The National Health Insurance (NHI) philosophy is not complex, nor unusual. Its premise is the separation of the suppliers of healthcare services from the role of purchasing access to care. In line with international best practice (and similar to the reform plan for Eskom), it asserts that purchasing should be done by a competent agency equipped to enter into value based care (VBC) contracts with suppliers. It is a best practice solution to the current dysfunction, and scaremongering reactions are either poorly informed about the options or defending their role and profits. Instead, we need a constructive debate about how to achieve success.
At present, the public sector is funded by a ‘supply driven’ budget determined by existing facilities and staff, not population need. Funds are guaranteed regardless of production, service, and outcomes. There is no ‘case mix’ data about how sick patients in the system are, or where, and how they are treated. Managers do not know about the relative productivity of their own systems, and governance arrangements are working in the dark. Under the NHI, public services will be subject to market competition for contracts and be required to improve their productivity and service delivery, or face losing their contracts.
VBC contracts are also largely absent in the private sector, which is still funded by ‘fee for service’, paid to isolated and competing individual clinicians. This leads to fragmented services with big gaps and duplications in care. There is no financial support for the integrated team model, which is a feature of all high-performing healthcare systems. Fee-for-service has clinicians seeing low patient volumes and delivering high-cost care of variable quality. Productivity simply isn’t a concern.
It is tragic that, despite the Medical Schemes Act of 2000 obliging medical schemes to do active purchasing for their members, they have failed to do so. Rather, they have interpreted their role to be securing low prices from providers per service. They have ignored rampant over-servicing from the oversupply of doctors, specialists, and hospital beds relative to scheme members in the country. This lost opportunity is well described in the Health Market Inquiry (HMI) provisional report, which shows how schemes failed their members by not commissioning and supporting new care delivery models. Only the shareholders of the administrators are happy.
In contrast, the separate purchaser role put forward by the NHI is the proper model for healthcare systems. Under it, providers - whether public, private or ‘not for profit’ - compete for local contracts, to deliver Primary Health Care (PHC) and hospital services, based on how well they deliver value. This competition will be a major wake-up call for both sectors and ultimately serve South Africans better.