware of the Presidential Health Compact and what the compact said about the role of healthcare system strengthening in enabling NHI.

The Chairperson also asked whether HASA was aware of the Presidential Health Compact and its recommendations.

Ms Da Costa replied that HASA had participated thoroughly in the Presidential Health Compact. The compact contained many recommendations, so HASA understood that implementation might take time, but it was involved and prepared to learn or assist as needed.

Ms Havard asked what HASA meant when it referred to an “iterative” approach and a “milestone” approach. What measurable milestones had HASA identified? How could the Bill include such milestones in an iterative way, as HASA proposed?

Ms Da Costa replied that Business Unity South Africa (BUSA) had done very comprehensive work on this topic, with the collaboration of various healthcare providers. The BUSA document had been submitted to the National Economic Development and Labour Council (Nedlac), but HASA would send a copy to the Committee.

Mr Sokatsha noted that HASA objected to the single-fund model and recommended that the existing multi-payer system should be maintained. Why should the Committee consider retaining the status quo, when the status quo continued to fall short of providing optimal and equitable healthcare to all citizens?

Mr Munyai noted HASA’s concern about the possible unintended consequences of the funding system proposed in the Bill (see slide 20). What unintended consequences specifically did HASA think the system could have?

He asked why private ambulances discriminated against accident victims on the basis of their wealth. He had asked this question of Mediclinic, which was in the same industry as HASA, but it had not provided an answer. He repeated his story of an ER24 ambulance denying his brother care at the scene of a car accident. The ambulance had thereby violated section 27(3) of the Constitution, which said that “No one may be refused emergency medical treatment.” He had heard many similar anecdotes. Why had this happened, and what should be done about it? NHI would not be discriminatory in this way.

He said that HASA seemed to want to achieve universal health coverage without NHI. He was hearing persistent questions about the availability of resources with which to implement the NHI Bill. But this was not the first bill that Parliament was dealing with, and it was standard practice for the Minister of Finance to find financing to implement policies and acts of Parliament only after the government had decided to implement them. Why should the availability of resources be a precondition for the passage of the legislation, given that citizens paid taxes? NHI could be funded through general taxation. Why did HASA believe that the government would not find funds to implement the Bill?

He asked whether HASA was “singing for the benefit of their members.” Did it want the existing two-tiered, racially skewed system to persist? The private sector currently received 8% of GDP, accounting for more than R400 billion.

On a point of order, Ms E Wilson (DA) said that this was the second time in the current meeting that Mr Munyai had accused an organisation of “being racist and acting on racial grounds only.” She thought that accusation was unsound and had been shown to be unsound in the public hearings the day before. The Committee should not pursue that line of questioning or cast such aspersions about those making submissions.

Mr Munyai replied that Ms Wilson had misunderstood him. He was arguing that the current status quo was a “racial, two-tiered” system, which failed to address inequality.

Ms Wilson interjected inaudibly. [recording 1: 02.44.42]

Mr Munyai said that he was speaking about the current policy, not about HASA itself. What else but “racial” should one call an unequal, two-tiered system?

On a point of order, Ms Chirwa said that she thought the Committee was exceeding its purview during the public hearings. She had raised the same point during the NHI public hearings the year before. During public hearings, Members were supposed to listen to the submissions, and later to consider them as a Committee. Though they could ask clarity-seeking questions, their central task was not to debate, analyse, or share opinions, but to listen to the public. Everyone was aware that “racism and systemic oppression” were features of the existing healthcare system, but she cautioned against Members’ “apparent intimidation” of those making submissions.

The Chairperson said that Mr Munyai had responded to Ms Wilson, who had accepted his explanation, and could now respond to Ms Chirwa.

Ms Wilson clarified that she did not accept Mr Munyai’s explanation. In fact, she disagreed with it, but the Committee could discuss that disagreement in a correct manner in a later meeting.

Responding to Ms Chirwa, Mr Munyai said that he would clarify his questions. The current status quo did not fulfil every person’s right of access to healthcare, and section 27(2) of the Constitution obligated the state to take reasonable measures to address this. The private sector received 8% of GDP, over R400 billion, while providing coverage to only 16% of the population – the rest of the population were “not really receiving care.” Would HASA be satisfied if this status quo persisted? Moreover, did HASA want intergovernmental relations, and a multi-sectoral approach, to be a precondition for the implementation of NHI? Intergovernmental relations would be ongoing both before and after the passage of the NHI Bill. He also repeated his question about his car accident.

Ms Wilson interrupted to point out that Mr Munyai was repeating himself.

Mr Munyai asked, in conclusion, whether HASA wanted the status quo to persist.

The Chairperson asked Members to behave properly and refrain from interjecting, given that the meeting was being broadcast live and they were supposed to “be an example” to the public.

Mr Sokatsha said that Ms Chirwa should avoid “grandstanding.” He did not recall Ms Chirwa raising the procedural point she said she had raised in the past. In his recollection, the Committee had met and had made a collective decision about how to pose appropriate questions to those making submissions during the public hearings.

The Chairperson said that Members should be mindful of their roles and responsibilities. They should be mindful of what they said to those making submissions, in order to avoid causing offence. As Mr Sokatsha had mentioned, the Committee had taken a decision to work respectfully with all who made submissions – though he was not implying that anybody had been disrespectful.

Mr Munyai asked what ruling the Chairperson had made on Ms Wilson and Ms Chirwa’s points of order.

The Chairperson replied that the Committee had noted their points, and he had reminded Members of their collective decision to be “gentle and proper” while discussing submissions – though, as he had said, this did not imply that anybody had been unkind or improper thus far. Members would discuss their substantive disagreements in a later meeting, as Ms Wilson had said.

Responding to Mr Munyai’s questions, Dr Bomela said that nobody wanted to have an experience in which a family member was denied emergency medical treatment. He undertook to facilitate a proper interaction between Mr Munyai’s family and the relevant service providers. The details of the situation would have to be investigated, but Mr Munyai’s brother deserved an apology if he had wrongfully been denied emergency treatment.

Ms Da Costa acknowledged that it would have been a terrible experience for Mr Munyai, and agreed that HASA should help follow up. However, she worked for Netcare, and knew that it was “unusual” for people to be denied emergency medical treatment by private providers.

To Mr Sokatsha and Mr Munyai’s questions about the status quo, Dr Bomela said that HASA categorically opposed a perpetuation of the status quo. However, it was important to define properly what was wrong with the status quo. The main problem, on the funding side, was the high degree of fragmentation and the lack of risk-sharing. HASA believed that any pragmatic solution had to involve the widest possible risk-sharing pool. Its submission argued that this could be achieved through mechanisms other than those proposed in the current Bill. With any policy reform such as NHI, there would be risks and benefits. The potential benefits of NHI, as currently proposed, were clear. However, HASA worried about the many uncertainties and the accompanying risks. It believed its funding proposal provided for risk-sharing while better addressing the risks. Its submission also outlined that it wanted public and private facilities to be treated equally, to be accessible to people of all backgrounds, and to provide similar services to all patients who came through their doors, without discriminating on the basis of socioeconomic status.

