South African Business 2016 edition

OVERVIEW Healthcare

OVERVIEW Healthcare South Africa’s healthcare industry has a colourful history, with firsts ranging from the first heart transplant to the first successful penile transplant. Groote Schuur Hospital, located on the slopes of Table Mountain, is recognised as one of the best teaching hospitals. South Africa offers a full range of health care from the most basic primary health care through to highly specialised, hi-tech health services available in both the public and private sector. The state contributes about 40% of all expenditure on health but the public health sector has to deliver services to about 80% of the population. The private sector is highly commercial and serves middle- and high-income earners who are usually on medical schemes. Within this inequitable and largely inaccessible two-tier system, public sector institutions in the public sector have suffered poor management, underfunding and deteriorating infrastructure. Access may have improved but the quality of health care has fallen. Public health challenges include dealing with diseases such as HIV and tuberculosis (TB) together with a shortage of key medical personnel. In response, the South African government has developed a far-reaching reform plan to revitalise and restructure the South African health care system, including: • Fast-tracking a National Health Insurance scheme for all South Africans. • Reinforcing the struggle against HIV and TB, non-communicable diseases, as well as injury and violence. • Improving human-resource management at state hospitals. • Strengthening co-ordination between the public and private sectors. • Allocating ‘health teams’ to communities and schools. • Regulating costs to make health care universally affordable Expenditure The bulk of health-sector funding comes from South Africa’s National Treasury. The health budget for 2014/2015 was R144.6-billion, mostly to improve hospitals and strengthen public health. According to the National Treasury’s Fiscal Review for 2015, the Medium Term Expenditure Framework (MTEF) supports a long and healthy life for all South Africans. Considerable progress has been made in this area in recent years, with declining infant mortality rates and rising life expectancy at birth. The consolidated health budget is projected to grow by 7.1% over the MTEF period, reaching nearly R178-billion by 2017/18. In the 2014 Budget, government allocated R200-million per year for the human papilloma virus vaccination programme. Targets in this programme, which aims to reduce the incidence of cervical cancer, have been exceeded: 82% of eligible Grade 4 schoolgirls were vaccinated against a fi rst-year target of 80%. SOUTH AFRICAN BUSINESS 2016 98

OVERVIEW R1.2-billion has been added to the HIV and AIDS conditional grant in 2017/18 to expand access to the antiretroviral medication programme. Efforts to prevent mother-to-child transmission of HIV continue to yield success, with the transmission rate having declined to only 2% in 2013/14 from 20% in 2003. In 2015/16, the Offi ce of Health Standards Compliance will be listed as a public entity responsible for inspecting and accrediting all public and private health facilities. An amount of R85.2-million has been reprioritised from the national health grant: health facility revitalisation component, to strengthen the capacity of the offi ce, which conducted inspections at 583 public establishments, 15 per cent of the total number, in 2013/14. In line with the National Health Amendment Act (2013), government is shifting R380.4-million from provinces to the national Department of Health to centralise management of disease control at South African ports. A new funding model for National Health Laboratory Service will be instituted in 2015/16. The National Institute of Communicable Diseases, the National Institute for Occupational Health, and the teaching and research functions will henceforth be funded directly through a transfer from the national department. Currently they are cross-subsidised by the laboratory test fees paid by provinces to the National Health Laboratory Service. Streamlining of operations will reduce forensic testing backlogs. National health insurance (NHI) programme spending has been lower than anticipated over the past two years, partly due to diffi culties in contracting general practitioners. Over the three-year spending period, the focus of the indirect national health grant NHI component will expand to include piloting the contracting of allied and other health care professionals. Hundreds of NGOs make an essential contribution to HIV, Aids and TB, mental health, cancer, disability and the development of public health systems. South Africa has some 4 200 public health facilities in South Africa, 13 718 people per clinic. Since 1994, more than 1 600 clinics have been built or upgraded. Free health care for children under six and for pregnant or breastfeeding mothers was introduced in the mid-1990s. The National Health Laboratory Service is the largest pathology service in South Africa. It has 265 laboratories, serving 80% of South Africans. The labs provide diagnostic services as well as health-related research. In 2015, 41 132 qualifi ed health practitioners in both public and private sectors were registered with the Health Professions Council of South Africa. The doctor-to-population ratio is estimated to be 0.77 per 1 000. Most GPs – 73% – work in the private sector, so there is just one practising doctor for every 4 219 people. An estimated 80% of South Africans consult traditional healers alongside general medical practitioners. The Medical Research Council (MRC) founded a traditional medicines research unit in 1997 to introduce modern research methodologies around the use of traditional medicines and develop a series of patents for promising new entities derived from medicinal plants. The historically determined ownership pattern of the private healthcare system is undergoing transformation, with more and more previously disadvantaged players coming onstream. A prime example is Phodiso Holdings Limited, a leading black investment company steering the African healthcare industry in Africa. The second largest shareholder in the Medi-Clinic Group with a R3-billion investment, the company was established by a group of 68 healthcare professionals and business people, with a joint vision and passion to bring healthcare to the people. Phodiso strive to remain abreast of the latest technology, proven business models and secured strategic partners and alliances to grow and maintain their enviable reputation. The company is now also expanding into Africa. In South Africa, the Phodiso Group has acquired Presta (100%) as well as Orthomed (90%). Presta is a manufacturer and supplier of disability products and wheelchairs, while Orthomed is a producer and supplier of Orthotic and Prosthetic products. Orthomed offers a strategic market advantage as they are the only such manufacturer in South Africa. 99 SOUTH AFRICAN BUSINESS 2016