Dr Noxolo Xotyeni tends to Nthombethemba Halam and her baby Linathi. Public sector health spending is catching up. Photo: David Ritchie.
Dr Noxolo Xotyeni tends to Nthombethemba Halam and her baby Linathi. Public sector health spending is catching up. Photo: David Ritchie.

Health spending gap narrowing

Time of article published Feb 24, 2012

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The gap between South African public and private health expenditure is narrowing as the public sector plays catch up. Public spending is expected to exceed private sector spending in the future, the 2011 South Africa health review released yesterday showed.

According to the report compiled by the Health Systems Trust, public hospital spending on average has increased by 5.4 percent a year over the past three years.

The government spent 14.1 percent of its 2010/11 Budget on health, and real per capita public sector spending amounted to R2 650. At national level public sector spending was R110.3 billion. Expenditure growth over the next two years is expected to be 8.5 percent on average, resulting in projected spending of almost R127bn in the 2013/14 fiscal year.

The report showed that the significant increase in spending went to primary care and infrastructure, with a steady rise in human resources for health in the public sector. Spending on expanding HIV-related services alone had grown by 46.4 percent every year over the past three years and antiretroviral therapy reached 1.46 million people in June.

Spending by provincial health departments has put the public sector ahead of medical schemes. Provincial spending exceeded that of medical schemes for the first time in 2009/10 when it reached 44.3 percent and the Health Systems Trust said the trend was likely to continue.

In the 2010/11 financial year, provinces made provisions for health on their own revenue amounting to R1.48bn.

Mariné Erasmus, a senior health economist at Econex, said with the ongoing health sector reforms in South Africa it made sense that public sector expenditure was catching up with the private sector.

“With the introduction of the National Health Insurance you’d expect the trend to continue. But it does not necessarily mean more people are using the public system,” she said.

On the other hand, total spending in the private sector amounted to R234bn.

The report showed that private sector spending as a percentage of the total has declined steadily over the years, from 52.5 percent in 2007/08 to 50.4 percent in 2010/11, and was projected to reach 49.9 percent in the 2013/14 fiscal year.

This was despite the fact that a large proportion of people who did not belong to medical schemes used parts of the private delivery system, such as doctor’s visits.

The report showed that even though only 17 percent of South Africans were covered by private medical schemes, a total of 24.2 percent of people used general practitioners while most used private pharmacies. According to Statistics SA, about 29.2 percent of South Africans use private care.

Erasmus said difficult economic conditions were partly responsible for private sector spending declining as the buy-down trend persisted and younger and healthier members opted out of medical schemes.

“Medical schemes won’t go out of business, but their business models might have to change,” she said.

But the Health Systems Trust said despite this, inequity remained a challenge in the health-care system.

It said inequity of access to health professionals between rural and urban areas and between the public and private sectors, was persistent. Although the total number of health-care workers employed by provincial departments increased to 303 531 employees in May 2011 from 217 576 in 2002, comparisons with other countries showed that South Africa had a much lower ratio of health professionals per 10 000 people.

“Part of the reason for the low ratio of health professionals per 10 000 for South Africa is that our country is not retaining the health professionals that it produces.

“On average, 70 percent of health science graduates are not retained in the public sector, due in part to unavailability of posts in the public sector,” the report said.

The number of public sector doctors had increased from 10 880 in 2002 to 17 439 in 2011 and nurses from 97 111 in 2002 to 131 592 in 2011.

The challenge was that spending on personnel had more than doubled due to the occupation specific dispensation (OSD), which increased the salary package for most professional categories. Staff expenditure increased from R28.7bn in 2006/07 to R59.9bn in 2010/11. - Londiwe Buthelezi

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