THE CHARTER OF THE PUBLIC AND PRIVATE HEALTH SECTORS OF THE
REPUBLIC OF SOUTH AFRICA
CHAPTER ONE: FUNDAMENTAL PRINCIPLES
1.1 Opening Declaration
The Parties to this Health Charter earnestly and sincerely desire to facilitate and effect transformation of the health sector in the following key areas:
They acknowledge that it is essential to ensure the sustainability and efficiency of the health sector in order to achieve the transformation goals for each of these areas.
They further acknowledge the urgent need to effect transformation of the national health system in a co-operative, constructive and mutually beneficial relationship in such a manner as to reflect the diversity and meet the various health care needs of the total population of South Africa.
THEREFORE the Parties -
AND NOTING THE NEED:
1.2 DEFINITIONS AND INTERPRETATION
In this Charter, except where the context clearly indicates a contrary intention the following words and phrases have the meaning ascribed to them below:
"Access" means having the capacity and means to obtain and use an affordable package of health care services in South Africa in manner that is equitable;
"Affirmative means targeted procurement of commercial goods
Procurement or and services from persons disadvantaged by
"Preferential unfair discrimination on the basis of race, gender,
Procurement " disability or similar grounds
"BEE Act" means the Broad-Based Black Economic Empowerment Act No 53 of 2003;
"black people" has the meaning ascribed to it in the BEE Act and "black person" has a corresponding meaning;
"broad-based black means the economic empowerment of all economic
empowerment" black people including women, workers, youth, people with disabilities and people living in rural areas through diverse but integrated socio-economic strategies that include, but are not limited to-
(a) increasing the number of black people that manage, own and control enterprises and productive assets;
(b) facilitating ownership and management of enterprises and productive assets by communities, workers, cooperatives and other collective enterprises;
(c) human resource and skills development;
(d) achieving equitable representation in all occupational categories and levels in the workforce;
(e) preferential procurement; and
"Charter" means the Charter for the South African health sector
"coherent" means rationally co-ordinated and unified;
"Company"" means a legal entity registered in accordance with
the laws of the Republic of South Africa for the purpose of conducting business;
"Control" means the right or the ability to direct or otherwise control the majority of the votes attaching to the shareholders’ issued shares, the right or ability to appoint or remove directors holding a majority of voting rights at meetings of the board of directors, as well as the right to control the management of the enterprise;
"cost-effective" means a ratio between cost and efficacy with regard to expenditure such that within any given circumstance, optimum and demonstrable benefit is derived through the most efficient utilisation of the resources required to create that benefit;
"Direct ownership" means ownership of an equity interest together with control over voting rights attaching to that equity interest;
"Discrimination" means discrimination as defined in the Promotion of Equality and Prevention of Unfair Discrimination Act (2000)
"efficient" means the utilisation of limited inputs or resources in order to obtain or achieve a specific output or outcome in such a manner as to ensure the attainment or achievement of that output or outcome at optimal level;
"Employment Equity" has the meaning ascribed to it in the Employment Equity Act (Act No 55 of 1998);
"Enterprise Development" means investment in, and/or development of and/or joint ventures with black owned or black empowered enterprises and SMMEs, with real economic benefit flowing to the recipient enterprise allowing it to be set up and run on a sustainable basis;
"Equity" means the fair and rational distribution of an affordable package of quality health care services to the entire population of South Africa, irrespective of patients’ ability to pay for such services and irrespective of their race, gender, sex, pregnancy, marital status, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, culture, language or birth; and ‘equitable’ has a corresponding meaning;
"Executive management" means those managers who have a significant leadership role in the enterprises, have control over day to day operations, have decision making powers and report directly to the Chief Executive Officer and / or equivalent or the board of directors;
"GDP" means Gross Domestic Product i.e. the market value of all final goods and services being produced within the borders of a country;
"HDI" means a South African citizen-
(1) who, due to the apartheid policy that had been in place, had no franchise in national elections prior to the introduction of the Constitution of the Republic of South Africa, 1983 (Act 110 of 1983) or the Constitution of the Republic of South Africa, 1993 (Act 200 of 1993) ('the Interim Constitution'); and / or
(2) who is a female; and / or
(3) who has a disability;
Provided that a person who obtained South African citizenship on or after the coming to effect of the Interim Constitution, is deemed not to be an HDI; (2001 Regulations to the Preferential Procurement Policy Framework Act No 5 of 2000
"health care personnel" means health care providers and health workers as defined in the National Health Act No 61 of 2003;