Ms Da Costa agreed that the retention of the status quo was “the furthest thing” from what HASA wanted. HASA fundamentally agreed with the introduction of a NHI Fund to provide universal healthcare. It believed that the social solidarity principle was important and should be explicitly included in the broader NHI framework. It believed that, as far as possible, the fund should purchase services – primary healthcare services, emergency services, and hospital services – from both private and public providers. In respect of hospital services, HASA’s attitude was pragmatic: it acknowledged that private hospitals might not be incorporated into NHI until a later phase of implementation. Finally, HASA believed that private medical schemes had a role to play in NHI, to mitigate the concentration of risk. There was uncertainty, but, learning from other institutions like the Road Accident Fund, one had to ask how to structure the system to ensure that it was sustainable.

Ms Clarke said that clause 11(1) of the Bill provided for the NHI Fund to investigate complaints lodged against the fund. What was HASA’s position on this provision? Would it fuel the risk of corruption in the fund?

Ms Da Costa replied that it was not her area of expertise, but her experience suggested that, in the governance of all institutions, segregation of duties was critical.

Ms Clarke asked for HASA’s predictions about how the implementation of the Bill would affect vacancy rates in public and private hospitals.

Dr Nceba Ndzwayiba, board member, HASA, replied that HASA had conducted a study, in collaboration with NDoH, the previous year. The study had found that the skills gap would widen to a shortage of about 178,000 nurses by 2030, unless the pipeline was ramped up to produce about 20,000 qualified nurses annually. That would be a substantial increase from the 3,000 qualified nurses currently produced each year.

Mr Munyai noted that HASA objected to the role of the Minister as provided for in the Bill. Did HASA think that Parliament needed to amend the Constitution in order to change the Minister’s role? The Bill itself could not reduce the proper scope of ministerial powers.

In reference to South Africa’s limited fiscal space and macroeconomic challenges, the Chairperson asked for HASA’s view about the current escalation of costs in the private healthcare sector. Expenditure as a proportion of GDP was lower in the public sector than in the private sector, with the latter serving only 16% of the population. Would an equitable healthcare system not offer better access to services to people from different socioeconomic backgrounds?

Ms Da Costa acknowledged that there was a discrepancy in expenditure between public and private healthcare. Expenditure per capita on healthcare was low, compared to the average in Organisation for Economic Co-operation and Development (OECD) member countries. Even in the private sector, expenditure per capita was lower than in comparable countries. That had been documented in Discovery’s submission the previous day.

She said that private hospitals believed that they would be able to compete well on an “equal playing field” with public hospitals. The high costs had structural causes – such as high taxes – whose removal would increase the competitiveness of private hospitals. Some low-cost medical schemes had rates approximating the government’s Uniform Patient Fee Schedule (UPFS). She could provide further details about costs at Members’ request.

The Chairperson noted that HASA recommended an additional role for voluntary private funding beyond mere complementary cover. What was its view on duplicative cover, with both the NHI Fund and private funding covering the same services? Would that not perpetuate current inequities and therefore threaten the achievement of universal health coverage, which HASA said it supported?

Ms Da Costa replied that she understood the anxiety about duplicative cover. However, allowing the purchase of both public and private services could go a long way in incorporating the private provider base into the broader system, which HASA thought would help close the gap. That had been the case in the United Kingdom under the NHS. In an ideal world, a single fund, fully funded by taxation, might be preferable. However, that might not be practicable in South Africa. The HASA proposal would ensure certainty of coverage while NHI was being strengthened. Moreover, a strong NHI would organically crowd out private medical insurers, even if private insurance was allowed. For example, in the United Kingdom, there had been a significant drop in private medical insurance uptake during the global financial crisis of 2008 to 2010. At that point, the NHS had been purchasing from private providers for several years, and, given the cost, no rational person would purchase private insurance if he was satisfied with the service he was getting for free.

The Chairperson reminded HASA that data showed that, in South Africa, human resources in healthcare were biased towards the private sector. What was HASA’s view on that?

Ms Da Costa said that there was a skills shortage in healthcare. HASA thought that it would make a big difference to open up the purchasing of private specialists and general practitioners. However, the focus needed to be on establishing and accrediting private medical schools. Private medical schools need not be operated by or associated with private hospitals, and they could contribute to closing the human resources gap.

The Chairperson asked how HASA proposed the Bill should manage direct and indirect conflicts of interest for members of the Stakeholder Advisory Committee (see slide 32).

He noted that HASA mentioned 11 pieces of legislation affected by the Bill (see slide 33). He thought that HASA was arguing that those laws had not been considered during the drafting of the Bill. Could it elaborate?

Ms Da Costa replied that HASA’s view was not that the amendments had not been considered, but that they should be re-considered, especially in light of the phased approach to implementation. At the initial stages of NHI’s development, it might have been anticipated that the NHI Fund would be able to provide catastrophic cover sooner than such cover was likely, in reality, to be phased in.

The Chairperson asked Ms Da Costa to provide her contact details in writing for the benefit of Ms Ismail.

Concluding the discussion, Dr Bomela said that HASA had been deeply involved in the development of NHI. It had contributed to policy documents, including the white paper and the green paper. It had hosted government departments and had hosted the former Ministers, Dr Aaron Motsoaledi and Dr Zweli Mkhize, at its conferences. It had ongoing interactions with government and was committed to supporting reforms in order to increase the equity of and access to healthcare.

The Committee adjourned for an hour for lunch.

Submission: Western Cape Department of Health
Dr Nomafrench Mbombo, Western Cape provincial Minister of Health, said that the provincial Department of Health (WCDoH) would make only a short submission on the Bill, because it had submitted detailed input in 2019. Providing a preamble to the submission, she discussed the current fragmentation of the healthcare system, and the fact that access to healthcare often depended on one’s socioeconomic status, leaving many people outside the system. She provided an overview of the history of the NHI policy since 2012 and said that, for those who worked in healthcare, such as herself, it was “exciting” that there was progress towards urgently needed reform. There was nobody in the country, and especially in the healthcare sector, who could oppose health reforms in South Africa. WCDoH supported universal health coverage. Health was both a human right and a social investment, and central were the principles of accessibility, affordability, availability, and quality.

However, WCDoH was concerned about certain aspects of NHI as proposed under the current Bill. It was just like insurance – an excellent insurance policy was meaningless without guarantees that you would actually receive the services covered. In its current form, NHI would have a major and “dire” impact on the provinces, not only in terms of their purchasing power but in terms of their “stewardship” of the system. The model perpetuated obsolete binaries, such as between public and private and between national and provincial – at the end of the day, the country shared one health system. It was also discomfiting that the Bill did not mention the social determinants of health problems, such as poverty, unemployment, and inadequate access to water and sanitation. It was these social ills that the public healthcare system absorbed.

Dr Saadiq Kariem, Chief Operating Officer, WCDoH, conveyed the apologies of Dr Keith Cloete, the Head of Department, who was on leave.

Policy concerns

Dr Krishna Vallabhjee, Chief Director: Strategy and Health Support, WCDoH, said that WCDoH supported the strategic intent of the Bill. However, it had certain concerns about the architecture, distribution of roles and responsibilities, and financial flows proposed under NHI.

