Healthcare backlog can be ended with public private partnerships

“Every African can have access to clean, well-equipped hospitals with trained staff provided there was political vision and the will to support public private partnerships in the healthcare sector,” said Dr Richard Friedland, chief executive officer of hospital group, Netcare, at a forum for healthcare decision-makers in Cape Town on 6 November.

The formal banking sector also had a part to play by lending to small empowerment partners – this was not yet happening in Southern Africa, he added.

One of the biggest public private partnerships to date is between the Lesotho government and Netcare, and is currently underway in the capital, Maseru. The project will eventually see the total overhaul of the country’s dilapidated old hospital, the Queen Elizabeth II.

“It’s a hospital that looks no different from many others in Africa,” said Friedland who was addressing the Engage Forum, hosted by the Metropolitan Health Group and Qualsa.

The Engage Forum is aimed at providing the public, private and civil healthcare sectors with a platform for debate and discussion around key healthcare issues ahead of the planned implementation of the National Health Insurance system in South Africa.

Friedland said the Lesotho project, which was “engaging 85% of the country’s healthcare budget” would be “a lightening rod that shows the Southern African Development Community what is possible.” It was funded with a grant from the World Bank and a loan from the Development Bank of Southern Africa. Netcare stood surety for small empowerment partners because they had no access to formal banking or equity. The advantage for the hospital group was that it would manage all clinical and non-clinical services for the next eight years.

The new hospital, called Tsepang, included 425 beds, of which 35 were private, and three off-site clinics. The off-site clinics were for primary healthcare patients and would act as filters to prevent small problems from clogging secondary and tertiary facilities. As part of the partnership with the Lesotho government, Netcare would train staff, with a special focus on basic nursing. “For this to work there has to be vision, trust and understanding of the roles of each partner,” said Friedland.

He described to the Engage Forum the lengthy process of working out a contract with a government, highlighting that it was important to remain innovative and flexible. Having had extensive public private partnership experience in the UK, Friedland was asked how his company coped with long delays in payment by government and endless red tape.

“All governments are the same,” he said, “It’s no different here and you have to be prepared for that by having enough operating capital to cross-subsidise when necessary.”

Friedland also described a successful five-year project between Netcare and the British government involving mobile ophthalmic clinics that set up in parking lots around Britain doing onsite operations. Key to the sustainability of this project is a model that Netcare has developed, called ‘cost neutrality squared’. This model allows for Netcare to provide private quality and care at the same price that the state would have paid.

Altogether 34 609 procedures were completed over five years showing that it was possible to deliver a high volume number of procedures, at a stipulated national tariff, on a sustainable basis.

“South Africans can do it,” he said, “And we do it best when we do it together.”

Dr Steve Taylor, general manager for the coastal region of Life Healthcare shared with the forum that their public private partnership in Humansdorp in the Eastern Cape had battled to get off the ground. The project which involved a group of doctors as private partners lost millions of rands in its first years but turned a profit for the first time in the last financial year. The heavy losses were from over-capitalizing on improvements and a mis-reading of the market for private patients. The Eastern Cape health department also did not meet all its obligations. Part of the original contract would have to be re-negotiated with the provincial government if the project was to be sustainable, he said.

His colleague Dr Nilesh Patel, described a similar challenge in Mpumalanga, where a public private hospital near Bushbuckridge was embraced by the local community but struggled to maintain quality levels when suppliers were not paid by the provincial government.

“We have been in a situation when, for the last three months of the financial year the hospital doesn’t have drugs because the provincial government partner has not paid the supplier. This leads to all sorts of complications, most problematic being patient resistance to drugs.” In this case the private partner often had to step in to buy drugs for the public sector but then struggled to be reimbursed by government.

Aspen Pharmacare senior executive, Stavros Nicholaou,addressed the controversial issue of antiretroviral provision and cost, sayingthe single biggest cost of producing antiretroviral drugs in South Africa was importing the active ingredients to make the medication.

"It doesn’t make sense to import it," he told the forum. "We need to manufacture it here. If we do that we will demystify 75% of the cost of ARVs." A public private manufacturing partnership was a consideration, he added.

John Thomas, chairman of Living Hope, a community based organisation (CBO) that provides primary level care to Fish Hoek and its surrounding communities, ended off the Forum by stressing that public private partnerships do not have to take place just between government and the private sector; there were myriad opportunities for the private sector to work together with CBO’s to help remedy South Africa’s ailing healthcare system from the grassroots up.