20
Privatisation: The various interested
parties
Privatisation of health care in South Africa is an attempt to shift state responsibilities for welfare and essential services to private enterprise. This move is politically and economically advantageous to the state and private enterprise.
Political aspects of privatisation
Privatisation in South Africa depoliticises health by shifting the emphasis on the racial inequalities within the state health care delivery system to a class-based
system. The latter would cater for those who can pay high fees or who are fully covered by medical aid schemes.
Economic issues in privatisation
Economically, privatisation means that health care becomes a commodity. The profit motive is introduced into die previously state-provided sector. Introducing the element of profit as a motive for health care delivery raises certain issues, such as the following:
- what type of health care will be offered?
- where will these services be made available?
- to whom will these services be available?
Prognosis for privatised health care
If the concept of privatisation conforms to the principles of capitalist accumulation then the type of services provided will most likely depend on
Interested parties 21
A patient recuperating from an open chest operation at a private clinic
profitability and patients' ability to pay. In that case, these services will be predominantly urban-based, curative, sophisticated, and expensive. The private
sector, despite its overtures for preventive and essential programmes, is unlikely to be prepared to provide low profit services.
Privatisation vs. the existing health care delivery system
The argument for privatisation is a convincing one in the light of the inadequacies of the existing health system in this country. It captures the attention of many people who, like the advocates of privatisation, are reluctant to see the health problem as an integral part of the political, social, and economic structures in South Africa. Yet the arguments for greater efficiency and cost containment, convincing as they might seem, are addressing the symptoms and not the causes of the health problems in this society.
Privatisation and free enterprise
The proponents of privatisation interpret the concept according to the interests of
22 Interested parties
Privatisation addresses symptoms, not causes of health problems
those groups advocating the "free market solution". These groups reason that health is a privelege, not a right and therefore can be distributed according to the supply and demand forces of the market.
The privatisation lobby
The private sector which advocates privatisation of health care consists of private health industry and services (eg private practitioners and hospitals, medical aids and pharmaceutical companies) and economists and business management consultants who support this sector.
These interest groups support privatisation on the basis that health care for profit will be more cost effective/efficient and more efficiently delivered than health care in the public sector. The market, it is claimed, introduces competition which in turn will promote a high standard of service. The profit motive will
Interested parties 23
ensure competent and appropriate costing strategies. To achieve these ends, health institutions, like any other business, will be run by business managers.
Some advocates of privatisation also promote the idea of "freedom of choice"
in health, i.e. that patients will be able to shop around for the best care available, rather than being forced to utilise public services with all their inconveniences.
This attitude seems to indicate the target population envisaged by the private health industry, for only the affluent or insured would be in a position to make this choice.
Proposals made by the privatisation lobby
Various strategies are proposed to "overcome" the limited access to private health care. The private sector is lobbying for deregulation and changes in legislation to
"free" health services from the restraints of the present system. For example:
1. Changes are being sought to allow for the introduction of group health practice such as the health maintenance oiganisations (HMO's) of the USA. These HMO's are pre-paid membership schemes which offer services to members in
accordance with a subscriber's level of contribution.
These pre-paid schemes are being promoted as an alternative to the fee-for- service model applied in South Africa. It is claimed that the fee-for-service practice, rather than encouraging cost containment, encourages over-utilisation of services by doctors and patients.