WCDoH’s key concerns included that the Bill:
-Would fragment the health system, especially through the role envisaged for national bodies in provincial facilities;
-Significantly reduced the scope of the provincial governments’ work and powers in the healthcare system, and left the provinces’ responsibilities unclear;
-Reallocated conditional grants and redirected the provincial equitable share;
-Made the NHI Fund a single strategic purchaser, with attendant risks such as corruption;
-Established a centralised Office of Health Products Procurement within the NHI Fund, which would require significant administrative capability;
-Vested considerable authority and power in the national Minister; and
-Did not mention the social determinants of health problems, instead focusing only on direct service delivery.

Recommendations

To address the concerns listed above, WCDoH proposed that:
-The NHI Fund and NDoH should work with the provinces, as “co-stewards” of the health system;
-Provincial departments should continue to govern the central hospitals;
-Procurement should be decentralised, with the provinces also serving as strategic purchasers;
-Provinces should become the contracting units of the NHI Fund, receiving funds, coordinating services, and managing contracts with a mix of public and private providers;
-A centralised procurement process should not be attempted until the NHI Fund had appropriate and sufficient staff, systems, and processes;
-The lines of accountability in the National Health Act and Public Finance Management Act should be retained;
-The current funding arrangements (provincial equitable shares and conditional grants) should remain in place, with the NHI Fund topped up by tax subsidies in the initial phase;
-Appropriate checks and balances, including parliamentary oversight, should be applied to the board and chief executive officer, and to their appointment; and
-The social determinants of health should be explicitly prioritised.

Dr Vallabhjee said that the health system and universal health coverage required holistic transformation beyond the introduction of a mere financing mechanism such as NHI. WCDoH was willing to become a “laboratory” for piloting and testing out aspects of universal health coverage in the Western Cape, and it was committed to working with NDoH.

WCDoH believed that further important principles included the following:
-Public and private resources should be pooled;
-“Customisation” should be allowed in individual provinces, based on differing capacities and performance track records;
-Collaboration between the provinces should be strengthened; and
-The National Treasury should be asked to assess the affordability and financial management of the NHI model.

(See presentation.)

Dr Kariem added that, during the COVID-19 pandemic, WCDoH – and perhaps other provinces – had introduced many innovations which would strengthen the long-term resilience of the provincial healthcare system and in the future would advance the pursuit of universal health coverage in the province.

Dr Mbombo said that WCDoH had also used the pandemic as an opportunity to work more closely with the private sector, both in service delivery and in adopting technological innovations – the public and private sectors had learned from each other.

Discussion
Ms Ismail asked why WCDoH recommended that the provinces should remain responsible for specialist hospitals.

She asked whether the Bill addressed preventative care and the social determinants of health. If not, how should the Bill be amended to address them? What would be the implications if those items were not addressed?

She asked whether the private sector should be represented on the board of the NHI Fund, to improve the board’s accountability and legitimacy. Moreover, what was WCDoH’s assessment of the risk for corruption under NHI if the Bill was implemented in its current form? How strong were the Bill’s accountability mechanisms? What else should be included in the Bill to counter corruption?

She asked to what extent the Bill allowed for equal access to quality healthcare. Was the Bill inclusive and sustainable?

She asked whether the vacancy rate in the healthcare sector would increase if the Bill was implemented in its current form. Were many healthcare workers likely to move abroad?

Ms Chirwa asked what kind of collaboration WCDoH envisioned between the national and provincial governments. How would such collaboration improve the Bill’s legitimacy? She thought that the Bill already set out the role of the provinces. What roles should be allocated to the provinces? What could the national government not do as well as the provincial government?

She said that WCDoH alluded to challenges at NDoH, but similar challenges existed in the Western Cape. For example, the Committee had made an oversight visit to the Khayelitsha District Hospital. The staff had raised concern that the facility had not grown fast enough to keep up with the growth of the population it serviced and with the needs of that population. This had affected services like occupational therapy. For another example, clinics in townships and rural areas were not necessarily open 24/7. WCDoH implied that it had “mastered” leadership in a way that NDoH and other provinces had not. Yet what were some tangible examples of this? How had the WC intervened to address inadequacies in infrastructure? Why had it failed to resolve the structural problems that directly affected communities?

Ms Clarke noted WCDoH’s view that redirecting the equitable shares of the provinces would negatively affect service delivery. Why would it have that effect? More generally, the Bill intended to “dilute” the role of the provinces in healthcare. What were the implications of this shift for service delivery and access to quality healthcare? What challenges did WCDoH foresee arising from the shift?

Mr Siwela asked whether WCDoH’s primary concern was the change in the role of the provinces under the Bill. According to the Bill, the provinces would shift from being purchasers and providers to being delegated providers and stewards of public health services. Under clause 32(2), the purpose of this shift was to allow functions to follow funds in creating a single-fund NHI system. Could WCDoH clarify what its concern was, especially with the establishment of a single central fund?

He said that WCDoH seemed to believe that it was risky to position the NHI Fund as the sole strategic purchaser, and that it was therefore preferable to continue with the existing fragmented system. What were WCDoH’s reasons for this view? Fragmentation had not helped to address the population’s health needs.

Mr Sokatsha said that some provinces did not have central hospitals, which were largely funded by grants. Some residents of those provinces did not have access to the services of central hospitals. Was WCDoH satisfied with this situation? Currently, the Northern Cape and Eastern Cape relied on facilities in the Western Cape for access to some services. What would happen one day when the WCDoH began to deny those services to people from outside the province?

Ms Gela agreed with Mr Sokatsha that WCDoH’s submission gave the impression that WCDoH supported fragmentation in the healthcare system, with ten departments of health working independently. How did WCDoH expect to achieve equity in the country through such an approach?

She said that the submission appeared to assume that public hospitals would not be contracted as service providers under NHI, and that they would provide only emergency medical services. Could WCDoH clarify? What informed this assumption?

She noted Dr Kariem’s reference to innovations implemented by WCDoH during the COVID-19 pandemic. However, were these innovations not nationally integrated and nationally managed? Was this not precisely what NHI would achieve when the whole country was unified under one healthcare system?

She noted WCDoH’s concerns about the centralisation of procurement, as well as its accompanying proposals. In this regard, how did WCDoH believe that clause 38 of the Bill should be amended?

Finally, she said that the Committee had visited the Western Cape for public hearings on the Bill, and people had complained that the provincial government was misleading people about NHI. [Remarks in Xhosa, recording 2: 00.47.50–00.48.50] Why was WCDoH misleading people?

Ms Havard said that procurement, as defined in section 217(1) of the Constitution and in the Bill, was different to buying goods. The providers would themselves buy the medical goods at fixed national prices through the formulary. How was this system risky?

She asked why WCDoH was averse to converting central hospitals, which were national assets, into facilities accessible to all citizens and managed so as to achieve universal health coverage.

The Chairperson said that it was “comforting” that WCDoH accepted that NHI was going to be introduced and supported “the principle of” NHI, although it had some concerns about aspects of the Bill.

