News
HST Collects relevant news from a variety of sources, for your convenience. Select a story from below, or use our search feature to find stories of interest.

Private healthcare is massively wasteful'
by Wyndham Hartley
2001-03-16

South Africa's private health sector is massively wasteful and inefficient, with costs growing at more than twice the inflation rate, placing increasing pressure on the underfunded public health sector, according to testimony before a parliamentary committee. Overall cost increase in real terms in the private sector was 351% over a 15-year period. Health economist and consultant to government Alex van den Heever's remarks to the national assembly's health committee this week came in the wake of reports from health research units that while the health budget appeared to keep pace with inflation, real spending on health in SA was declining because it failed to take account of population growth and the ravages of HIV/AIDS. Van den Heever said the private health sector served about 7-million people while the public sector served 39-million. Public sector spending per capita was in decline while in the private sector it was on the increase. These increases in real money terms were in some cases more than 500% over the past 15 years. He said administration costs in the private sector were about R4bn. This was as much as it took to run all the public hospitals in Gauteng, which suggested substantial inefficiency. He said there was a perverse cycle in SA in which public spending declined and private spending increased, while at the same time the private sector tried to move the bad risks the chronically ill onto the public sector, while it took trained staff away from the public sector. (Source: Business Day, 14 March 2001)

South Africa's private health sector is massively wasteful and inefficient, with costs growing at more than twice the inflation rate, placing increasing pressure on the underfunded public health sector, according to testimony before a parliamentary committee. Overall cost increase in real terms in the private sector was 351% over a 15-year period

Health economist and consultant to government Alex van den Heever's remarks to the national assembly's health committee this week came in the wake of reports from health research units that while the health budget appeared to keep pace with inflation, real spending on health in SA was declining because it failed to take account of population growth and the ravages of HIV/AIDS.

Van den Heever said the private health sector served about 7-million people while the public sector served 39-million. Public sector spending per capita was in decline while in the private sector it was on the increase. These increases in real money terms were in some cases more than 500% over the past 15 years. The cost of hospitalisation in the private sector had increased 517% in real terms between 1982 and 1997 and the cost of private sector-supplied drugs 543%.

The costs of professional services rose 228% over the same period and administration costs 283%. The overall cost increase in real terms of the sector was 351% over the 15-year period.

He said administration costs in the private sector were about R4bn. This was as much as it took to run all the public hospitals in Gauteng, which suggested substantial inefficiency. In some cases private sector administration costs amounted to about 26% of spending; this was massive compared to the 6%-10% international norm. It is what we would expect to see in an unmanaged system.

Van den Heever also took aim at the medical schemes industry, saying that the open schemes created by the medical schemes were growing at the expense of the closed in-house company schemes because the open scheme market was aggressively robbing members from the in-house schemes.

He criticised the role of brokers in the industry. He said they earned high remuneration and there were kickbacks for securing members for a particular scheme. Price is not the factor one would assume because the members are going where the brokers take them, he said.

Van den Heever expected the aggressive competition for members to continue and he pointed out that the schemes have not tried to grow the medical schemes environment but have rather pillaged from competitors.

He said there was a perverse cycle in SA in which public spending declined and private spending increased, while at the same time the private sector tried to move the bad risks the chronically ill onto the public sector, while it took trained staff away from the public sector.

Source: Business Day, 14 March 2001

Keywords	This Item is associated with the Following Keywords: .
You Can Comment on this Item, or View other people's Comments
Easy Print  Email to a friend

	Related News
	Hospital costs 'should be 70% lower' (2006-10-26) No health insurance for 84% in SA (2001-10-18) Private healthcare 'will soon be beyond reach' (2002-01-31) Trust seeks equity in access to public, private health care (2002-10-24) Servicing the public sector (2004-10-21)

	Related Publications
	Private Health Care in South Africa (2000-06-08) Trust seeks equity in access to public, private health care (2002-10-24) Equity in public sector health care financing and expenditure (2000-10-19) Patient choice of primary health care provider and the need to influence quality of STD care in the private sector (2000-10-19) 2002/3 Annual report of the Registrar of Medical Schemes (2003-09-19)

	Related Health Statistics
	Ratio of private to public sector per capita health expenditure (2004-02-11) Per capita health expenditure (2004-10-11) Per capita expenditure (non-hospital PHC) (2007-08-17) Public sector dependent population (2004-10-11) Cataract surgery rate (surgeries per million uninsured population) (2006-06-07)

	Related Events
	International Health Summit (IHS) Symposium on: Leadership Development for Public-Private Partnershi (2004-05-23) Healthcare Financing Course at University of Pretoria in 2005 (2005-05-30) Joint Civil Society Monitoring Forum (JSCMF) Third National Meeting (2005-02-18) Health systems financing in low-income African and Asian countries (France) (2000-11-23) Health Sector Reform and Sexual and Reproductive Health and Rights: MPH/MSc Module and Short Course (2007-11-26)

	Related links
	PPMnet - Public/Private Mix in health care Health Economics Unit The Mvula Trust The Contact Trust Medicines for Malaria Venture

	Related Content
	SAHR 2007: Media Coverage (2007-12-12) The STI Initiative (2004-04-07) Summary Bulletin 10 (August) - DHS-LG Discussion List (2004-07-16) Summary Bulletin 8 - DHS-LG Discussion List (2004-07-16) Mapping of HIV/AIDS Services and Resources in South Africa (2004-04-07)