Keynote address by Minister of Health, Dr Manto Tshabalala-Msimang, 8th annual Board of Healthcare Funders (BHF) Conference, Sun City

The Chairman of Board of Healthcare Funders of Southern Africa (BHF), Mr Mbasa Mxenge
Board members
Distinguished guests
Ladies and gentlemen

I am happy that I have managed to attend your conference this year. I unfortunately could not attend it last year.

Thank you very much for the invitation to attend, give a keynote address and officially open this eighth annual BHF Conference. It is a real honour and privilege for me to do so.

The theme of this conference, "Squaring the Circle", is appropriate and aptly defines what we have to do in the health sector in South Africa. Presently in many ways it feels like being caught up in "a vicious cycle" that has to be "squared" to bring about order, certainty, structure and sustainability.

As the Minister of Health, it is my duty and responsibility to uphold the provisions of the South African Constitution which state that "everyone has a right of access to healthcare services and that no one may be refused emergency medical treatment".

The Constitution also imposes on government an obligation to ensure progressive realisation of this right. I take this obligation seriously.

The constitutional obligation of the State is to take reasonable legislative and other measures within its available resources, to ensure the progressive realisation of the right.

It is therefore within the power of the State to legislate not only with regard to the public health sector but also the private health sector. I must say that the National Health Act No 63 of 2003 mandates the provision of a "structured uniform health system", taking into account the obligations imposed by the Constitution and other laws on the national, provincial and local governments with regard to health services. The approach therefore is to treat the public and private health sectors as elements of a "single national system."

It is encouraging to note that in your invitation to me you indicated that BHF subscribes fully to the tenets contained in the National Health Act through working with your member schemes to attain access, affordability and quality in the private healthcare sector.

We have to agree that both the public and private healthcare sectors in South Africa are faced with huge challenges. There are problems in both sectors albeit different in nature and substance. It is my duty and constitutional mandate to create an environment and establish systems and processes that must address the challenges and problems that exist in both sectors of healthcare in South Africa. Failure to do so can be regarded as abdicating my responsibility and thereby failing the people of this country.

Allow me to raise a couple issues that concern me when it comes to the private healthcare sector.

Clearly the cost of healthcare in the private healthcare sector in South Africa is high and cannot be accessed by the majority of people.

While the quality of healthcare in the private sector may be perceived to be good, it is difficult to evaluate it intelligently in the absence of robust health quality assurance systems in place. This matter is crucial when this perceived quality is used to justify the high cost.

We must therefore appreciate the provisions in Section 77, 78 and 79 of the National Health Act No 63 of 2003 which mandate the Ministry to establish an inspectorate of health establishments, office of standards compliance and inspections by the office of standards compliance. We have to do this so that we can ensure that South Africans get value for money spent.

It is concerning to note that while we observed a 8,8% decline in the expenditure of medicines dispensed by pharmacists and providers other than hospitals compared to 2004, there was an increase in hospital expenditure from R11 billion in 2001 to R16,1 billion in 2004/05. There was also an increase in specialists and total non-healthcare costs. So clearly the private healthcare funding industry paid 12,1% more for services in 2005/06 compared to the previous year (R45,8 billion in 2005/06 compared to R40,8 billion the previous year).

From the Council for Medical Schemes annual report, it can be deduced that:

* almost every year, the medical schemes increase the contributions paid by the members
* the medical schemes pay out more for services on annual basis
* there is an increase in non-healthcare costs viz. administration, managed care and broker fees
* there is also an increase in hospital and specialists costs
* there is no direct relationship between the quality of healthcare rendered and these increases
* there is a decrease in the medicine costs but no decrease in the total cost of healthcare
* there is no increase in the number of participants of medical schemes.

Considering this scenario, the following questions therefore have to be asked:

* Are there 'inappropriate gaps' in the private healthcare system that are largely exploited by the funders and providers of healthcare in a way that does not benefit the members?
* Is the current model for providing private healthcare insurance in South Africa appropriate and adequate to meet the requirements of the participants and is it sustainable?
* To what extent is the current arrangement of not regulating the fee structure and quantum for rendering health services by hospitals and health professionals suitable for South Africa? Or is it entrenching exploitation?
* Will we not see a decrease in the cost of healthcare if we regulate this tariff and fee as we did with medicines? Should we not change the current "fee for services model" to prevent over servicing?
* Do we not need more transparency with regards to the costing structure and system of health providers so that we eliminate any perceptions of exploitation?

Relating to these questions, the Ministry of Health is embarking on a number of initiatives that are aimed at addressing these issues.

We are setting up a legislative framework relating to the reference price list which will determine the cost of health services. We are establishing the office of standards as provided for in the National Health Act to critically look at the quality issues.

The current Prescribed Minimum Benefits (PMBs) must be reviewed as required by legislation, so that they adequately respond to a comprehensive package of healthcare including primary healthcare.

Legislative amendments are being made to allow for the establishment of the Risk Equalisation Fund (REF).

We will appreciate your co-operation and contributions to these initiatives that are aimed at improving this precarious situation. The theme of your conference "Squaring the Circle" does help to set the tone for this so that we can break out of the "vicious cycle" we find ourselves in. Treat these initiatives as some of the tenets of the square we have to design.

Programme Director, I would like to wish all of you fruitful deliberations on the issues in your programme that are aimed at "squaring the circle." It is now a great pleasure for me to declare this conference open.

Thank you!

Issued by: Department of Health
23 July 2007