He acknowledged WCDoH’s concern about the changing role of the central hospitals. According to the White Paper on NHI, “the structure and financing of central hospitals will be transformed into national assets as well as training platforms, research hubs and centres of excellence locally, regionally and internationally.” Rural patients did not have sufficient access to central hospitals – what was WCDoH’s view about that? As Mr Sokatsha had said, other provinces used a system of referrals to the Western Cape. When he was a medical student, that system had been in place as far afield as Namibia. Did WCDoH agree that achieving universal health coverage required making healthcare services accessible to the entire population, without imposing further “barriers”? Given the unequal geographical distribution of central hospitals across South Africa, what was the alternative to centralising the management of those hospitals? How else did WCDoH propose the government should ensure equitable access to central hospitals and access to specialised healthcare services?

He said that clause 37 of the Bill provided for the establishment of contracting units for primary healthcare. In lieu of this, WCDoH proposed that those functions should be taken on by existing provincial structures. How would that work, given that public structures and resources in the provinces were already overstretched?

Finally, the Chairperson said that the Committee had heard that WCDoH had rejected almost all of NDoH’s proposed reforms, such as the Health Patient Registration System and the Central Chronic Medicines Dispensing and Distribution programme. How was that reconcilable with the fact that WCDoH wanted to serve as a “laboratory” to test and develop the NHI model?

Responses

Responding to Members’ questions about the central hospitals, Dr Mbombo said that central hospitals had previously been academic or teaching hospitals. This had influenced both their geographic distribution, since they were attached to medical schools, and the specialist services they offered, since they trained specialists in various specific disciplines. Provinces which did not have central hospitals, such as Limpopo and Mpumalanga, nonetheless received central hospital grants. For example, Gauteng sent invoices to Mpumalanga, because residents of Mpumalanga were referred to central hospitals in Gauteng. The National Health Act had long allowed central hospitals to cater for residents of other provinces. For example, in the Western Cape, Groote Schuur Hospital and Tygerberg Hospital were the two central hospitals, and the Red Cross Children’s Hospital was a tertiary hospital. Together, they served residents of the Western Cape, the Eastern Cape, and parts of the Northern Cape. Beyond the central hospital grants, this required expenditure from the province’s equitable share. For example, paediatric oncologists travelled to villages in the Eastern Cape every month to hold clinics for the residents there. In sum, any province which had a central hospital understood that the central hospital was not only for the service of the residents of the area or province in which it was located.

On why the central hospitals should remain under provincial governance, she referred to continuity of care, a principle also stressed by the World Health Organisation (WHO). People received varying levels of care – preventive, promotive, rehabilitative, palliative, acute and sub-acute, and so on. When a patient was referred from primary care and upwards until after, for example, he received heart surgery, his journey through the healthcare system should be traceable and continuous – it should not be segregated. That was why it was important, for example, for specialists from the Western Cape to travel to assist their patients who lived in other provinces.

She repeated that nobody could reasonably oppose universal health coverage. WCDoH had never said that it did not support universal healthcare, and there was no argument about that principle. In the past, she had been part of a trip organised by NDoH, where officials had looked at examples of healthcare systems in other countries and had learned lessons that could be applied in South Africa – she had gone to Thailand to study its universal healthcare system.

To Ms Gela’s suggestion that WCDoH had misled people about NHI, Dr Mbombo replied that it was a situation in which it was WCDoH’s word against the word of the residents who had complained. WCDoH had provided people with a pamphlet which summarised NHI so that they could understand what it was and what it did and did not offer.

On the suggestion that WCDoH supported a “fragmented” system, she said that it would be excellent if the NHI Bill could meet everybody’s expectations and achieve universal health coverage. However, in its current form, it would not do so. As she had said, the Bill focused on only one building block of the healthcare system: like any insurance scheme, it focused on financing and funding. For example, it did not mention the “upstream factors” that affected healthcare. Moreover, it did not enact the principle of subsidiarity, which said that decision-making should be decentralised. For example, with the approved posts list, the managers of central hospitals could be flexible about how to respond to any vacancies – the decision to hire or not hire a replacement did not require approval from the provincial government. The current system allowed for decisions to be made at the local level, even at the sub-district level.

She said that, according to the Public Finance Management Act, the head of WCDoH had to account and take responsibility. Yet if healthcare funding and procurement were centralised elsewhere, that system would not work. The package of care, and the quality of care provided to patients, depended on the “building blocks” of healthcare: financing, information systems, leadership and governance, and human resources. These building blocks had to reside in the same place in which services were dispensed – they could not be centralised elsewhere. However, WCDoH understood the limitations of the current dispensation. Under the National Health Act, NDoH was primarily responsible for norms, standards, and policies – the provinces, not NDoH, owned hospitals and human resources and were responsible for patients. This put NDoH in a difficult situation, especially when it had to intervene to stop the healthcare system from “collapsing.” There was a need to enable a proper role for NDoH. Thus WCDoH was arguing that health policy should not perpetuate the binary between national and provincial – and, equally, it should not perpetuate the binary between public and private. Nobody was happy when healthcare services were not affordable and accessible.

She said that WCDoH supported a pre-payment system, rather than a system in which money changed hands at the point of service. 26 countries had implemented universal healthcare, and South Africa had to “customise” to develop its own model. She had engaged with the private sector and had found that private companies welcomed universal healthcare. Most private medical aid schemes already depended on government subsidies.

Dr Vallabhjee said that WCDoH was not arguing against a single national health system. It supported that, and also completely supported the intention to pool public and private resources in order to try to achieve the best possible health outcomes for all residents. It was not espousing a fragmented system in which each province worked independently. In fact, NDoH should be setting the national policy, the national direction, and the reform agenda, and the provinces should be committed to implementing those. The provinces should be working together with NDoH.

However, he said that it was important for healthcare systems to be cohesive. The provinces had spent decades trying to build a cohesive healthcare system in which all the different parts worked together. Patients were referred between facilities thousands of times every day. The performance of the healthcare system depended on maintaining its cohesion, and enabling and supporting the relations between its constituent parts. Any reform that undermined those imperatives would fragment the system, undermining its performance.

To Ms Chirwa, he said that WCDoH did not believe, and had not claimed, that it had “mastered” leadership or faced no challenges. The province faced considerable challenges, and there were improvements and innovations to be made with respect to equity, efficiency, and quality. Making these improvements was an ongoing and unending process. WCDoH did not profess to “know it all” or “have all the answers.” However, it wanted an approach to reform under which the provincial and national governments would commit to solve problems jointly and learn from each other’s experiences. WCDoH viewed the NHI legislative process as an important opportunity for such engagements to occur.

He said that this answered Ms Chirwa’s other question, about the kind of collaboration WCDoH envisaged. The last two years had provided an excellent example of collaboration as a means to advancing towards universal health coverage. For example, the national government had procured COVID-19 vaccines for the entire country. For another example, during the COVID-19 pandemic, public and private actors had worked together in various ways – at an operational level, through data-sharing, and through joint problem-solving. This boded well for the future and it was important to build on that experience by convening further engagements and creating an environment for further collaboration.