"Health sector" means natural persons and other entities involved in the provision or funding of health services in one or more of its aspects to people in South Africa;
"health services" means health services as defined in the National Health Act No 61 of 2003
"national health system" means the system within the Republic, whether within the public or private sector, in which the individual components are concerned with the financing, provision or delivery of health services;
"Junior Management" means the level of management below middle management and includes academically qualified workers who possess technical knowledge and experience in their chosen field;
"Middle Management" means the level of management below senior management and includes people who possess a high level of professional knowledge and experience in their chosen field;
"NGO" means an organization which is independent from government and its policies, which is generally, a non-profit organisation that obtains a significant proportion of its funding by way of donations from private sources and includes a non profit organization as defined in the Nonprofit Organisations Act No 71 of 1997
"parties" means the parties to this Charter;
"PPI" means a Public Private Interaction in terms of which one or more persons or entities involved in health care within the public sector interact with one or more persons or entities involved in health care within the private sector or the NGO sector with the object of achieving a mutual benefit or goal and includes but is not limited to a PPP; PPIs include: public financing of health services provided by the private and/or NGO sectors; private financing of publicly provided health services; innovative healthcare delivery models and business models for health practices; delivery models aimed at skill retention and effective distribution and utilisation of skills; use of public assets for the provision of health services by the private sector; use of private assets for the provision of health services by the public sector;
"PPP" means Public Private Partnership as defined in Regulation 16 of the Treasury Regulations issued in terms of section 76 of the Public Finance Management Act, 1999 (Act 1 of 1999);
"PPPF Act" means the Preferential Procurement Policy Framework Act No 5 of 2000;
"Private sector" means persons and entities who are not within the "public sector" and includes NGOs;
"Procurement" means procedures and expenditure, including capital expenditure, for the purpose of acquiring goods and / or services and which, in the case of the public sector, are governed by legislation;
"Public sector" means government departments, organs of state and institutions exercising a public power or performing a public function in terms of legislation;
"Quality" in relation to health care means input of such a nature and applied in such a manner as to ensure optimum results within the available resources and the circumstances of each case, taking into account the constitutional rights of the patient, including the rights to life, human dignity, freedom and security of the person, bodily and psychological integrity, freedom of religion, belief and opinion and privacy;
"Senior Management" means people who plan, direct and co-ordinate the activities of a business/organization and who have the authority to hire, discipline and dismiss employees;
"SETA" means a sector education and training authority established in terms of section 9 (1) of the Skills Development Act 97 of 1998;
"Skills Development" means the process of enhancing individuals’ specialised capabilities in order to provide them with career advancement opportunities;
"SMME" means a small, medium or micro enterprise as defined in the National Small Business Act 102 of 1996;
"sustainability" means having a reasonable prospect of continued, successful existence in the present and the foreseeable future with regard to those critical success factors that define and affect the viability of a particular enterprise over time;
CHAPTER TWO: CHALLENGES
2.1.1 Access to health care is a complex issue of constitutional significance. There are significant numbers of people in South Africa who do not have adequate access to health services due to geographical, financial, physical, communication, sociological (such as unfair discrimination and stigmatisation) and other barriers.
2.1.2 The general challenges to improved access for all are to identify specifically such barriers as and where they occur in communities throughout South Africa and to implement interventions that are explicitly designed to overcome them with due regard to the -
Improved "access" requires improved efficiency, since increases in efficiency should lead to increased access. The sustainability of the national health system is dependent upon its efficient use, management and generation of resources including financial, human, technological, scientific, clinical, managerial, infrastructural and resources in the area of materials and equipment and research and development.
Inefficiency in the national health system threatens its sustainability since it leads to maldistribution of resources, and negates or undermines policies and procedures designed to give effect to the distribution, allocation or utilisation of resources. Policies and procedures should be developed with an awareness of the need for sustainability of the national health system and with a view to the elimination of inefficiencies within the system that could arise for instance from wasteful duplication of resources, under-utilisation of resources and cost ineffective application of resources.
