in the economy Melanie Da Costa Outgoing Chairman Private sector operates in a constraining legislative framework Medical Scheme Membership 80 of people in households earning gt250K pa ID: 808187
Download The PPT/PDF document "Healthcare: its importance" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
Healthcare: its
importance
in the economy
Melanie
Da
Costa
Outgoing Chairman
Slide2Private sector operates in a constraining legislative framework
Medical Scheme Membership: 80% of people in households earning >250K p.a.
1. Council for Medical
Schemes
Slide31.
Insight Actuaries
Slide4Hospitals comprise 30-35% of spend
Result
of listed hospital group’s spendthroughout the economy =
R55.5 billion to GDPEmployment = 248 504
R180bn spent on private health per annum
Econex
Mulitplier
Study:
conomic
contribution of the sector is calculated on the basis of the three corporate hospital groups which comprise approximately two thirds of the sector. This is calculated on the basis of the Social Accounting Matrix compiled by StatsSA
Private sector operates in a constraining legislative framework
Economy-wide contribution of the private hospital sector
Slide5Healthcare
plays a much larger role in our economy….it serves to ensure a productive
workforce
Slide6Policy uncertainty and investment outlook
Slide7Uncertainty a function of declining 5
year
capex forecasts
Source:
Econex
Rbn
Excludes forecasts for +/-8000 bed licences in issue to independent groups
Slide8Uncertainty will at best lead to a stagnant investment and employment outlook
Contribution to GDP if “baseline” level of investment continues
Contribution to GDP under lower levels of investment
Jobs supported under lower levels of investment
Jobs supported in “baseline” level of investment continues
Policy uncertainty
Lack
of clarity on the future role of the private sector leads to uncertain return on investment in the sector
Regulatory requirements under
NHI:
Benefits
, pricing and funding arrangements for private facilities
and the services they will be required to provide under NHI are
unclear
HMI recommendations to address “perceived” concentration in private hospital sector
:
Divestiture
and moratoriums have severe consequences for investment sentiment
Source:
Econex
Slide9Legislative and policy changes have important ramifications for planning and investment
Policy developments in healthcare = uncertainty
Publication of the NHI Bill
on 21 June 2018
Publication of the Medical Schemes Amendment Bill (MSAB)
on 21 June 2018
Health
Market Inquiry’s (HMI) Provisional Findings and Recommendations Report
on 5 July 2018
Uncertainty arises from multiple sources:
Medical
schemes and the private hospitals
– never the twain shall meet
MSAB: Medical schemes
cannot
offer benefits offered by NHI
(assume its Prescribed Minimum Benefits)
NHI Bill: NHI Fund will not contract private hospitals but rather these will be provided EXCLUSIVELY by the public hospital sector
HMI’s
recommendation to remedy levels of concentration amongst private hospitals, which have not raised any competitive concerns, is a 20% on market share (divestiture and licence moratoriums).
The Bills
are inconsistent or contradictory
Slide10Policy uncertainty and investment outlook
In the absence of clarity around the role and composition
of the private hospital sector,
investment and capital expenditure are forecast to decline
2
scenarios illustrate the economy-wide macroeconomic impact of
different
policy paths:
These scenarios are illustrative and depict high-level macroeconomic outcomes associated with different policy scenarios. Extensive macroeconomic modelling will be required
to assess the full economic impact of any healthcare policy change
Slide11Economy-wide multiplier effect on private sector
This scenario depicts the high-level impact of
combining the provisions of the NHI Bill
with those
of the MSAB
.
The NHI fund in this scenario can only purchase from public hospitals
.
We
use CMS
¹ estimates of PMB² expenditure proportion to estimate the proportion of expenditure that will shift from private to public sector
1. Council for Medical Schemes2. Prescribed Minimum Benefits : 2017 expenditure of R79.2 billion / total healthcare expenditure of R160.8 billion = 49.3%)
Scenario 1:
Complementary (“top-up”) medical scheme cover
Economic impact of Scenario 1
Slide12Economy-wide multiplier
effect on private sector
This scenario depicts the high-level impact
of combining the provisions of the NHI Bill
with
those
of the
MSAB
.
The NHI fund in this scenario can only purchase from public hospitals.We use CMS¹ estimates of PMB²
expenditure proportion to estimate the proportion of expenditure that will shift from private to public sector
1. Council for Medical Schemes2. Prescribed Minimum Benefits : 2017 expenditure of R79.2 billion / total healthcare expenditure of R160.8 billion = 49.3%)
Scenario 1:
Complementary (“top-up”) medical scheme cover
Economic impact of Scenario 1
(28%)
(55%)
(40%)
Overall
impact
:
Decrease in income: R24.6 billion
Reduced impact on GDP: R31 billion
99 600 fewer jobs in private sector
99 600 jobs lost
Slide13Economy-wide multiplier effect on private sector
This scenario depicts the impact of allowing medical schemes
to
provide the
same benefits
are those covered by the NHI Fund
plus,
but at
regulated prices
NHI Fund does not purchase from private hospital sector
It assumes regulated prices capped at 23%¹ below current prices
Scenario 2:
Unrestricted medical schemes but NHI benefits at regulated prices
1.
Based on Deliotte exercise
in
2010 on DOH Reference Price list vs market related priced
Economic impact of Scenario 2
Slide14Economy-wide multiplier effect on private sector
This scenario depicts the impact of allowing medical schemes
to
provide the
same benefits
are those covered by the NHI Fund
plus,
but at regulated prices
NHI Fund does not purchase from private hospital sector
It assumes regulated prices capped at
23%¹ below current prices
Scenario 2:
Unrestricted medical schemes but NHI benefits at
regulated prices
1. Based on Deliotte exercise in 2010 on DOH Reference Price list vs market related priced
Overall macroeconomic impact:
Contribution to production decreases by 46.6%
Contribution to GDP decreases by 43%
Contribution to employment decreases by 46.9%
Economic impact of Scenario 2
(46.6%)
(43.0%)
(46.9%)
132 000 jobs lost
Slide15Thoughts on improving health access
Source: DoH CEO Public Health Enhancement Fund meeting July 2017
Civil
servants
and dependents
5.5 million
Formal sector
employed
and dependents
(large business)
12 million
Formal sector
employed
and dependents (SMME)
6 million
Informal
sector and
dependents
6 million
Individuals
in households
with no income
24 million
Only 8.8 million out of 23.5m have private medical aid
Domestic workers
Hawkers
Taxi industry
Casual labourers
Elderly
Children
School kids (12m)
Unemployed
“The central philosophy of NHI is to bring
‘into fold’ those people who are not insured”
Slide16How many more people can the private sector cater for?
1. Insight Actuaries, October 2018. Private hospital occupancy analysis
Overall weekday
occupancy is 70%
on average,
while weekend
occupancy is 52%
Based on public sector admissions rates
and 85% occupancy
current capacity
can cater for a
maximum
7.7 millionadditional people¹With an additional8 000 beds comingon stream, mainly independent hospitals, potential for private sector to cater for another14 million population
Slide17Thoughts on improving health access
Medical Scheme risk equalisation and mandatory health cover for formally employed
Low cost medical schemes (basic benefit design)
Private medical school or
Include private hospitals Dr education
Lift limits on private nurse training
Lift restriction on
corporate ownership of pathology and radiology practices
Allow flexibility in
Dr contracting by
private facility
Slide18Melanie Da Costa