Private sector can help state improve health care
July 6, 2009
By SLINDILE KHANYILE
A skills shortage that led to long working hours, poor remuneration and a lack of decent infrastructure is the prime reason behind the countrywide strike by doctors that has threatened thousands of lives.
These are old problems that have been a ticking time bomb for years. The government has not done much to address the skills and salaries issue.
It has, however, been proactive in improving infrastructure. Since 2001 the Department of Health has engaged the private sector to refurbish existing hospitals and lay on new health care facilities.
These have been few and far between, primarily because of opposing views on how public-private partnership (PPP) projects should be structured.
Inkosi Albert Luthuli Hospital in KwaZulu-Natal is the largest PPP project in the health sector. Done with the Impilo consortium, the project is valued at R630 million.
It was implemented in 2002 and the private sector is responsible for the supply and management of equipment, information and technology systems and facility management.
The Western Cape has a similar partnership at Lentegeur Rehabilitation Centre.
Pelenomi and Universitas Hospitals in the Free State have a cohabitation partnership with Netcare. The Settlers, Port Alfred and Humansdorp hospitals in the Eastern Cape also have cohabitation deals.
Gauteng has Folateng wards, which are considered private wards, but these are not registered with the Treasury.
Polokwane hospital in Limpopo has a renal dialysis partnership.
But have these initiatives achieved their aims?
The government gives a cautious response.
Solani Khosa, the director of PPPs at the Department of Health, said PPPs were long-term partnerships: they usually had contractual life spans of between 10 and 30 years.
"All current health PPP projects have relatively short implementation duration. It is therefore difficult to objectively assess whether these have achieved their overall objectives," said Khosa.
"The department plans to evaluate all current PPPs."
But private hospital group Netcare, which has been active in PPPs, has a different take on the outcomes of these projects.
Victor Litlhakanyane, the chief operating officer at Netcare, said: "Yes (they have achieved their objectives), but there is, as with everything, always room for improvement.
"We are still in the early days in terms of the implementation of PPPs in South Africa."
Finance Minister Pravin Gordhan recently touched on the subject of PPPs, saying the National Treasury had formed a task team to look at how best to implement them in the health care sector.
Three weeks ago Deputy Health Minister Molefi Sefularo said there was a massive PPP project in the pipeline to turn around the state of health care infrastructure and lay on additional infrastructure.
Sefularo was speaking at the Hospital Association of SA's annual conference, but he did not give any details.
Everyone agrees that this alternative funding method is the way to go, but there is no total agreement on the shape or form it should take.
Khosa said the equity implications of PPPs, their long-term sustainability and impact on the department's equitable share was a challenge.
"There is a bias in the private sector to consider mainly PPPs that are urban based, and too much focus on hospitals, whereas the need is far broader than hospital provision," said Khosa. "The private sector does not focus on projects of greatest need."
Medi-Clinic, the country's second-largest private hospital group, has previously said it did not participate in PPP deals because the government only wanted support services from the private sector.
It said it hoped the proposed national health insurance (NHI) would pave the way for PPP projects that would allow the private sector to provide clinical services.
Khosa would not be drawn into whether the NHI would open up more PPP opportunities, saying the universal cover plan was still at infant stage.
But Khosa dismissed the perception that the government did not allow the private sector to offer clinical services.
"The provision of clinical services by the private sector happens at a number of facilities. These interactions are done on a contractual basis, but do not fall under PPPs as defined by the Treasury. These are called public-private interactions," said Khosa.
Khosa said these were not captured as PPPs, which were meant to cater mainly for projects that required large capital investments.
"The biggest challenge to PPPs by private hospitals is the cost at which the private sector provides these services. Private hospitals are the highest contributors to health care costs in the country.
"The rates that private hospitals charge for services are not affordable to the government, nor are they sustainable in the private sector. Remember that the two key characteristics of PPPs are value for money and affordability."
Litlhakanyane said risk transfer to the private sector needed to be appropriate, as it was not practical to transfer the total risk.
"It is imperative that the government absorbs at least some of the risk. Accountability needs to stay with the government and cannot be shifted to the private sector.
"Contract management is key to ensure the government experiences the full benefit of the project, and the government has to consider including clinical services in their requests for proposals," he said.
While improved infrastructure is critical, well-maintained buildings are not the only requirement for delivering health care. There are nurses, doctors, funders and drugs manufacturers in the chain.
Discovery Health spends R10m a year training specialist doctors at medical schools through the Discovery Foundation - one of the medical scheme's many PPP initiatives.
Mandi Mzimba, the deputy general manager in policy and regulatory affairs at Discovery Health, said previously that there was a reluctance to engage the private sector in partnership arrangements.
"We welcome the more open approach the government has now adopted," said Mzimba.
Mzimba said it would benefit all parties to have a clearer and more consistent framework within which to implement PPP projects.
In the pharmaceutical sector, Biovac is the only firm in a PPP arrangement. It is part of a joint venture for vaccine manufacturing with the state.
Stavros Nicolaou, the chairman of Pharmaceuticals Made in SA, said it was important to reduce the red tape involved in establishing a PPP and to bridge the ideological gap between the two sectors.
"There has to be a realisation that the private sector requires appropriate returns on capital investment in order to allow for continued reinvestment in infrastructure, equipment, skills and new technologies," said Nicolaou.
Adcock Ingram, which has spent R10m on corporate social investment programmes that are public partnerships in nature, said the definition of PPPs should be changed to cover all contributions: in kind, time spent or financial, and any other project done in partnership with the government irrespective of its size.
Vicki Ehrich, the chief operating officer of the Pharmaceutical Industry Association of SA, said private sector expertise and investment could be harnessed for the procurement, management, warehousing and distribution of medicines in the public sector.
"The public sector carries no risk related to the manufacture and importation of medicines, but is purely a purchaser of medicines," said Ehrich.
"Should policy change, there may be an opportunity for partnership in the manufacture and packaging of medicines for dedicated supply to the state. This might be most appropriate in specific disease areas affecting public health."
If Inkosi Albert Luthuli Hospital was not a referral facility, the staff would not cope with the number of patients who would flood it.
This is because the facility is equipped with highly specialised technology; the building is clean and well-maintained; and the health care professionals are generally well mannered, a rare find in public hospitals.
This shows that PPPs can improve the quality of health care in the country.
The government needs to now be open-minded and look at using private sector expertise to address other challenges in health care, such as training of personnel.
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