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Category Healthcare
SUB CATEGORIES General  |  HIV |  Medical Schemes | 

Co-payments: An interim solution

07 September 2009 National Hospital Network (NHN)

Everybody involved in the current healthcare debate in South Africa agrees on the desired outcome; that in an ideal world, quality healthcare should be accessible to all income groups. To achieve this, healthcare policy makers have to balance the challenges of protecting the expertise and capacity in the private sector while delivering on election promises.

A fundamental problem to be confronted is the issue of financing the proposed NHI; one of South Africa’s most shocking statistics is that out of a potential working age population of 19 million people, only 5.4 million pay tax. This means that 13.6 million people are either unemployed or earn salaries below the income tax threshold.

It is possible that it will be many years before agreement is reached, and in the meanwhile, creative, interim solutions have to be found.

‘In my view, one option which would serve to increase access, retain expertise and offer policy makers some speedy results would be for the Department of Health to design a voucher and co-payment system, where those who are willing to pay more for private hospital services will just have to pay for the difference between public health facilities and private health facilities,’ says Otto Wypkema, CEO of the National Hospital Network.

‘Prices for different procedures could be fixed at an agreed ‘public sector rate’, which the Department of Health would commit to paying, even if the procedure was done in a private hospital. However, those who wished to pay more, would have the right to approach private hospitals and pay extra for the benefit of not waiting or other reassurances that private facilities provide.

‘To use another metaphor, it is like the Department of Health agreeing to pay for a burger and chip meal voucher, valued at R30.00. If however, the patient wishes to have a more up-market meal, the R30 voucher can be used as part payment, with the patient paying the balance.

‘This model, a variation of which is used in France, brings many threads together. It will immediately free up valuable public hospital space for the very poor and it forces hospitals to design transparent pricing systems and to compete on this basis,’ says Wypkema.

South Africa has four hospital groups; these include two listed hospital groups, (Netcare and Medi clinic) as well as Life Healthcare and the National Hospital Network, a network of 79 independently owned hospitals. The group has a comprehensive footprint with solid representation in South Africa’s major cities and represents almost 20% of the private sector beds.

The National Hospital Network has fought hard to protect the viability of member hospitals as the larger groups have increased market share by expanding their geographic reach. Members of the Network have been commended by the Council for Medical Schemes for offering competitive, cost effective solutions.

‘Not many policy makers realize that hospitals in South Africa have a wide range of cost drivers; nurses salaries and transport costs differ by region, rents, leases and the price of food varies, doctors charge different rates. It is a mistake to see them as monolithic entities,’ said Wypkema.

‘From our point of view, it would be mistake if the Department of Health did not capitalize on these differences to its own benefit,’ said Wypkema. ‘Best of all, this system could be set up very quickly.’

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