REPRESENTATIVE ASSOCIATION OF MEDICAL SCHEMES (RAMS)

WHITE PAPER FOR THE TRANSFORMATION OF THE HEALTH SYSTEM IN SOUTH AFRICA

INTRODUCTION

The Honourable Chairperson and Members of the Portfolio Committee, the Minister and Officials of the Department of Health, ladies and gentlemen.

I wish on behalf of RAMS Council to convey to those whose task it was to develop this White Paper our congratulations and appreciation not just as a sector, but as citizens, for all their efforts.

It is an endeavour that links crucially with the other goals of transforming our country into one where the needs of all are addressed within the context of a world at once apprehensive and excited by the prospects of the next millennium and incipient globalisation.

Emerging as we do, from a highly polarised society, where competing interests were subjected to strict apartheid planning, into a new society where competing interests are subjected to the necessity for equity and social justice, provides us with the opportunity to a build a new society on a most compelling template.

It is therefore important to note, Chairperson, that the document before your committee today, which attempts to establish a unified healthcare system that is efficient and responsive to the conditions faced by all South Africans, and, most importantly, has the ingredients to provide a sustainable delivery system, represents the most fundamental and comprehensive policy analysis and insight on healthcare developed in our country to date.

The White Paper also for the very first time in our country, emphatically and unambiguously proposes the modalities for transforming healthcare delivery from an interest-centred system to a people-centred system. Whatever the merits or demerits of the various policy options are, that fact alone sends a clear message to the citizenry that government will be accountable to, and cater for, the needs of all our people.

The health status of a population represents the barometer which measures the political, economic and social atmosphere of their country. This White Paper is brutally frank about the health status of our nation and cogently reflects a situation analysis that identifies the consequences of health care planning under apartheid. It targets precisely those areas which have been responsible for creating tragedies such as children dying of diarrhoeal disease a few kilometres from institutions housing some of the most advanced medical technology in the world.

It is clear that this juxtaposition of experience has been identified in this document as being the key locus for transformation. For those among us who feel that their interests have not been adequately addressed in this White Paper, it is now for them to speak up and state their case. But there is a notable caveat to this. Those parties must ensure, to the full satisfaction of the citizenry of this country, that their interests are secured with absolutely no dilution of the interests of those who were, and still are, the deprived and poverty-stricken. If change is perceived to imply the surrender of ownership of capital or ideas, there is a natural tendency to become defensive. But we would argue that there has already been an overwhelming confluence of purpose, if not on every policy initiative, then certainly in the broad currency of ideas emanating from government, business, labour and other organs of civil society.

We would suggest that this White Paper attempts to achieve this balancing act and is well within the mandate spelt out by our national constitution. This document henceforth is no longer the possession of Minister Zuma and her Department. It now belongs to us all as South Africans. So let us therefore examine and interrogate the premises outlined herein and soberly apply our rationality and conscience to its propositions.

R. D. P.
The White paper is premised on the fundamental principles of the RDP and, as such, proposes policies consistent with these principles which include:-
1. Multisectoral offensive against poverty and inequality.
2. Building the economy.
3. Human Resource Development.
4. Monitoring sustainable development.

These principles are highly relevant in the context of the serious challenges posed by the marked disparity in resources available to different groups in this country, and the lack of accessibility to the mainstream economy by the majority of South Africans The global economy is replete with examples of business failure in the absence of adequate social investment and justice. One need only glance at the whimpering Asian tigers to accept the truth of this contention.

The RDP recognises the inherent linkage between economic imperatives and social redress. The white paper is thus anchored within this realistic and pragmatic program for reconstruction and development, which has been endorsed by leading economists worldwide as sustainable approach.

GOALS AND OBJECTIVES
The goals and objectives of the White Paper clearly demonstrate a people-centred approach, and herein lies the greatest challenge and makes courage, determination and fairness prerequisites for prosecuting this ambitious agenda.

The pursuit of these goals is, according to the Department of Health, compatible with constraints of the Medium Term Expenditure Framework of the Government. It is therefore logical to assume that a controlled approach to the implementation of the policies outlined here is being envisaged.

The fiscal discipline of the Medium Term Expenditure Framework gives comfort to those who subscribe to the goals and objectives of the White Paper, both in the public and the private sectors, and creates an atmosphere of optimism that radical and necessary social investment can occur without the creation of undue debt

Clearly implied in these goals and objectives, and equally clearly enunciated in the details, is the fact that each of these goals and objectives will require necessary strategic partnerships between Government, the private sector, NGO's and other entities active in the field of healthcare delivery.

The present linkages between the public and private sectors are tenuous and often complicated by adversarial factors, leading to mistrust and confusion.

We suggest that the present nature of engagement between the sectors may effectively cripple the State's ability to significantly enhance the healthcare status of the populace, and hobble the private sectors ability to prosper.

