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. 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

4. Cover Burden of disease Providers
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

5. 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
Growingmaldistributionof

6. 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

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

8. Context: Healthcare Provision in 2004,
Professional
category
Total Public sector
Estimated
dependants
34 611 781=82%
Private sector
Estimated
dependants
7 597 709= 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
Distribution of Health Professionals in the South African Health Care System (2004)
Source: Health and Health Care in South Africa (2004)

9. Partial Social Security Universal 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:

10. Key Issue: Pillar 2
Out of Pocket Spending Prepayment
Income
Lowrisk
Health risk
HighriskX-subsidy from low to high risk X-subsidy from rich to poor
Rich
Poor
Lowrisk

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 2007- 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. Infrastructuredevelopment
Delivery of clinical services
0% 100%
0%
100%
Indicativefavourabletrajectory
combiningbothinfrastructuredev’tand
clinicalservices
1
2
3
Infrastructure v/s Service Delivery: PPPs

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