Let the private sector work

On the occasion of the ANC’s 103rd anniversary, in his January 8th statement, President Jacob Zuma said, “We support efforts to improve the security and efficiency of supply of critical services in the health sector such as cleaning, food, laundry and others. The ANC government has decided that these services will no longer be outsourced”.

The private sector does not seem to concur with this view as private hospitals outsource most cleaning, food, laundry and other services. Or are they not concerned about efficiency and thus profitability? Are these private sector services inefficient and unreliable when supplied to public facilities because government bankrupted many of its service providers through non- and/or late payment? Or might the inefficiencies in government-run facilities have more to do with weak hospital management and poorly enforced and/or conceived contracts?

Government, anyway, should not be providing any of these services, including the most critical of all, namely, medical care. All of these services should be put out to tender and the government should merely ensure that it gets the “best bang for its buck”. Government does not manufacture the bricks used to build hospitals, the medicines and devices, or even the hospital beds, etc, so should it be involved in the provision of medical care?

For many years the FMF has propagated the idea of the “big giveaway” - the transfer of hospital assets to those who operate the hospital,coupled with negotiated contracts for such entities to provide government-funded services to their existing patients and clients. More specifically, government’s role should be to finance medical care for the poor and destitute, and to purchase an increasing percentage of those services from private providers. To do this, it must allow and encourage the rapid growth of the private health care sector, enabling it to supply services to an increasing percentage of the population.

The government does not have to provide “free health care to all” – this is a disastrous use of scarce taxpayer resources. Additional spending in any one area of the economy necessarily comes at the expense of spending in another. Thus, when government spends more on healthcare, it leaves less money available to spend on providing other critical services such as education, water, electricity, etc, especially for the poor.

A poor developing country such as South Africa cannot afford a nationalised system of healthcare given the increasing burden of disease, a small tax base, the antiquated infrastructure within the public health sector, the country’s aging population, the inevitable increase in demand that will result from promised “free” health care, and the inadequate number of medical personnel. Nationalised healthcare will also impose an impossible burden on taxpayers. If the government truly wants the best for the country’s people, it must let the private sector do what it does best – provide the services – and allow individuals to decide for themselves where and how to spend their money.

Under NHI, in a tight economic climate such as we are currently experiencing, how would the government officials decide which services to provide and who should receive care? This is not a unique situation. Patients in high-income countries such as the United Kingdom and Canada are forced to endure extraordinarily long waiting periods before they can see a doctor, and then for referral to a specialist, and finally for the recommended specialist treatment because of the rationing that inevitably is introduced to cope with the huge demand that occurs when “free care” is offered, even during good times! At no point in the nationalised process is there any apparent incentive for service providers to be as efficient, or as effective, as they would be if functioning in a private environment.

When individuals are forced to make payments into the NHI, what will happen to them when their disposable income has been all but wiped out and they can no longer afford to pay for someone else’s healthcare? When people take responsibility for their own medical and other needs they are in a much better position to reallocate resources in lean times.

The NHI will not fix South Africa’s healthcare crisis no matter how many times President Zuma states that, “We remain committed to providing universal health care to our people and the ANC is happy to report that the National Health Insurance Scheme is now being moved to more pilot sites that will cover all nine provinces”.

Too many people seem to be simply sitting back and waiting for NHI to arrive like a knight in shining armour to cure all of our ills. In the meantime, things within public hospitals are deteriorating and with the stated cancellation of private sector contracts for “critical services”, we can only expect things to rapidly get much worse. All the while, patients suffer and, too often and too early, unnecessarily, pay the ultimate price.

This article was first published by the Medical News in February 2015

Author: Jasson Urbach is an Economist and director of the Free Market Foundation and of the Health Policy Unit. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.


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