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Crisp answers to tough questions: How NHI system might – or might not – function

Commentators have in recent months raised many questions about how South Africa’s proposed National Health Insurance (NHI) system might function – or not function. Spotlight formulated 12 of these questions and sent them to Nicholas Crisp, the person heading up government’s NHI office. The report contains Crisp’s answers in full.

Q1: What happens if there are not enough OHSC accredited facilities in an area?

Imagine for example a small rural town where the only health facility is poorly managed and cannot be accredited. Does the fund accredit this underperforming facility, or does it not accredit the facility and leave the people of the town with no facility?

Q2: Will the OHSC’s standards for accreditation be lowered to allow for NHI?

Most public healthcare facilities currently do not meet OHSC standards and the last decade suggests that a massive improvement of facilities by 2026 is unlikely – something that will leave many public sector facilities unable to contract with NHI if current OHSC standards are maintained.

Q3: Apart from the threat of not contracting a facility, what leverage will there be under NHI to improve the quality of service provided at a facility?

The underlying concern here is that facilities will be incentivised to do just enough to remain contracted, but that there will be little incentive for facilities to excel beyond that. Holding chronically underperforming facility managers accountable is already a challenge in the public sector – without the current competition in the private sector the same might happen to private sector facilities.

Q4: Why is the Minister of Health given such extensive powers in the NHI Bill?

A number of commentators have expressed concerns about the Minister’s extensive powers and pointed out that it opens the NHI fund and NHI systems up to political interference. Given our recent history with state capture, this seems extremely risky.

Q5: What mechanisms and structures will there be to help normal people to hold District Health Management Offices and CUPs accountable?

The NHI Bill is not clear on how accountability will work at a local level and how the consultative structures envisaged in the National Health Act will look under NHI. It seems clear that local level accountability structures will be key to making NHI work, but the Bill is silent on such structures.

Q6: Why are District Health Management Offices defined as components of national government?

This appears to be a centralisation of both power and management. It risks making the healthcare system less sensitive to local contexts and less accountable at a local level. It also raises questions regarding the reduced role of provincial departments of health under NHI.

Q7: How transparent will the dealings of the NHI fund and related structures be?

Given South Africa’s recent history with corruption, it seems critically important that the management of the NHI fund is as transparent as possible. The public should, for example, be told why one private facility was contracted with the NHI fund while another was not contracted. The public should also be given detailed justifications for the inclusion and exclusion of treatments in the package of NHI benefits. Unfortunately the Bill hardly mentions transparency – which is worrying since transparency in the public healthcare sector currently varies from good in some areas, to very poor in others.

Q8: By how much will South Africa’s total health spending (public plus private) increase or decrease under NHI?

There has been some confusion over how the financing of NHI will work with some commentators asking serious questions about the available numbers. It is understood that public sector spending will increase through various forms of taxes, but it is not clear by exactly how much and how taxpayers at various income levels will be impacted. An additional extra R30bn raised through taxes etc has been mentioned, but what is the longer-term trajectory? It is also not clear exactly how private medical schemes will be impacted and by how much medical scheme contributions are anticipated to decrease. As in other areas, the more reliable estimates we have on the table, the more informed our public discourse on these issues will be.

Q9: What will the relationship be between the OHPP and private facilities?

The NHI Bill proposes the establishment of an Office of Health Products Procurement (OHPP). It is not clear whether private facilities contracted under NHI will be able to purchase theatre beds (for example) from the open market, or only through the OHPP. If the latter is the case, private procurement will in effect become part of public procurement – something that in worst case scenarios could leave private facilities with no choice but to purchase sub-standard equipment and to purchase from corrupt companies. 

Q10: Do you anticipate that public sector medicines prices will increase or decrease under NHI?

It is sometimes argued that high private sector medicines prices in effect subsidises low public sector medicines prices in South Africa. Whether this is true or not, it is true that private sector medicines prices are typically much higher than public sector prices. By bringing most purchasing of essential medicines under the NHI umbrella, might we not end up with prices that are higher than the current public sector prices?

Q11: Do you anticipate that the income of medical specialists will decrease under NHI?

The work of at least some types of medical specialists is likely to fall entirely, or almost entirely within the scope of conditions and treatments covered by NHI. This will mean that specialists can only charge NHI rates – which is likely to be substantially lower than their current private sector rates. Balancing the better regulation of specialist rates with the need to attract and keep specialists in the system is a difficult challenge – but one we must face head-on.

Q12: Do you anticipate that the profitability of private hospitals and private hospital groups will decrease under NHI?

It seems likely that NHI will introduce price controls that will make it harder for private hospitals to be as profitable as they are now. This view is supported by the fact that hospitals will have less choice of who to contract with since the NHI fund will be by far the largest purchaser of private hospital services from 2026. This change is likely to have an impact on the private hospital sector, and accordingly on the quality and nature of their services. How well do we understand what that impact will be?

[link url="https://www.spotlightnsp.co.za/2019/10/22/spotlight-on-nhi-qa-with-head-of-nhi-office/"]Spotlight report[/link]

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