Health maintenance organisations, it is claimed, have inbuilt incentives for cost containment, e.g. patients are entitled to treatment only in accordance with pre-paid contributions; physicians are paid per enrollee not service; and physicians
An artist's impression of Lesedi Clinic
24 Interested parties
Subsidiary companies
Nature1 >l business"
1986 R
Issued share capital
1985 K
Effective Percentage holding 1986 1985
Book value of the company's interest
Shares Indebtedness 1986
R
1985 K
1986 R
1985 K Subsidiaries incorporated in South Africa
Afro* Limited
Afro* Finance Limited
Amalgamated Mcdkal Services I-imited Ammed Medical Systems (Pty) Lid AOL Performance and Educational Services (Pty) limited
Brenthurst Chnic(Pty) Limited Brenthurst Dispensary (Pty) I muted Die Eugene Marai* Cedenkhospitaal Apteek (Edms) Beperk
Dowson & Dobson Limited Fntabem Hospital limited
Florence Nightingale Nursing I lonn* Limited Glynnwood Nursing Home (Pty) I .united Glynnwood Proper ties (Pty) limited
Harris Welding Equipment Co. (Pty) limited Home & Hospital Dispensaries (Pty) limited Industrial Research & Development (Pty) Limited Industrial & Petroleum Valves Holdings (Ptv) 1 .muted Industrial & Petroleum Valves International
(Pty) Limited
Jomoru Investments (fay) Limited Kwest (Petersburg) (Pty) Limited Lady Dudley Nursing Home Limited
Les Marais Verpleeginrigtings (Edrm) Beperk Nasionale Sweisware (Edms) Beperk
NlKoweld (Pty) Limited
Northern Dispensary Limited Princess Dispensary (Pty) Limited Randburg Nursing Home (Pty) Limited Sapego Company I ami ted
The Princess Nursing I lome Limited United Medical Services Limited
Welding Electrode Manufacturing Co. (Pty) limited Subsidiary incorporated in South West Africa South West African Oxygen (Pty) Limited Subsidiary incorporated in Malawi Industrial Cases Limited
Subsidiary incorporated in Swaziland
c;
I H H I I I I I I I C
M
i i H H W I I
I- I I- I I I I H W W
8
H H I H I I W
G
100 60000 3400000 270 200 10000 200 499 1000000 1183860 2000 1000 6000 2 20200 6000 20000 100 100 1000 63S00 499 2 1200 200 4 100 10 10785 37000 60000 280000
Kill 6 0 0 0 0 144 Mi KM
21X1 II) (XHI
2IX) 499 I 1100 IXX1 I 18186(1
2 WW
20 2(10 6 000 20 (KM 100 100 1000 63 500 499 2 I 200 200 4 100
10 10 785 37 000 60 000 2H0 (XX)
100 100 100 100 100 60000
85 85 17450798
60 162 100 KM
85 85 85 85
200
100 (1085781) (713 154) 60 (XX) (54 930162) (63 026135) 174507*8 5086013 3K710I
179923
2iX) (671895) 236 340
C. K2 133 334 Kt 866 667
57 100 76 85 85 85
too
80 100 100 100 85 100 85 55 100 75 85 85 44 85 85 85 100 100 75
0X1 75 H5
100
KM KM KM 85 Ktt 85 55 100
75 K5 85 44 85 85 85 KM 100 75
3674208 8120575 790892 533963 2 16000 594496 372242
3 674 208 8 063 829
14534027) (6 087 2V) 1827599 2 475 I IS
2 16 (XX) 594 4 % 372 242
(825505) 1185034 1137158 (441177) 2149 150
1 406 19|
44 XI (XXI (379 797) 3 725 81ft
46973 46 973 3963 44 429
2 2 (21 (2) 21446 21446 53910 (137 410)
563140 563 140 (41646351(2 752 679) 2 8 0 0 0 0 280 0 0 0 1 3 4 9 6 1 0 1 4 8 7 764 3 1 8 0 5 4 318 054
Swazi Oxygen (Pty) Limited No n -trading companies
G E8 F8 100 100 8 8 782578 659 497
32843261 3) 461 498 (52898246) (62274179) 1345554 1345 554 (887352) (858 321) 34188 815 32 807 052 (53 785 598) (63 132 500)
Unlisted associated companies
Nature of business'
1486 R
H 4000 I I — I I -
H -
11 -
I I 951 C. RS 110569*0
I I 1000 I I 100 L 19200
Issued share capital I98f»
K 4 000 4 (XXI 1000 6 (XX)
951 KMllftv**) 1 (XXI
KM 19 201)
Efleclive Percentage holding 1986
20
—
—
—
— 34 34 32 32 50
1985
m.
