Recent Reforms in the South African Healthcare System

The South African government has given healthcare reform a key position in current developments, in an attempt to improve access to healthcare and to enhance the quality of healthcare services. In order to accomplish this, they have created a new National Health Insurance Fund (NHIF), fueled by general taxes and a type of health insurance contribution. However, analysts are skeptical whether the objectives of this plan can be met, due to a lack of necessary funds, funding mechanisms and political commitment.

South Africa has suffered a history of inequality and socio-political turbulence, but in recent decades has made substantial progress in developing its capacities, fighting inequality, boosting its economy and establishing itself as an international player. However, South Africa continues to score poorly on most healthcare related parameters, due to poor sector management, high costs of the care delivery chain, a lack of cost transparency and the difficulty to retain staff in the public healthcare sector.

In recent years the reorganization of the national healthcare system took a key position in the South African government’s strategy and national planning, and healthcare will continue to be a focal point for the years to come as the nation continues to industrialize and develop.

In order to improve accessibility and quality of the healthcare in South Africa, the government has decided to implement the New Health Insurance (NHI) program. The NHI system is expected to be funded through personal taxation and mandatory employer contributions. The NHI aims to provide universal access to healthcare for South Africans based on a contributory system with higher income individuals contributing more than lower incomes.

Other healthcare reforms in South Africa have been grafted onto the NHI, which the government has decided to roll out gradually over a period of fourteen years, starting in 2012. The overall plan intends to improve primary care capacity, accessibility, and quality.

The plan entails a single National Health Insurance Fund (NHIF) for health insurance, fueled by general taxes and a type of health insurance contribution. The proposed fund is supposed to work as a way to purchase and provide healthcare to all South African residents without detracting from other social services. Those receiving healthcare from both the public and private sectors will be mandated to contribute through taxes to the NHIF.

National Health Insurance (NHI)

The NHI intends to:

Part of the plan is to involve public and private hospitals, specialists, public clinics and private GP practices to deliver free health services to the community.

Technology will play a major role in the reform. An evidence-based mechanism to assess the cost-effectiveness of new products and solutions is required. The recently launched national e-health strategy further aims to empower ICT in an effort to transform the healthcare delivery system.

At this point, analysts are concerned that the plan for universal South African healthcare is falling short of its objectives, due to lacking the necessary funds and political commitment to reach its goal. The legislation concerned is failing and the required funding mechanisms are inadequate, or non-existent all together. The National Treasury is reluctant to support the initiative since the reforms place additional pressure on what is an already overstretched income-tax base.

The plan was to pilot the NHI scheme in eleven districts. The lesson learned was that provincial and district authorities lacked the technical capacity to coordinate and implement innovations, and that they underspent their budgets. The plans to extend the pilots to twenty more districts has not been initiated yet, due to the current set-up and program structure having revealed itself to be ineffective.

Under the National Health Insurance, a hospital is expected to provide services to patients based on its category of hospital. For example, tertiary hospitals should provide specialist level services and should receive referrals from regional hospitals which are not limited by provincial boundaries. Regional and district hospitals should provide for the other levels of care. In reality, the tertiary hospitals offer all levels of care, resulting in poor quality of care overall and over-expenditure.

At this point it is unclear what the role of the key players in the industry would be under the NHI, particularly those in the private sector. Private hospital groups, uncomfortable with their role as care providers under a unified system remain conspicuously absent in debates. Nonetheless, they offered to support the public sector in different areas such as training, patient administration and pharmacy management.

In order for South Africa to advance its healthcare system, it will have to follow a trying and challenging road, with many learning curves and alterations to its existing structures. Nonetheless, the government has made the first positive steps to doing so, and aims to continue seeking solutions and innovations to resolve current issues, and to enhance the quality of the healthcare system as a whole for the nation.

For further quantitative information on the South African healthcare system and the macroeconomic climate, please look into our Business intelligence platform or order the TforG Deep Dive report for South Africa containing volumes of 620 surgical procedures in 13 specialisms.