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Healthcare: its importance - PowerPoint Presentation

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Healthcare: its importance - PPT Presentation

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

sector private nhi medical private sector medical nhi scenario impact investment expenditure schemes benefits hospital prices economy hospitals policy

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Presentation Transcript

Slide1

Healthcare: its

importance

in the economy

Melanie

Da

Costa

Outgoing Chairman

Slide2

Private sector operates in a constraining legislative framework

Medical Scheme Membership: 80% of people in households earning >250K p.a.

1. Council for Medical

Schemes

Slide3

1.

Insight Actuaries

Slide4

Hospitals 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

Slide5

Healthcare

plays a much larger role in our economy….it serves to ensure a productive

workforce

Slide6

Policy uncertainty and investment outlook

Slide7

Uncertainty a function of declining 5

year

capex forecasts

Source:

Econex

Rbn

Excludes forecasts for +/-8000 bed licences in issue to independent groups

Slide8

Uncertainty 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

Slide9

Legislative 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

Slide10

Policy 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

Slide11

Economy-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

Slide12

Economy-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

Slide13

Economy-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

Slide14

Economy-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

Slide15

Thoughts 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”

Slide16

How 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

Slide17

Thoughts 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

Slide18

Melanie Da Costa