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

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) The National Health Act, 2003 “ everyone has the right to have access to health care services, including reproductive health care” S.27(1)(a) The Constitution of the Republic of South Africa “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) Legislative Framework

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

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

Challenges with current financing system –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 Pooling of resources: Inadequate financial risk protection Inequity and inefficiencies in financing

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

Context: Healthcare Provision in 2004, Professional category TotalPublic sector Estimated dependants =82% Private sector Estimated dependants = 18% Public: private ratio General practitioners =27.4%14 331=72.6%1:2,65 Medical specialists =24.8%5 888=75.2%1: 3,04 Dentists (including specialists) =7.4%3 953=92.6%1: 12,51 Pharmacists =23.7%3 363=76.3%1: 3,21 Physiotherapists =13.6%2 943=86.4%1: 6,36 Occupational therapists =19.5%1 598=80.5%1: 4,12 Speech therapists and audiologists =8.6%1 269=91.4%1:10,65 Dental therapists306121=39.5%185=60.5%1:1,53 Psychologists =5.8%3 586=94.2%1:16,15 Distribution of Health Professionals in the South African Health Care System (2004) Source: Health and Health Care in South Africa (2004 )

Partial Social SecurityUniversal Social Security Key Issue: 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 1: Pillar 2: Pillar 3:

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

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

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.

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