1. 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

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

3. 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)

4. 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)

5. 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

6. 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

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

8. 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
=82%
Private sector
= 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)

9. 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:

10. 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

11. 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

12. 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

13. 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

14. 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.

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

16. 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.

17. 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

18. 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.

19. THANK YOU