49
— 50 50 42.5 42.5 34 M 32 32 50
1986 R 32245
—
—
—
— 400 85401 814016 32
—
Book value Group
1985 R
— 2000 2000 266 255 58 600 400 85 40) 814 016 32
—
1986 R 32245
—
—
—
— 150 85401 814016 32
M B
Company 1985 R
— 2000 2000 266 255 58 600 150 8540) 814 016
32
^
Ben d o c (Pry) Limited
City Park Hospital (Pty) Limited
City Park Medical Centre (Pty) l i m i t e d C i l y n n w o o d N u r s i n g H o m e (Pty) l i m i t e d G l y n n w o o d Properties (Pty) Limited
I liway Medical I f o l d i n g s (Ptv) Limited Les G a / Industrials Limited
Magnolia Clinics l i m i t e d N e d park Clinic (Ply) Limited Rainspray H o l d i n g s (Pty) Limited
932094 1228 704 931844 1228 454
A large number of private hospitals are AFROX business ventures
Interested parties 25
Here's THE plan to help you get the
money you'll need if you go to hospital anywhere in the world for
HEART ATTACK
5CANCER, STROK SURGERY or any
other serious illness.
PLUS...an extra R10 000 paid in the event of accidental death.
ASK y o u r M n n o w D r o r t n i s l o o WW...WtlOf1
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tart you paid by r e * Even rf you nave medtcat aid and you go 10 a state hosp«a» you * H ^ v * to pay a ponton oteie costs Theamounl w* vary aocor Ong 10 you> •ncome but you wtf st# have to pay
Many people want the more ndMduaksed waiment and care provvjed by pnvale rentes But Jo get Ihem you must pay an ever more significant amount pi the cost) lor
• t*? pernor. o< you/ .laity rourr. cost not paid by medcal aid
• laboratory tea* and tests a taa» Of doctors and surgeons
• drugs anaesthesia therapes, etc
Whether you go to a state hosprt*] or a private ckrac. ttere
proving kx the 9if*n$t that anse wnen e>ere s no one left at home to take care ol your household
Cae»8ene«n»paKl«»ecOytorou
Your cashbenefcts are pad oVectty 10 you not to a cVx-ior orahOCpMl
You are the best judge o» what >our needs and extra expenses are. and The Hoiprta* insurance Plan allows you to us* your cash benefits as you sec lit
Also, these cash benefits are paid m addition to any txmefrtS you Tiay receive from any other insurance regardless ot the actual amount ot your hoepaat bll* Mmen you make a dawn, no QjHMMflt are asked about irry ottv* insurance
PLANA
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One suggested measure of cost-containment is separate catastrophic cover
are subject to peer review. All these suggestions are cited as solutions to
"overtreatment" of patients.
2. Changes in the medical aid structures are suggested as part of the cost containment strategy. The call is for flexibility of schemes and prepaid health insurance. Both of these may offer packages to suit the patients predicted requirements and both offer levels of entitlement in accordance with contributions. The lower the premium the more basic the care, the higher the investment the greater the care available.
Incentives such as no claim bonuses, co-payment by patients and separate catastrophic cover are also being suggested as methods of cost containment in health care delivery. All of these proposals are based on the assumption that the patient can predict their disease profile.
Private doctors, medical aids,
and the pharmaceutical industry
A local financial newspaper reported in November 1985, that medical aid tariffs had increased 500% since 1975.
26 Interested parties
The cost of private health care in South Africa is very high. The causes of this cost escalation are being debated by the private health industry, each sector blaming the other for this state of affairs.
Private practitioners are "over-servicing", patients are "over- using", pharmaceutical companies are "over-marketing", private clinics and medical aids
are "over-charging".
Medical schemes, in their search for cost containment measures, are lobbying for legislative changes which will allow for flexibility of medical cover and the removal of guaranteed payments. Medical aids blame doctors' tariffs, over-usage of services and drugs by doctors and patients, and the high cost of medication for the increases in medical aid contributions.
Doctors, in turn, lay much of the blame for their problems on the medical aid system. They are reluctant to forego guaranteed payment as a means of containing costs. Instead they are suggesting alternative methods of cost containment, e.g.
responsible self medication, co-payment by patients and subsidised care for those who cannot afford expensive care.
This merry-go-round fails to address the fundamental causes of and solutions to health and ill-health.
Conclusion
All of these debates and "solutions" reflect the different interests of the various sectors of the private health industry. The privatisation platform is debating health care at the level of symptoms and not the causes of health care deficiency in South Africa. The primary aim of the interested parties is cost and efficiency.
This is in stark contrast to the fact that the health care deficiency is caused by disproportionate distribution of the human and material resources of health.
The Officially Recommended
Hospital Insurance Plan
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The Officially Recommended
Hospital Insurance Plan
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Medical aids are primarily available to salaried, skilled, white employees
