The public versus private healthcare debate
Health minister Manto Tshabalala-Msimang’s campaign against the private healthcare sector escalated earlier this week when she told journalists that “the current challenges in the private sector are best resolved through legislative interventions.” Her th
When we apply our mind to the public versus private healthcare debate we quickly identify two separate industries. One is for those who can afford to pay over the odds for faster access to medical facilities (generally individuals who belong to some form of private medical scheme) – and the other intended for wards of the state (or individuals who don’t have private medical aid cover). There are approximately 7m private medical scheme members – leaving the bulk of the country dependant on the public sector. This is confirmed by the fact that some 78% of hospital beds in the country are public sector beds. Instead of focussing on here domain (the public healthcare sector) our health minister is intent on annexing the private sector to carry government’s healthcare obligations. After all, each person that has a private medical aid and uses private hospitals and specialists is one less person the state has to care for.
Tshabalala-Msimang’s latest attack on private sector medical costs is an excellent public relations exercise; after all, few will complain if the minister appears to be fighting on their behalf. The reality is she is fairly unpopular in certain sectors of the community and there have been repeated calls for her resignation on government’s slow reaction on the HIV/Aids pandemic. Other criticisms include an alleged criminal record in Botswana, preferential treatment in securing a donor liver and alcoholism. The decision to legislate lower prices in the private healthcare sector is a dangerous game indeed and it appears the minister is playing games with the future of healthcare in the country. Here are some of FAnews Online’s thoughts on the matter.
The great cover-up
Tshabalala-Msimang’s obsession with the private sector comes at time when the public health service is in shambles. Surely the minister of health’s focus should be on the affordable health care structure that is already in place in South Africa. We believe that uplifting public hospitals and clinics would be far cheaper and reach more people than any price cuts she can squeeze out of the private sector. The sooner this game of smoke and mirrors ends the better for all South Africans.
The minister’s major gripe is with private hospitals. She points out that the annual cost carried by medical schemes for hospital benefits has risen from R803 in 1997 to R2320 in 2005. This increase equates to around 11.41% per annum… So while it is above the official inflation rate, it is certainly no worse than increases in other services and prices over a similar period. If the increase had been limited to inflation each year the private schemes would have been paying R1 429 (or around 7.5% more per annum) – still well above government’s definition of affordable.
In the final (possibly oversimplified) analysis consider this. Medical aid membership has been stagnant for many years at around 7m. If two of the country’s largest private hospital groups (Netcare and Mediclinic) were to ‘refund’ all their 2007 profits, each medical scheme member would receive a rebate of R571. So the health minister might want to think long and hard before demanding that fees be cut. Even running at breakeven a private medical aid is going to cost well in excess of government’s current R530 per person per month (allowed in the 2008/2009 budget).
Undesirable consequences
Private hospitals are in business to make profit for their shareholders. At the same time they are a safety net for the country’s citizens – filling a much needed stop gap for procedures which cannot be accommodated in the public healthcare sector. We cannot argue that private hospitals are a strong driver for medical aid costs; nor can we dispute that the hospital increases over the last decade are in excess of the official inflation rate… But that doesn’t necessarily mean the increases are excessive? There will always be certain goods and services that increase at rates above the official inflation rate. Private hospitals operate at the cutting edge of technology and you would expect them to be one such area…
If the minister of health gets her way she could very well speed the demise of private hospital care as we know it. Instead of elevating the public health care system to offer service of similar standards to private healthcare; the whole system will tumble down in a messy heap. If you think this warning is a bit dire – then consider the recent Bloomberg announcement that reads: “Netcare yesterday cut its capital expenditures plans in South Africa by as much as a quarter and said profitability would drop…” That’s R200m that will no longer be spent on upgrading and increasing medical infrastructure in SA. Government pressure is forcing private healthcare groups to reconsider their long-term plans. Investors demand a certain returns on their capital – and if this return cannot be earned in SA, they expect the management team to find other outlets. Another headline “Netcare buys nine UK hospitals” confirms where those funds are now going…
We think the minister of health would far better serve the country by focussing on the public sector. If the public system were functioning properly the private medical scheme memberships would never have reached 7m in the first place. If the public system is properly maintained and funded then the private sector can resume its intended function as an expensive alternative for the wealthy.
Editor’s thoughts:
We believe the focus on private hospitals as cost drivers for private medical care is simply an attempt to divert focus from the real healthcare problems in South Africa. Do you agree, or do you think the health minister is on the right track?? Send your comments to gareth@fanews.co.za, or add them below.