2.1.4 Human Resources
(a) The Parties to this Charter hereby acknowledge that human resources are critical to adequate access to health services. Access to health services training is essential for the attainment of the Charter objectives. There is a need to ensure that historically disadvantaged individuals in particular have access to training institutions or other institutions, for purposes of obtaining academic, or other training in all aspects of health services.
(b) There are currently shortages of health care personnel in a number of different areas. These include specialised nursing, general medical practice, specialised medical practice, clinical technology, pharmacy, radiology and pathology. If the skills necessary to ensure access to a basic minimum package of care and services are not maintained throughout the national health system then access is not achievable.
(d) There are different salary ranges in the public and private health sectors which create significant disparities in human resources and incentive structures.
(a) Access to medical schemes is diminishing in real terms. Medical schemes provide financing for almost 7 million people but over the years membership figures have declined as a percentage of the general population. This is due in part to major increases in non-health expenditure by medical schemes on items such as administration and brokers fees.
(b) Given that health care expenditure in South Africa was approximately R107 billion in 2003/4 equivalent to 8.7% of GDP in that year, and that this compares favourably with many other countries in terms of percentage of GDP there is a strong basis for arguing that the key challenge facing the national health system is not necessarily one of inadequate resources but inequitable and inefficient application of resources. Inequitable application of resources results in inadequate access for many. In 2003/4 medical schemes spent approximately R8 800 per beneficiary while in the public sector the figure was approximately R1050 for persons who were not members of medical schemes.
(c) There are geographical inequities in the provision of health care financing which is skewed towards the urban and private sector. This clearly affects access in the rural and public sector. The challenge is to find a way of providing health services at a low cost to what are perceived by health care financers as high risk areas such as townships, rural areas and poor provinces. Whilst health service providers are interested in meeting the needs in these areas, they are discouraged by the fact that it is difficult to find appropriately structured funding solutions.
(d) These are challenges which the Parties to this Charter will address by means of the strategies and targets set out in a chapter three.
2.2.1 Equity in health care involves ensuring equal access to equal care for equal need in a situation in which resources are efficiently utilised in a fair manner. The challenge is to develop a minimum defined basic package of health services without detracting from the principle of buy-ups and other mechanisms of funding levels of care that are higher than the basic minimum.
2.2.2 The basic package of care must reflect the minimum acceptable standard of health services to be made available as the health care safety net for all. This will not preclude the purchase or provision of larger baskets of health services by persons who can afford to do so.
2.2.3 There is a small minority of South Africans, (between 15 and 20 percent of the population) who have a high degree of access to health services and a large majority (between 75 and 80 percent of the population) who have limited access to health services. According to the latest figures, the state spends some R33.2 billion on health care for 38 million people while the private sector spends some R43 billion servicing 7 million people.
2.2.4 Health outcomes and life expectancy for the poor and medium income groups are generally worse than those for high-income groups due to inequity in health services. The services to which the minority has access are far superior in terms of quality and quantity, to those to which the majority has access.
2.2.5 The general challenges with regard to equity in health services are –
2.2.6 Human Resources
(a) The Parties acknowledge that the availability of human resources is central to the question of equity in health services between the public and the private sectors, between rural and urban communities and between historically disadvantaged individuals and those not historically disadvantaged. For this reason appropriate numbers of suitably qualified and trained health care personnel must be assured throughout the national health system. This is presently not the case.
(a) The most significant challenge facing the South African health system is to address the inefficient and inequitable distribution of resources between the public and private health care sectors relative to the population served by each.
(b) The financing of health care in South Africa currently contributes to the inequity between the public and private health sectors. Slightly more than 38% of total health care funds in South Africa flow via public sector financing intermediaries (primarily the national, provincial and local departments of health) while 62% flows via private intermediaries. Medical schemes are the single largest financing intermediary accounting for nearly 47% of all healthcare expenditure followed by the provincial health departments at 33% and households (in terms of out-of-pocket payments directly to health care providers) at 14% of all health care expenditure. The national and local government health departments and direct expenditure by firms account for less than 6%. In relation to the original sources of finance, the vast majority of funds flowing through public sector financing intermediaries are funded through nationally collected general tax and other revenues. From the provider perspective, about 39% of all health care expenditure occurs on public sector providers and 61% on private sector providers. This is inequitable when one considers the number of persons treated by private sector providers as opposed to public sector providers.