To the Chairperson, Dr Vallabhjee said that to say that WCDoH had “rejected” NDoH’s proposals would be to use “a strong word.” WCDoH had spent many years establishing certain systems in the province. The central question was how to make the transition between systems smoother – or how to make different systems interoperable, so that it was not necessary for provinces to dismantle effective existing systems in order to implement new national proposals. The Health Patient Registration System was a good example. In that case, WCDoH had an effective system that it had used for ten to 15 years, with a data centre. It had collaborated with NDoH, sharing its data, in order to see how the systems could be made interoperable. Interoperability would be an important principle going forward – especially in the information technology space, because each province had different systems and different histories developing and testing those systems. It was in that context that the country had to transition to an interoperable national health system, with seamless data sharing and so on.

Dr Kariem said that a central definitional issue was the “stewardship” role of the provinces under NHI. WCDoH had been grappling with that, and the Committee probably had too. As Dr Mbombo had said, WCDoH had acted as steward of the province’s management of the COVID-19 pandemic, in both the private and the public sector. The province had contracted with private companies, who had provided services as part of a composite basket of both public and private healthcare. In the context of NHI, however, it would be important to distinguish the stewardship role from the purchasing, service-providing, and regulatory roles.

He said that WCDoH had always supported universal health coverage. As he had said earlier, innovations during the COVID-19 pandemic had taken the province in the right direction in that regard. One example of an innovation was the telehealth system WCDoH had implemented for people with diabetes, who were at a higher risk of dying from COVID-19. That programme had significantly reduced mortality. WCDoH had also introduced a system for delivering chronic medications to people’s homes, so that they did not have to queue in public places. It had delivered about three million medication packages over the course of the pandemic.

He said that WCDoH had identified four pillars of or “action areas” towards universal health coverage: service delivery, governance capability (including the relationship between the public and private sectors), workforce capability, and learning capability. WCDoH believed that it was strong in all four pillars. That was why it wanted to serve as a laboratory for developing models that could provide universal health coverage. As Dr Mbombo had said, NHI was primarily a financing mechanism, so it alone would not achieve universal healthcare.

Responding to Ms Gela’s question about the services provided by the provinces, Dr Mbombo said that, under NHI, the provinces would provide emergency medical services, forensic pathology services, environmental pollution control services, and health and medical services during provincial disasters. Emergency medical services had been transferred to the provinces from the metropolitan municipalities, and forensic pathology had been transferred to the provinces from the police – in fact, Dr Nicholas Crisp of NDoH had spearheaded the latter shift.

She said that, since these were the only services provided by the provinces, complications could arise. The NHI Fund would appoint service providers to provide other services. Suppose somebody went to one of those nationally appointed service providers, and was dissatisfied with the service she received. Where should she lodge her complaint? It was impracticable for all such complaints, from all provinces, to be handled by the national government. Yet under NHI it also would not make sense for the provincial government to handle the complaint, because the provincial government would lack authority over the services dispensed inside the province. It was long overdue to pool the country’s resources to work towards universal health coverage, but a better approach would be a single healthcare system with multiple entry-points, to cater for individuals’ needs and allow them choice.

Submission: South African Local Government Association
Ms Nozibele Makanda, Portfolio Head: Health and Community Service, South African Local Government Association (SALGA), outlined SALGA’s recommendations for amendments to the Bill.

Proposed amendments

SALGA proposed that the Bill should:
-Clearly define “municipal health care services” in clause 1, with consideration of the definition of “municipal health services” in the National Health Act;
-Clearly delineate the role of municipalities, if any, in NHI;
-Stipulate what would happen to health facilities and healthcare-related assets and liabilities currently controlled by local government; and
-Clearly define the non-personal health services to be managed by the District Health Management Offices which would be established under NHI.

Ms Makanda said that, based on the definition of non-personal health services in the National Health Act (which included water quality monitoring, waste management, pollution control, and so on), municipalities were currently providing such services. Once the District Health Management Offices were established, this work should not be duplicated or fragmented.

Application and implementation

SALGA believed that the implementation of NHI would require:
-An intergovernmental and multi-sectoral approach; and
-Addressing problems in health infrastructure and human resources.

In SALGA’s interpretation of the Bill, especially clause 3, the Bill applied to local healthcare services and facilities. Local government had played an important role in piloting NHI, and would continue to play a critical role in addressing the social determinants of health outcomes.

On infrastructure and resources, Ms Makanda made the following points:
-Some municipal clinics would not qualify for accreditation as service providers without infrastructure improvements and additional human resources;
-Local government would be required to provide and coordinate services which enabled the provision of healthcare services, such as water and sanitation, energy, and waste management;
-Additional resources would be required to strengthen environmental health programmes, which in turn were crucial to preventative healthcare; and
-The recruitment of healthcare workers, especially environmental health practitioners, should be prioritised.

Insofar as these points pertained to local government, implementing NHI would require increased funding to local government. The Bill should therefore highlight the need for review of the appropriations, equitable shares, and grants allocated to local government.

(See presentation.)

Discussion
Ms Havard asked for clarification on the difference between “municipal health care services” and “municipal health services.” Where in the Bill might the two have been conflated?

The Chairperson also asked what the difference between “municipal health care services” and “municipal health services” was, and where in the Bill they might have been conflated. He recalled that there had been municipal clinics in the past. They had largely been taken over by the provincial governments, although some municipal clinics remained in the metropolitan municipalities. What was SALGA’s view of the definition of municipal health services in the National Health Act, and of section 32 of that act? Could municipal health services be regarded as personal healthcare services, to be funded through NHI?

Ms Makanda replied that section 1 of the National Health Act defined “municipal health services” as including a list of specific services, such as water quality monitoring, food control, waste management, and disposal of the dead. “Municipal health care services” was a phrase used in clause 1 of the NHI Bill and would likely refer to healthcare services under a municipality’s jurisdiction, including the primary healthcare services offered by some municipalities. SALGA wanted it to be clear what definition the Bill used. It also thought that the broad term “municipal health services” should include environmental health and related services.

Ms Gela noted SALGA’s point that some municipalities currently had “health establishments in the form of clinics” (see slide 5). Yet municipalities lacked the statutory mandate to deliver the services rendered at such establishments. They were delivering the services without any budget to do so. For example, the City of Cape Town had over 120 clinics, which essentially drew on the budget and capacity of the WCDoH. Staff employed by municipal establishments earned higher salaries. How did SALGA propose to fund and harmonise these municipal healthcare services?

Moreover, she said that there had been efforts to “provincialise” the personal healthcare services formerly delivered by municipalities. What “bottlenecks” did SALGA believe had hampered provincialisation? If it agreed with provincialisation, how did it think it could be achieved? Would municipalities be interested in transferring their healthcare infrastructure, currently maintained as unfunded mandates, to the provinces?

The Chairperson agreed that SALGA had raised issues related to the provincialisation of healthcare services and to the devolution, to the local level, of environmental health services. What was SALGA’s view on these two policies, with reference to the longstanding problems with environmental health services and offices?

