Key issues facing the health sector in the next five years Thabo Rakoloti Director: Public Private Partnership National Department of Health The BHF Annual Southern African Conference, 2007

Presentation Outline Legislative Framework Policy Context Key strategic challenges Focus on key policy areas

Legislative Framework The Constitution of the Republic of South Africa “everyone has the right to have access to health care services, including reproductive health care” S.27(1)(a) “state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of each of these rights” S.27(2) The National Health Act, 2003 and to “Prescribe mechanisms to enable a co-coordinated relationship between private and public health establishments in the delivery of health services” [S56(1)]. The Minister of Health has the responsibility “to prioritize the health services that the state can provide taking into consideration health needs and resources available” (S4 (1)(e)

POLICY CONTEXT System Cover Burden of disease Providers Public Private Indigent Low-income marginalised HIV/AIDS Infectious Communicable Chronic Medical Nursing Pharmacy Private HIV/AIDS Infectious (na) Communicable (na) Chronic (reduced) High income Good risks Poor risks (decrease)

Key Strategic Challenges financial, human and other resources between the public and private sectors, relative to the populations they serve health care resources available to different socio-economic groups within the population Growing maldistribution of all health care resources between and within provinces, which has been increasing over the past few years Fragmentation of the health system, based on separate financing and provision arrangements for different socio-economic groups

Challenges with current financing system Inadequate Pooling of resources: Private sector: covers 7m people Public sector: covers 39m, of which 7m fall outside means test Individual households: Out-of-pocket payments 7m low income people who cannot afford medical schemes, but do not qualify for free public services, so pay out of pocket Out of pocket payment is the most regressive form of health financing Inequity: public/private sector Inefficiency: excessive expenditure on hospitals Inadequate financial risk protection Inequity and inefficiencies in financing

Context: Healthcare Financing, 2006 Public sector R52 billion Serves 38 m Private sector R66 billion = R1 368 pp Serves 7 m = R9 428 pp

Source: Health and Health Care in South Africa (2004)   Context: Healthcare Provision in 2004, Distribution of Health Professionals in the South African Health Care System (2004) Professional category Total Public sector Estimated dependants 34 611 781=82% Private sector 7 597 709= 18% Public: private ratio General practitioners 19 729 5 398=27.4% 14 331=72.6% 1:2,65 Medical specialists 7 826 1 938=24.8% 5 888=75.2% 1: 3,04 Dentists (including specialists) 4 269 316=7.4% 3 953=92.6% 1: 12,51 Pharmacists 4 410 1 047=23.7% 3 363=76.3% 1: 3,21 Physiotherapists 3 406 463=13.6% 2 943=86.4% 1: 6,36 Occupational therapists 1 986 388=19.5% 1 598=80.5% 1: 4,12 Speech therapists and audiologists 1 388 119=8.6% 1 269=91.4% 1:10,65 Dental therapists 306 121=39.5% 185=60.5% 1:1,53 Psychologists 3 808 222=5.8% 3 586=94.2% 1:16,15 Source: Health and Health Care in South Africa (2004)

Partial Social Security Universal Social Security Key Issue: 1 Partial Social Security Universal Social Security Pillar 1: Universally available basic benefit for all citizens and specified classes of legal resident Contributory environment over-and-above pillar 1, characterized by strong mechanisms to ensure social solidarity: Income-based cross-subsidies Risk-related cross subsidies Mandatory participation Discretionary social security over-and-above minimum levels regarded as essential Pillar 2: Pillar 3:

Key Issue: Pillar 2 Prepayment Rich Poor Low risk High risk Out of Pocket Spending Prepayment X-subsidy from low to high risk X-subsidy from rich to poor Rich Poor Low risk High risk Low risk Health risk Income

Specific Issue: Access to Private Health Care The MSA sought to promote non-discriminatory access to privately funded health care through – Open enrolment Community rating Protecting a core set of benefits from arbitrary attrition

Specific Issues: Access to Private Health care The major objective has been met but there are still concerns involving the following: very limited growth in overall number of covered lives open enrolment for high risk individuals being frustrated through indirect discrimination inappropriate benefit design potential fragmentation of risk pools

Reform of the Medical Schemes Industry Legislative Development from 2007- Medical Schemes Amendment Bill Introduction of the Risk Equalisation Fund Restructuring of the Benefit design Strengthening of the Governance framework Introduction of the general framework for low income products The Bill will be tabled in Parliament before the end of 2007

Contribution Protection Mechanisms? As a result of the escalation of the cost of health care, we are in a process to: Create a statutory framework for effective pricing negotiations between funders and health care providers. Extensive consultation as soon as clear proposal are in place.

Health Technology Appraisal Draft Regulations on Health Technology in 2008/9

Public Private Partnerships - Build Operate Transfer where the private sectors builds and operates a new facility for a given period of time and then transfer it to the public sector at the end of the concession period - Build Transfer Operates that is where the transfer of the facility to the government would take place as soon as the construction is completed, rather than at the end of the concession period and Revitalise Operate and Transfer where the private sector could rehabilitate the existing public health facilities at its own risk, and then operates and maintains the facility at its own risk for a given period We are working with the National Treasury to prepare concrete proposals for consultation.

Infrastructure v/s Service Delivery: PPPs 100% 3 2 Indicative favourable trajectory combining both infrastructure dev’t and clinical services Infrastructure development 1 0% 0% 100% Delivery of clinical services

Achieving Millennium Dev’t Goals The Millennium Development Goals (MDG’s) have set clear targets and goals for eradicating poverty and related human deprivations. The MDGs include 8 goals, 18 targets and 48 indicators: 3 of the goals, 8 of the targets, and 18 of the indicators relates directly to health Creating a standard reporting and evaluation framework for the public and the private health sector.

THANK YOU