(c) A further challenge in the area of health financing in the public sector is the inequitable distribution of health care resources between provinces. There are considerable differences between provinces in public sector expenditure per person. The challenge is how to gradually reduce disparities so that South Africans are not disadvantaged in their access to health services purely as a result of their place of residence without unduly infringing on provincial autonomy with regard to budgetary allocations.
(d) In the private sector membership of medical schemes has become increasingly unaffordable thus widening the gap between the high-income group and the middle-income group in terms of equitable access to health care. Medical scheme membership has decreased in absolute terms and has declined as a percentage of the population. This is due in part to rapid increases in expenditure on private hospitals in the late 1990s and early 2000s. Another area of rapid increase in expenditure by medical schemes is non-health items such as scheme administration fees (R4.5 billion in 2003), managed care initiatives (R1.1 billion) and brokers fees (which increased 64% from R354 million in 2002 to R581 million in 2003).
(e) The challenge is to control the rapid spiral of medical scheme contributions and expenditure. It is significant that direct out-of-pocket payments, the most regressive form of health financing, account for almost a quarter of private health care financing. The majority of such expenditure is by medical scheme members (for instance for co-payments and services not covered by the scheme).
These are challenges that the Parties to this Charter will address using the methods and strategies set out in Chapter three.
2.3.1 To achieve quality in health services the best health outcomes must be secured with regard to the available resources. The issue of quality of health services is inextricably connected to issues of both access and equity. Access to health services of unacceptable quality is not access. Access by some categories of people to health services of inferior quality to those accessible by others creates inequity.
2.3.2 General challenges in the area of quality in health services include –
2.3.3 Measurement of quality in health services on an ongoing basis is critical to promote and maintain the delivery tracking, publication and feedback processes to ensure awareness of health outcomes in relation to quality of services.
2.3.4 Human Resources
(a) Specifically in the area of human resources the Parties to this Charter hereby acknowledge that quality in health services is heavily dependent upon the availability and work ethic of health care personnel.
(b) They concede that for a number of years there have been concerns about the attitudes of health care personnel towards patients and the fact that the health care system needs to become patient centred. A lack of respect for the human dignity and freedom of patients on the part of some health care personnel continues to be an obstacle to the achievement of quality in health services.
(c) The Parties further acknowledge that quality is also affected by the skills shortages in the health sector. The resultant psychological, and physical work pressures upon those who work in such fields leads to a downward spiral of diminished availability of such personnel within the national health system as a whole. In some instances, failure on the part of employers in some instances to implement adequate employment equity programmes, to actively develop historically disadvantaged individuals and to ensure the transformation of employment practices at all levels within health establishments further contributes to lack of motivation amongst human resources.
(a) One of the challenges with regard to quality in particular is that low cost options should not be perceived as, or become, low quality options. The quality of health services that are offered by low-cost options must be the same as that offered by other options. The absence of low cost solutions is largely due to the cost of providing health care on the supply side with high concentrations of services and vertical integration. In the private sector this is evidenced by limited growth.
(b) Linked to the high costs are the current business practices and pricing models in the provider market.
(c) A further challenge is that it is difficult for new entrants to get into the hospital services market by small medium and micro enterprises. This is due to the concentration of suppliers in the hospital sector and financing requirements for such services. Improved price competition would have the effect of forcing prices downwards, leading to lower cost at acceptable levels of quality.
(d) In order to ensure its sustainability the national health system must be able to produce and reproduce all the resources needed to deliver quality, affordable health services in the medium to long-term. The sustainability of the national health system is dependent upon its efficient use, management and generation of resources including financial, human, technological, scientific, clinical, managerial, infrastructural resources in the area of materials and equipment and research and development.
(e) Inefficiency in the national health system threatens its sustainability since it leads to maldistribution of resources, and negates or undermines policies and procedures designed to give effect to the distribution, allocation or utilisation of resources. Policies and procedures should be developed with an awareness of the need for sustainability of the national health system and with a view to the elimination of inefficiencies within the system that could arise for instance from wasteful duplication of resources, under-utilisation of resources and cost ineffective application of resources.