Ms Makanda replied that provincialisation had entailed the transfer of healthcare functions from local governments back to the provincial governments. For example, some functions had previously been carried out by districts, who had sometimes had service-level agreements with the local municipalities – those functions had been transferred to the provinces. However, that process had not happened in the metropolitan municipalities. During the provincialisation process, the metros had not been able to reach agreements about the transfer of their human resources and assets, and especially about the compensation they should receive in exchange. They had made significant investments into the infrastructure, and they also paid healthcare workers on a higher scale than that offered by the provincial and national governments. So, in lieu of transferring the metros’ resources and assets to the provinces, the metros and the provinces had agreed that the metros would continue to run the primary healthcare function and render the related services.

She said that metros therefore continued to carry out primary healthcare functions, and to run clinics and other health facilities. This was indeed an unfunded mandate – healthcare was not part of the core functions or mandate of local government. However, the services were rendered on behalf of the provinces, through service-level agreements. There were not exactly any remaining “bottlenecks” to provincialisation, insofar as there did not seem to be an active ongoing effort to provincialise the metros’ healthcare services. The discussion with NDoH in this regard had been left “hanging.” The provinces and the metros had a good relationship, and it made sense for communities to receive primary healthcare services from their local governments.

However, she said that, in rendering primary healthcare services, the metros were exceeding the allocations they received from the provincial government, and therefore had to use municipal funds. To rectify this situation, SALGA wanted the metros to receive an allocation that met their funding requirements for rendering the services. Funds should follow functions. That is, the allocation of funding to the metros for primary healthcare should be based on an assessment of what it was costing the metros to carry out that function. At this point, the metros and the provinces seemed to agree that the public’s interests were best served by an arrangement under which the metros rendered the services, using allocations from the provinces. But that function would remain a “burden” for the metros until they were allocated sufficient funding.

The Chairperson asked whether he had understood correctly that SALGA was motivating for the NHI Fund to provide funding for infrastructure.

Ms Makanda replied that one relevant aspect of municipal infrastructure related to municipal healthcare, as provided by the metros. If local governments were to remain healthcare providers under NHI, they would need funding to improve their healthcare infrastructure, so that they could meet the standards of NHI. Another aspect related to broader municipal health services, such as water quality monitoring, food control, and waste management. The municipalities were responsible for those functions, but sometimes were not allocated commensurate and sufficient funding through their equitable shares. This issue had been raised at the National Health Indaba in September, which had been held in partnership with NDoH and had also involved the National Treasury and the Department of Cooperative Governance and Traditional Affairs. At the indaba, stakeholders had discussed the funding and capacity challenges faced by local government in this regard. The challenges had been clearly exposed during the COVID-19 pandemic: environmental health functions had an important role in preventing communicable diseases, and, had there been adequate capacity, could have played an important role in preventing the spread of COVID-19. SALGA believed that municipal health services, especially environmental health services, should also be considered and funded under NHI, in order to meet WHO standards.

The Chairperson sought to clarify SALGA’s stance. Ms Makanda had said that some primary healthcare facilities were managed at the local government level, especially in the metros, and that funds should follow function. In SALGA’s view, what should happen to municipal health facilities and to healthcare-related municipal assets and liabilities? The municipal assets, liabilities, and facilities were supposed to have been transferred to the provinces in 2003. However, in his understanding, under NHI, government would purchase healthcare services from any accredited provider. He did not think that the NHI Bill prohibited municipalities from managing clinics – that was already provided for in the National Health Act. Would SALGA support a situation in which the NHI Fund contracted directly with metro-owned clinics? In that situation, the funding would go directly to the clinics, not to the municipalities.

Ms Makanda replied that SALGA would support such an arrangement, with the NHI Fund directly funding the clinics. What was important was that the facilities should provide adequate services to the community, in line with the NHI standards. In that case, if infrastructure needed to be upgraded to meet the NHI standards, local government would have to go directly to the facilities. SALGA did not have a problem with a co-operative governance arrangement of that kind. There was a problem only if the burden remained on municipalities to meet healthcare funding requirements that were not covered by the allocations. Currently, continual underfunding was burdensome to the metros, who had to use municipal funds to cover the shortfall in the provincial allocation. It also hampered the ability of the metros to provide high-quality services that would meet the NHI standards. The funding arrangements in the Bill should take that into consideration.

She said that SALGA would be willing to participate in a discussion about the transfer of assets, liabilities, and human resources from the metros, if that was to be a requirement of NHI. But such a transfer would have to be discussed, so that an adequate budget could be arranged. SALGA would also be satisfied with an arrangement in which local governments – not as part of their core mandate, but under their service-level agreements with the provinces – were contracted as service providers under NHI. In that case, however, the metros would have to be comfortable that they had sufficient funding and capacity to deliver on the functions.

In closing, Ms Makanda reiterated that SALGA wanted Parliament to amend the Bill to recognise the importance of municipal health services, especially environmental health services, in preventing and controlling disease. The Bill should also recognise the benefits of capacitating such programmes. Preventative medicine and curative medicine should be given equal, or almost equal, funding. In SALGA’s view, if preventative medicine was given as much attention as curative medicine, less would have to be spent on the latter – “prevention is better than cure.”

The Chairperson said that he liked Ms Makanda’s argument about preventative medicine – he agreed that “the basics” were critical.

Submission: Life Healthcare Group
Mr Peter Wharton-Hood, Group Chief Executive, Life Healthcare Group, introduced the Life Healthcare delegation and provided an overview of Life’s business.

Mr Adam Pyle, Chief Executive Officer, Life Healthcare South Africa, said that Life acknowledged that there were challenges – relating to cost, access, resources, and fragmentation – in the private healthcare sector. Life supported the principle and objectives of NHI. However, the proposed single-payer system would create enormous concentration and unmanageable operational risk. Life therefore proposed that NHI should be administered through a single fund but a multi-payer system.

Life also had the following recommendations for the implementation of NHI:
-Implementation should proceed on a milestone-based approach;
-The public and private sectors should collaborate; and
-The use of existing private sector capacity could help accelerate implementation.

Implementation of NHI

Ms Amrita Raniga, Manager: Health Policy, Life Healthcare South Africa, outlined the milestone-based approach that Life proposed for the implementation of NHI. The current time-based approach could lead to NHI becoming fully operational prematurely, and reduced the government’s ability to manage risks sequentially.

Ms Sharon Vasuthevan, Executive: Education, Life Healthcare South Africa, discussed the three key deliverables required to meet the objectives of NHI:
-Human resources: both management skills and healthcare professionals;
-Infrastructure: sufficient facilities of appropriate standards; and
-Capital: sufficient capital with appropriate reimbursement models.

Highlighting human resources as the most critical deliverable, she discussed the reasons for the current skills shortage in healthcare in South Africa.

Public-private collaboration

Mr André Joseph, General Manager: Funder Relations, Life Healthcare South Africa, discussed four areas in which Life believed that the public and private sectors could productively collaborate during the transition to NHI. These were:
-Education and training;
-Hospital management services;
-Elements of supply chain management (especially procurement of imaging equipment and pharmacy);
-Provision of spare capacity through service-level agreements.

On education and training, he said that current policies impeded healthcare delivery and severely constrained the private sector’s ability to contribute to health reform. Specific impediments were:

-The limited accreditation of private nursing colleges;
-The prohibition on private medical schools;
-The restrictions on the employment of foreign doctors; and
-The prohibition on the employment of healthcare professionals in the private sector.

