THE PRIVATE HOSPITAL INDUSTRY

1. THE PRIVATE HOSPITAL INDUSTRY a presentation to HEALTH PORTFOLIO COMMITTEE 12 May 2010

2. What is the Hospital Association of South Africa (HASA) • A voluntary non-profit association that represents more than 90% of private hospitals and ambulatory clinics. • HASA recognizes and submits to the leadership and stewardship of the DOH of the Republic. • It communicates and consults with its members on important national and international developments which may impact on South African Healthcare interests. • HASA is governed by an agreed upon code of Ethics. • HASA would like to see itself as a responsible resource that will continue to contribute to the betterment of healthcare for all in the RSA.

3. HASA has historically demonstrated it’s commitment to work with government, the Health Portfolio Committee and the DOH for improvement of healthcare in South Africa • We recognize that the Portfolio Committee on Health has earmarked four areas of priority for this year. Three of which are relevant to HASA and are : • How private hospitals operate between two sectors? • NHI? • 2010 readiness?

4. How private hospitals operate with respect to the handling of patients, transfer of patients to the public sector and how we charge. • Important data to note: • RSA total population: is estimated to be approximately 49m • Of that there are approximately: 8m (medically insured) • Private Sector usage: • Primary Care:15m • Secondary.& Tertiary: 9.5m

5. Use of public facilities • Medical Schemes Act (1998) introduced Prescribed Minimum Benefits (PMB’s) • PMBs represents approximately 70% of private hospitalisation • These cases are fully covered by Medical Schemes according to the Medical Scheme Act • In the early years some medical schemes might have tried to circumvent PMBs by unilaterally making the State the DSP • Some low cost benefit options still has the public sector as DSP e.g. Transnet • A scheme can instruct that the patient be moved to public when funds are exhausted. • Private hospitals must treat all emergency cases. On stabilisation, state patients are transferred to the public sector if a bed can be secured . (Section 5, National Health Act, and the Constitution of the Republic) • COIDA – unconfirmed cover can result in transfers to the State. • When public sector is on “divert” (i.e. state closed and not taking patients) – private hospitals are obliged to accept and keep uncovered patients without reimbursement.

6. Use of public facilities - Recommendations • There are currently no conditions and/or terms in which patients are diverted to the private sector or transferred to public sector. • We recommend that a protocol be developed for managing patients between the public and private sector. • Since HASA members do not discern patients between PMBs and non-PMBs we support the CMS view that PMBs should be expanded to include all hospitalisation. This would remove the problem of covered patients being moved to state hospitals .

7. Private sector pricing Various combinations of FFS, Per diems and Fixed fees

8. Hospital expenditure as % of total health expenditure Source: OECD 2006; German Federal Statistical Office; American Hospital Association

9. SA private pricing cares compares well globally Source: Servaas van den Bergh, Stellenbosh University

10. South Africa has significantly lower out of pocket payments than peer countries Source: WHO 2008

11. Conclusions on Price • Sec 90 (1) (v) requires cost based reference pricing– Reference Price Lists (RPL). (Such list however, shall not be mandatory, so as to ensure competition within the sector) • This has been completed by HASA and its consultants and should inform the discussion on appropriateness of cost. • RPL results may add comfort as based on actual input costs.

12. Solutions to improved affordability of private health • The underlying problem is the gradual erosion of cross subsidies as: • Medical scheme population ages • Adverse selection with young and healthy opting to remain uncovered; sick incentivised to get medical cover • Solution: strengthen social solidarity and affordability as a consequence • Improve risk cross-subsidies (Risk Equilisation Fund) • Improve income cross-subsidies (restructure Tax Exemption Subsidy; mandatory membership for those who can afford) – 20% reduction in contribution rate 1 • Review VAT on healthcare product and services – 14% reduction in cost • Review HPCSA regulations on employment of Doctors • National purchasing scheme for drugs and surgicals 1 Prof. Heather McLeod

13. Private sector 2010 readiness

14. The private sector 2010 readiness • Early in the process HASA was periodically invited to participate in 2010 health-plan meetings. • Most of the recent scheduled meetings have been cancelled for varied reasons. • HASA members continued to implement internal readiness plans. In this regard, meetings have been held with the national and provincial departments of health on an ad hoc basis (attended by private sector members).

15. Overall plan – the need • Biggest event in the world, for 32 days, in mid winter, within the socio-political background and amidst an economic recession : • Provide emergency care and acute hospital admission support, with additional surge capacity • Do all of this as if it was “business as usual” • Develop and forge new relationships between public and private sector (for legacy building)

16. Major incident preparedness • Most private hospital staff trained , with each hospital running own internal training • Hospital Major Incident Committees have been established and are functional in all designated hospitals • Major Incident Plans – based on a Group generic, but customized per hospital – strategic and tactical • Hospital Operational Plans – detailed actual roles and committed responsibilities on game days , and those in between • In addition private hospitals need to ensure that ordinary operations continue (local patient demand is seen to).

17. Health Technical Task Team 2010 targets supported by the private sector Hospital and EmergencyTask Team Emergency centres Triage Forensic (criminaland sexual assault) Database Hospitals Disaster medicine Department of Health and the Private sector collectively agreed the targets

18. Gathering of Clinical Information • Triage priorities • Information about patient acuity • Clinical outcomes • Information about volumes and admissions • Clinical surveillance • Information about disease/injury profiles • Clinical processes • Information about delivery of clinical care

19. Resources on Intranet • Major incident related • Signage – directional, during MI • Action cards - descriptive for roles and tasks • Triage tags - ensures priority • Major incident plans • Infectious disease protocols - ensures safety • Special situations • Clinical reference information • Operational standards and formats

20. What we still require • Communications plan from DoH per province • List of reporting requirements • Reporting structure for incidents / admissions • Finalized list of supporting hospitals and services • Agreement in place, and terms thereof, for co- operation between Health care sectors • Legacy targets in terms of outcomes

21. In conclusion…… We want to reassure the honourable members of our willingness to join hands and work with yourself towards the attainment of better health for all in our country.