2.4 Broad Based Black Economic Empowerment
2.4.1 The Parties to this Charter acknowledge that transformation is a process that involves a comprehensive change in the status quo, the manner in which the national health system is structured and operates. It includes profound changes in the levels of ownership, concentration and representation of Black persons across the value chain within the health sector. Therefore, the outcomes of any transformation process should reflect a redressing of the imbalances created by apartheid policies and other discriminatory laws and practices of the past. Therefore the principles of Broad Based Black Economic Empowerment are applicable to all those firms and/or individuals that conduct business or economic activity in the health sector whether for profit or otherwise.
2.4.2 Equity in ownership refers to a state of affairs in which black people are fairly and proportionately represented in all areas of, and at all levels within, business in the health sector. This is to be achieved by a process of comprehensive transfer of ownership to, or acquisition of ownership by, black people throughout the value chain in the sector. The object of this process is to give practical effect to the recognition that apartheid and other discriminatory laws and practices resulted in excessive concentrations of ownership and control in the hands of the minority within the health sector and the need to redress this imbalance. Within this process, the imbalance must be remedied with particular regard to black people and with the object of the opening up of the health sector to ownership by greater numbers of South Africans
(a) This challenge is a challenge shared with institutions of higher learning. How far these institutions transform and whom they produce for this country is directly linked to the speed with which the health sector can be transformed.
Even though the skills development levy and affirmative action legislation are in place, there is little evidence to suggest that the health sector has made significant progress in addressing this issue.
(b) Transformation of management echelons relates more to affirmative action legislation (Employment Equity Act No 55 of 1998). Despite the many years that this Act has been in place there is still paucity of representation at senior management level in the private sector. Not many black people have been promoted to management level. Lack of movement in this area is said to have led to a lot of job-hopping. The challenge is to ensure that genuine transformation takes place at this level?
(c) It is important that the process of transforming the workplace covers the total value chain. In identifying the appropriate levels at which changes must take place, the following broad categories are identified;
(i) Executive Management- this includes the board of directors, members of the Executive Committee (Exco) and persons earning more than R600 000 p.a.
(ii) Senior/Middle Management – includes persons that report to members of Exco and any person earning between R 400 000 and R 599 999 p.a.
(iii) Junior Management – includes supervisors and heads of section and any person that earns between R 200 000 and R 399 999 p. a.
(iv) Professional and skilled workers – includes persons who are not in management and are employed because they have special knowledge or particular skill.
(d) The question of the quality and orientation of leadership of company boards is a major issue of concern. The presence of black people in the local or even international boards of multinational companies does not necessarily guarantee the implementation of BEE and the other principles of this Charter. The challenge is how to empower Black people who sit in corporate governance provisions so that they are in a position to be able to influence or drive the implementation of the initiatives envisaged in the Charter.
CHAPTER THREE: SOLUTIONS AND RESOLUTIONS
The Parties hereby resolve and commit to move towards a coherent, unified health system offering financial protection for all the population in accessing a nationally affordable package of health care at the time of need and to improve access to health care services by -
The Parties hereby resolve and commit to improving equity in health services by –
The Parties hereby resolve to improve quality in health services by -
3.4 Broad Based Black Economic Empowerment
The Parties commit themselves to the transformation objective of equity in ownership and more particularly broad based black economic empowerment employing the strategies outlined in terms of section 11 of the BEE Act and this Charter.
Implementation of the Health Charter will be a process that allows for experimentation and discovery and must be flexible enough to allow for changes and adjustments to be made to strategies as new variables come to light and existing variables change.
3.5.1 The Parties agree that a mechanism to monitor the implementation of the Charter be established and to enable the public and private sectors to work together towards the common goals outlined in this Charter.
3.5.2 The eligibility of stakeholders that do not implement the Charter for state contracts and contracts with other parties to the Charter would be reduced or precluded altogether depending on the circumstances.
3.5.3 The National Department of Health undertakes, in collaboration with the National Treasury, to develop a practical framework for PPIs.