Concluding the submission, Mr Wharton-Hood emphasised two lessons learned during the COVID-19 pandemic. The first was the significance of the skills shortage in South Africa, and the second was the potential for public-private collaboration. NHI was the most difficult undertaking of government in South Africa’s democratic history, making excellent administration crucial, but the government was “not alone” in implementation and Life wanted to participate as a partner.

(See presentation.)

Discussion
Single-payer system
Ms Havard noted that Life was concerned that a single-payer system would create “enormous concentration and operational risk.” What was the basis for this concern? Was it based on empirical evidence from similar systems abroad? If so, could Life share that research?

Ms Gela asked Life to elaborate on its proposal for a multi-payer system with a single fund. What were the benefits of this model, and how would it reduce the use of financial intermediaries? Such intermediaries had been shown to increase non-healthcare costs.

Mr Wharton-Hood replied that a single national system, across such a complex landscape, would require the development of infallible technology processes. In addition, the system would have to process an enormous volume of transactions daily, at very small levels and values, which would require considerable resources. This was not necessarily “risk-worthy” and would probably be “insurmountably expensive” to provide at all hours. He disagreed with those who said that a single-payer NHI would be comparable to the National Payment System. The National Payment System did transmit transactions worth billions of rands, but the transactions were generic, had high values, and had relatively simple validation processes. The volume, complexity, variability, auditability, and verification requirements for the transactions processed by a single-payer NHI were completely different. He could not think how one would design such a system, and it would be extremely difficult to manage.

He said that the whole healthcare system would come to a standstill if the fund’s system were to fail. Of course, it would not directly prevent doctors and nurses from doing their jobs, but the delivery of healthcare depended on the underlying value transmission and thus on cash flows. With a multi-payer system, a disruption would not compromise or bring to a standstill the provision of care. In addition, a multi-payer fund would come with economic and competitive advantages and thus drive a more efficient healthcare system. Under a multi-payer system, providers could be compelled to compete for contracts, and each contract could be allocated on a competitive bid basis, with a view to reducing administrative costs to the most efficient and representative cost per transaction. In a single-payer system, on the other hand, there was no competitive mechanism of this kind. Ms Wilson had mentioned the effect on innovation in a written chat message, and he agreed that competition under a multi-payer system would incentivise innovation. Thus, in sum, Life strongly supported a multi-payer single fund: it would reduce risk and improve financial outcomes.

Timing and milestone-based approach

Ms Havard understood Life’s concern about the time-based implementation of NHI and the attendant risk of premature implementation. However, was Life aware of clause 57(1)(b) of the Bill? That clause said that NHI would be “gradually phased in using a progressive and programmatic approach based on financial resource availability.”

Mr Pyle replied that Life understood that the Bill promised a programmatic approach to implementation. However, it wanted the Bill to be more explicit about what exactly that entailed. The Presidential Health Compact and the WHO guidelines were fairly clear about which building blocks had to be in place. The Bill should identify the requisite building blocks and the targets that had to be met under each category.

Ms Wilson agreed with an earlier submission which had identified three pillars or foundations of the healthcare system: affordability and sustainability; accessibility; and quality. None of those pillars were in place in the public sector, especially in rural areas. It was concerning that the Committee had heard of cases in which hospital managers and senior personnel had been hired without even five years’ experience in the medical industry, let alone any experience in finance or administration. She was pleased that Life was prepared to partner with and assist government. However, even with such partnerships, was it worthwhile to pursue NHI before the three pillars were in place? Should government not ensure that the pillars were in place before even considering NHI?

Ms Gela asked how long it would take to achieve the milestones that Life proposed should guide the progress of NHI’s implementation. How long would it take to strengthen the healthcare system in the requisite ways? Was NHI itself not supposed to ensure that the milestones were reached, by improving the resourcing and funding of the healthcare system?

Mr Siwela also asked what timeframe Life proposed for each milestone. Could the milestones be pursued concurrently? Did Life think that a milestone-based approach would ever lead to the implementation of a single healthcare system? Was Life’s position that the risk of proceeding with NHI was high enough that the status quo should be retained until the challenges identified – in human resources, infrastructure, and management – had been resolved?

To these questions, Mr Pyle replied that Life understood that NHI was not something that could be switched on and off – there was a “journey” underway, and Life did not advocate for halting the process entirely. The milestones should certainly be pursued simultaneously rather than sequentially. The country should begin working towards each milestone immediately under different work-streams. It took a decade to train a specialist, for example. There should be a strong focus on increasing the number of healthcare workers. That did not imply that NHI should not be implemented until the country had the perfect number of healthcare workers, but there had to be a sufficient number. Without sufficient healthcare workers, management capability, facilities, access, and so on, the objectives of NHI would not be achieved. Surely it was not about ticking a box and being able to say that NHI was now in place – it was about ensuring that NHI achieved its objectives, improving the quality of and access to healthcare.

Mr Wharton-Hood said that it was very difficult to estimate how long it would take to execute each milestone. The milestones could certainly be pursued in parallel. In general, Life thought that some kind of milestone-based approach would allow a logical, coordinated roll-out, focusing on the most important issues first, so that the country could “build” the desired system. Like any building project, one could not start with the roof – one had to get the foundations right. A milestone-based approach entailed a focus on resources and on the effort required to secure the deliverables. A time-based approach, by contrast, might apply “unrealistic pressure,” and made it difficult to administer accountability if deadlines were missed. The milestone-based approach was in line with how Life managed its own large projects.

Human resources

Ms Wilson said that the “maldistribution” of healthcare professionals in South Africa was not surprising. It was not surprising that they did not want to work in the public sector, given the deficiencies in infrastructure and resources, especially in combination with the prevalence of medical malpractice suits. In their submissions, other organisations had seemed to suggest that NHI would exacerbate, not mitigate, this situation. However, she was surprised that Ms Vasuthevan had said categorically that there were sufficient nurses in the country – the Committee often heard the opposite.

Ms Vasuthevan clarified that she had emphasised a shortage of nurses. Currently, there were about 285 000 nurses registered in South Africa, although there was no data to indicate whether all of them were currently employed inside the country. On the distribution of professionals, one study had found that 85% of nurses were employed in the public sector, with the balance employed in the private sector.

Mr Wharton-Hood added that Life did not employ doctors: the doctors chose to practice at Life facilities because of various features, including infrastructure, which provided an environment conducive to high-quality care. This suggested that the management of healthcare facilities was critical. Hospital managers had an extremely complex job. Uplifting healthcare facilities was not just about spending on infrastructure – it was also about ensuring that there were capable managers in place. Infrastructure improvements had to be combined with the requisite executive oversight and management – one without the other would not deliver high-quality care.

Ms Clarke said that shortage of healthcare workers was a major concern. Life’s submission had outlined impediments to the resolving those shortages. How could the Bill or policy be changed to ensure that there were sufficient human resources for the implementation of NHI? What implications would a shortage of healthcare workers have for service delivery?