The White Paper proposes a rethink on this engagement, a notion we would enthusiastically support.

In its emphatic suggestion that strategic partnerships are vita! to the mission of the White Paper, there can be no gainsaying the fact that only through the alignment of the needs of the poor with the legitimate self-interest of the private sector can these strategic partnerships be meaningful.

We hold the view that the benefits to both sectors in such an instance far exceeds the greatest potential benefits that can accrue to each in the present milieu.

We have for so long been mired in the practice of fragmentary and divergent policies that we have inherited a health system that is a celebration of mediocrity.

The White Paper now presents us with a wonderful opportunity to forge ahead united in the pursuit of a National Health System that is instead, a celebration of excellence, and holds out the tantalising prospect of the creation of a health system that is characterised by efficiency, equality, compassion, sustainability and, crucially for the private sector, legitimate profitability.

The areas outlined in the White Paper: that will be the focus of activity to achieve the goals and objectives are comprehensive and, in our view, there is not a single area that does not lend itself to a strategic partnership, between the public and private sectors in particular These are too numerous to mention so I will focus on those where such partnership is absolutely imperative, and where the mutual benefits are obvious.

A. RE-ORGANISING THE HEALTH SERVICE
The plans for strategic management structures are outlined logically and are in keeping with the constitutional requirements of the devolution of power down to the local levels.

A clear communication and facilitation chain is being proposed which allows for maximal efficiency in the utilisation of resources for this effort.

It is essentially governments responsibility to ensure that the requisite skills are procured. Various strategic partners can be approached to provide such skills in a manner that is both appropriate and advantageous to both.

B. DISTRICT HEALTH SYSTEM
The development of this concept is so logical in the scheme of things that one wonders why it was not thought of before. It complements perfectly the reorganisation of the national, provincial and local departments and presents a unique vehicle for the Sate to be both a purchaser and provider of services.

We note that the principles guiding the planners of the District Health Service are both necessary and appropriate. We would now urge the Department of Health to engage those organisations in the private sector with both the insight and the capacity to positively influence the District Health System, with a view towards securing its rapid implementation

C. PRIMARY HEALTHCARE
Human resources in the private sector are imaginatively engaged in the proposals. Such is the state of private practice currently, that this approach opens a window of opportunity for practitioners to prosper through the creation of a wider pool of health services that are governed by the principles of equity, access and affordability.

It is also in accordance with establishing Primary Health Care as the foundation of the health system, wherein community participation is paramount. Private practitioners are, by and large, located within communities and represent both the point of service delivery and the point of information transfer that lies at the heart of Primary Health Care.

D. FINANCIAL AND PHYSICAL RESOURCES
The principles governing financial and physical resource policy are sound, especially in respect of equity, optimal utilisation and management.

Revised procedures for budgeting in the public sector, in line with the Medium Term Expenditure Framework, accord with the goals and objectives of the White Paper. Being the system of last resort, and in the context of the realities we face, we concur that a strong public sector is vital.

Proposals to raise revenue for the public service through Systems of Social Health Insurance, revenue retention and efficiency gains will require the active involvement of the private sector in what could clearly be a mutually beneficial endeavour.

Hospital assets in the public and private sectors are an obvious focus of the public private mix and we concur that arrangements such as the utilisation of private hospital beds by the public sector, as well as other measures, will help ensure both State delivery as well as viability of a robust private sector.

The proposals also set out the need for prudence in this pursuit, because the possibility of moral hazards emanating from inadequate oversight and control is great, and has been proved to occur both here and abroad.

We are also pleased to see clearly spelt out policy options regarding the licensing of health technology, one of the great cost drivers in the healthcare system.

E. MEDICAL SCHEMES
While it is more comprehensively dealt with in upcoming legislation, the White Paper alludes to the new regulatory environment for medical schemes, and is predicated on two principles, which, according to the Department of Health, are necessary to underpin medical scheme operation and which will seek to reverse the "instability, increasing costs and reduced coverage that has characterised deregulation

These two principles are:
Medical schemes may not exclude an individual on the basis of health risk
Continuation membership, and an obligation not to transfer medical aid patients to the public sector because of benefit exhaustion.

Neither of these two principles are in dispute. There are however, differences of interpretation emanating from various quarters. This is to be expected in a climate of change and is a healthy manifestation of democracy.

Since the legislation concerned will be the subject of consideration by this Portfolio Committee in the near future, it would be premature to engage in the details of these proposals at this stage. Suffice to say that the proposed legislation will be further interrogated by RAMS and its members in a mature manner that will facilitate the development of a regulatory environment responsive to the interests of all South Africans instead of a few. It is a RAMS position that it supports a private sector delivery system for affordable, appropriate lifetime coverage. We are also aware of the centrality of the economic power of medical schemes and the responsibilities which that fact confers on the leadership of this industry.

