South Africa’s National health insurance policy – a new opportunity for strategic purchasing?

February 2016
Ayako Honda

RESYST has recently completed research that assesses the performance of healthcare purchasing mechanisms across several countries.  In South Africa, this has coincided with the development and publication of the Government’s plan for National Health Insurance (NHI), which includes major changes to how health services are purchased. Dr Ayako Honda, a Senior Lecturer at the Health Economics Unit, University of Cape Town, explores the extent to which NHI might lead to more strategic purchasing in South Africa, and outlines how purchasing mechanisms should be designed to ensure high quality, equitable and responsive health services for all.

The South African government has committed to pursuing NHI in an attempt to achieve Universal Health Coverage. In December 2015, the Government issued a White Paper that outlines the path to implementing the NHI over the next 14 years.

A key component of the NHI reform is the establishment of the National Health Insurance Fund (NHIF), which will be responsible for pooling resources and purchasing health services. The South African health system will be transformed from the current ‘public integrated health system’, where the government funds healthcare provision using government sector healthcare providers, to a public contract model in which public purchasers contract healthcare providers.

In theory, the separation of purchasers and providers is critical in strategic purchasing with clear contractual relationships established between the two groups, allowing purchasers to ensure efficiency and quality in service provision. However, RESYST research found that the organisational separation of purchaser and provider, such as with Social Health Insurance (SHI) in Indonesia and the Philippines, does not necessarily provide the preconditions for strategic purchasing.

Consequently, it is critical for the South African Government to carefully design and set out the role and responsibilities of the NHIF so it can undertake strategic purchasing to ensure efficiency, quality and equity in health service provision. The research identifies three areas for consideration when designing purchasing mechanisms for the healthcare financing reform that are relevant and essential to the effective implementation of NHI.

Monitoring the quality of health services

Firstly, the White Paper closely links strategic purchasing to cost containment. However, strategic purchasing does not simply aim to reduce the cost of healthcare but also to improve overall health services performance through gains in both efficiency and quality. Purchasers can use a range of tools to send signals to health care providers to encourage the delivery of quality services, including determining criteria for the selection of health care providers; implementing mechanisms to monitor provider performance and quality of health services; and imposing sanctions and penalties for delivering sub-standard care.

While the NHI reform emphasises health care quality and includes some of the above-mentioned tools in the policy design, establishing clear links between healthcare purchasing and the improvement in service quality is important. The research revealed that both public and private purchasers in South Africa were challenged in the acquisition of information on health service quality and improvements in the area. Establishment of effective mechanisms to monitor the quality of healthcare service provision is a key issue that must be addressed by both the NHIF and private medical scheme purchasers.

Addressing geographical and societal diversity to ensure equitable access to services

Secondly, in the current system, the packages of care that are provided by public sector health facilities are defined according to the level of health facilities and are based on nationally defined packages of care. Public sector health care providers feel constrained by the service packages that health facilities are required to deliver, as the standard formula for determining the type of health facility that will operate in a particular community does not always consider community needs. Service package restrictions are felt more acutely in rural sub-districts where the availability of health facilities, both public and private, is extremely limited. Residents in rural areas face considerable constraints in accessing referral services. The benefit entitlements for the NHI mechanism should be carefully designed to address geographical and societal diversity and include appropriate referral pathways to ensure equitable access to quality healthcare services wherever people live.

Representing people’s needs, preferences and values in purchasing decisions

Lastly, the White Paper repeatedly emphasises the importance of meeting people’s needs and preference in service entitlements. The South African purchasing study results also highlight the importance making people aware of their entitlement to quality care and to have their needs, preferences and values reflected in the health services offered. Facilitating strategic purchasing in the purchaser-citizen relationship will allow purchasers to more effectively represent people’s needs, preferences and values in the purchasing decisions.

Financing Strategic purchasing South Africa