Ms Vasuthevan replied that the shortage of healthcare workers was already affecting service delivery. That had been evident during the COVID-19 pandemic – there had been a sudden rush to offer contracts, hire more workers, and share resources. Life believed that progress could be achieved through enabling regulation with respect to the training of healthcare workers.

Mr Sokatsha asked whether Life had any thoughts about task-shifting and task-sharing as a means to moderating the human resources challenges.

Ms Vasuthevan replied that Life continually explored such initiatives and other ways of bringing in new cadres of workers. It had been one of the first groups to start using healthcare technicians. However, the lack of enabling regulation discouraged innovation in this area.

Other questions

Mr Sokatsha suggested that Life should communicate to the Presidential Health Compact Committee its interesting suggestion that the NHI milestones should be aligned to the pillars of the Presidential Health Compact and the WHO framework.

He noted that Life said that NHI required “appropriate reimbursement models” (see slide 13). What reimbursement models did Life think were appropriate? The background for his question was the findings of the Health Market Inquiry on existing payment mechanisms. The inquiry had mentioned issues relating to supply, induced demand, and an increase in utilisation and private health expenditure not justified by changes in demographics or risk profiles. He also wanted Life to reflect on the reimbursement mechanisms proposed under the Bill and white paper, including the proposal to determine rates according to level of care.

Mr Riedwaan Jabaar, Executive: Funder, Policy and Product Development, Life Healthcare South Africa, replied that Life was aligned with the NHI Bill and the Health Market Inquiry in this regard. It acknowledged that the private sector was fragmented, primarily due the fee-for-service model in combination with scant primary care, which drove utilisation. It endorsed a reimbursement model which was aligned to episodic outputs and payment for outcomes on a risk-adjusted basis.

Mr Wharton-Hood added that Life believed that the way to increase the affordability of healthcare was not to reduce the quality of care but to eliminate waste.

Mr Siwela said that the United Kingdom had established the NHS shortly after World War II, which had decimated the country’s infrastructure. How had the NHS succeeded in this context?

Mr Wharton-Hood replied that the delegation was not qualified to give a detailed account offhand, but would reply in writing.

The Chairperson said that, in Life’s view, service-level agreements should be set at the national level and operationalised at the provincial level. Was Life aware that some private service providers did not have a national presence? What should those providers do? Should they be excluded from the service-level agreements? Moreover, what was Life’s view on the Health Market Inquiry’s findings about barriers to entry in the market for healthcare facilities?

Mr Pyle replied that service providers should be able to enter contracts regardless of their national presence. There could be a general contract at a national level, which played out across the provinces, with the provinces contracting facilities in the region on the terms negotiated at the national level.

The Chairperson noted Life’s recommendations for key parameters in the determination of tariffs. Was Life Healthcare aware of clause 26 of the Bill? Clause 26 discussed the pricing committee and outlined the various stakeholders who would be represented on it. Did Life need further clarity about that clause?

He asked for Life’s views on the certificate of need policy. One of the things that had to be addressed in the private hospital market was the concentration of private facilities in metropolitan areas – the distribution of private facilities did not always align with healthcare needs, especially in the rural provinces.

Mr Pyle confirmed that hospitals were concentrated in the cities. Life had some hospitals in smaller towns, but such facilities came with additional challenges. It was difficult to manage them and especially to hire healthcare professionals and competent managers to staff them. At one of Life’s small-town hospitals, the entire management team had contracted COVID-19 at the same time. Life had also had a hospital in a small town in KwaZulu-Natal, but it could never get it to work properly – the hospital’s medical staff and patient pool had always been of an unsustainable size.

He said that Life agreed with the objectives underlying the certificate of need policy – it was important to improve the distribution of healthcare resources in under-resourced areas, to improve access to healthcare. However, there were a number of problems with the redistribution process that the certificate of need attempted to effect. The central problem was that the certificate of need would not fix the shortage of healthcare workers. More healthcare workers had to be trained, and then they had to be encouraged and incentivised to work in under-resourced areas. Life kept returning to its point about resources because it was so critical. Regardless of whether NHI was implemented, the quality of and access to healthcare services would not improve unless the country trained more healthcare workers.

Mr Wharton-Hood agreed that the healthcare system would not be improved merely by “reslicing the existing pie” – the country needed more healthcare workers. In fact, any initiative to make healthcare more accessible and affordable was going to result in more residents making use of healthcare facilities. That in turn would increase the amount of work for existing healthcare workers, meaning that more healthcare workers would be needed to meet the demand.

Mr Pyle added that Life was firmly and genuinely committed to helping train healthcare workers, and to working with government in that regard. It was not just a matter of nurses and doctors, but also of pharmacists, physiotherapists, and other healthcare professionals.

The Chairperson asked whether Life believed that, under the NHI, only public service providers would be contracted. If so, what, or which clause of the Bill, informed that view?

Mr Pyle replied that Life certainly expected that both private and public providers would be contracted.

Mr Munyai said that it seemed that Life’s position was that the risk of proceeding with NHI was high enough that the status quo, the current two-tiered system, should be retained until the challenges identified – in human resources, infrastructure, and management – had been resolved.

Mr Pyle replied that Life did not propose that the status quo should be retained. It agreed that there had to be change, and understood that there would be a journey to embark on. However, it was arguing that the country would not achieve the objectives of NHI – would not improve the quality of and access to healthcare – until the building blocks of the healthcare system were in place. It would take some time to put those in place, and the system would change in the process.

Mr Munyai asked whether Life understood that, under NHI, reimbursement would be based on diagnostic-related groups (DRGs).

Mr Pyle replied that Life did understand the reimbursement model proposed in the Bill. The Bill did refer to DRGs, but no national DRG grouping currently existed in South Africa. There was a long way to go if a national DRG-based reimbursement model was going to be implemented, and it would not be simple. However, Life was willing to participate in developing reimbursement models. It did not agree with the fee-for-service model, and few of its reimbursements took place on that basis. During its submission the day before, Discovery had mentioned a transition to value-based claims, and Life was one of the organisations that Discovery was talking to in that regard.

Mr Munyai repeated his story of an ER24 ambulance denying his brother care at the scene of a car accident, saying that it was an example of discrimination on the basis of socioeconomic status. He also repeated his claim that the private healthcare sector currently received 8% of GDP, or over R400 billion. Did Life want this status quo to be perpetuated without reform?

Correcting Mr Munyai’s statistics, Mr Wharton-Hood said that total healthcare expenditure in South Africa was currently about R500 billion, of which about R250 billion went to the private sector and the public sector respectively. Moreover, Life accepted patients into its facilities without regard for their socioeconomic status. That had been demonstrated during the COVID-19 pandemic and was demonstrated whenever any emergency case came through Life’s facilities. Life, as a healthcare provider, was committed to helping improve the affordability and accessibility of healthcare. It looked forward to contributing, in partnership with government, to those objectives.

The Chairperson confirmed with the Committee secretary that the public hearings would continue on Friday morning.

In closing, Mr Wharton-Hood reiterated that Life supported the NHI initiative and wanted to help and participate. It wanted to be regarded as a partner to government, along the lines of the successful partnership models it had participated in in other countries.

The meeting was adjourned.