One of the responsibilities is to ensure that those who are covered by medical schemes are able to afford such cover. Another responsibility is to ensure that such cover is sufficient and that the eventuality of people running out of benefits and being transferred to the public sector will only occur as the exception rather than the rule.

F. REGULATION OF THE PRIVATE SECTOR
The White Paper identifies two crucial aspects of regulatory practice that are not just worth noting, but which should help inspire confidence in those who are cynical about State intervention in the private sector.

The first relates to the manner of regulatory intervention. The White Paper unequivocally accepts that a central weakness in the regulatory framework is the tendency to regulate too rigidly, and is a practice which must be avoided if the optimal public: private mix is to be consolidated. The White Paper suggests that a system of incentives and disincentives encourages appropriate behavioural change more effectively and rapidly than rigid regulation. We welcome such an approach.

The second aspect deals with the accurate measurement, through monitoring and the collection of quality information, of changes engineered through the incentive: disincentive approach. It is this type of analysis that will allow better management of the interface We hold the view that a factual and scientific basis for modifying the regulatory environment is far more acceptable and effective in obtaining a consensus for change.

This approach is highly pragmatic and will facilitate the development of the interface. Obviously, the existence of a strong regulatory capacity, as the White Paper suggests, is necessary for encouraging private sector participation.

This is common cause in most countries which have successfully engineered a public: private mix and should be no different here.

We also recognise that a regulatory influence can occur through the agencies of professional bodies3 patient organisations and financing intermediaries such as medical schemes utilising mechanisms such as managed care.

NGO's have a crucial role to play in advocating patient's rights and with their active engagement, the balance of power can shift to the consumer and away from vested interests, professional or otherwise.

It is important to emphasise the refrain of respected global economists who all agree that an interventionist capacity within the State will develop in proportion to the degree to which social justice is entrenched and accountability is preserved.

G. CHANGING THE NATURE OF MANAGEMENT
We are pleased to note that Government has recognised and singled out in the White Paper one of the greatest hurdles in the path of the establishment of an efficient healthcare delivery system viz. effective management.

There is a dire need for a total overhaul in the management systems of the public sector particularly and the White Paper has, we believe, correctly identified the target areas.

These include:-
1. Decentralisation.
2. Manager support and skills development.
3. Participative, democratic management styles and management by objectives.
4. Effective evaluation techniques and performance standards.

These measures are in line with international practice and will be heartily welcomed by all stakeholders. Partnerships with the private sector in realising these objectives are highly desirable. RAMS has already indicated to Government its willingness to co-operate with public hospital administrators with a view to streamlining billing and claiming procedures for medical scheme members who utilise the public service. No doubt, other private sector parties, especially private hospitals, can be similarly engaged.

H. NATIONAL HEALTH INFORMATION SYSTEM OF S A (NHISSA)
The White Paper correctly contends that the availability of quality data for statistical analysis and operational efficiency is woefully lacking in South Africa.

This has led to serious ramifications for both the public and the private sectors, with both sectors sustaining ongoing losses by making adjustments through guesswork.

Medical schemes in particular are constantly fighting a rearguard action against escalating costs, because the dearth of quality data is hampering efforts to provide cost effective healthcare financing initiatives. The emergence of managed care principles is crucially dependant on such information systems and the possibilities of cooperation with the private sector particularly managed care organisations will add greatly to the potential of this system.

There is a growing realisation that long-term planning in the private sector is vital for its future survival, but the private sector, like the public sector, is hamstrung by the fact that these projections are based on faulty baseline statistics. From the view point of the private sector, there is every reason for lending this initiative its support.

Finally, Chairperson, the other policies outlined in the White Paper such as those on nutrition, Maternal, Child and Women's Health, HIV and communicable disease, the disabled, environmental and occupational health and Essential National Health Research are all as important as the other areas I have touched on. Due to the constraints of time, and by virtue of the fact that these areas are in the purview of others more knowledgeable in these matters, I will not expand thereon. They all seem to follow clearly the principles that guide the rest of the White Paper and we are comfortable that they represent appropriate and sustainable policies.

The White Paper does not shirk from its responsibility to append a time frame for the realisation of its mission. It is suggested that sufficiently substantial implementation of these policies will have been completed in 10 years. We think this is realistic and provides us all with sufficient time to apply ourselves and extend our assistance to this most important project.

In conclusion, Chairperson and Honourable Members, let me express our optimism about the future outlined in this document. It infers that strategic partnerships between and amongst the varies sectors contributing to the political economy of healthcare can result in the attainment of the twin goals of prosperity and social justice simultaneously. The White Paper clearly sets out its motives and its agenda through such an application and we take comfort from this transparency of intent and deed, knowing as we do, that the destinies of both sectors are inextricably intertwined in this exciting melting-pot which we proudly call our South Africa.

This is a brave plan designed to service a brave nation.