In continuation of our review of the NHI Health Insurance for South Africa White Paper released on 10th December 2015  we need to look at the demand (patient need) and supply side (health care provisions) issues that are revealed and attempted to be resolved through the reform.


 ‘Demand side’ management by Health Insurers / Medical Schemes:  What’s their role? What are the virtues of a single vs. competing funds?

Schemes and their Administrators / Managed Care efforts are failing to adequately manage the ‘production’ efforts of the private supply side. This is because Schemes don’t compete on the overall ‘value’ proposition for consumers i.e. the member experience and outcomes of the system.

Currently, they’re mostly concerned with attracting healthy members, crudely restricting care and getting marginally better Tariff prices than other Schemes.

They have a short term focus because cover is sold on an annual term. And because Scheme cover is sold nationally, they aren’t involved in local level system performance and they just don’t undertake the role of ‘managers’ of the system. Nor does anyone else.

Would a single Scheme with local offices do better?

Maybe, but the price is likely be a system that is also less responsive to consumers.

We like the Dutch system where membership of a choice one of a number of competing Schemes is mandatory, and the State pays contributions for the poor.


 ‘Supply side’ provision: What is the policy aim for the design of the effective supply model; and how will this be engineered?

A ‘vision’ of an effective supply model for the whole of SA is not evident in the plan at all, and in our view is the biggest weakness of the whole proposal.

If purchase function and demand side management is solved, with what services would the Scheme (or Schemes) contract? Neither of the current models public or private is an obvious basis from which to build a new system. Nor is there a clear policy vision nor aims for how the sector will be structured and how its processes will work.

Paying differently – DRGs and capitation – are a requirement but experience tells that this alone does not lead to structural change. That takes a whole lot more.

A clear vision of the system and the engineering required to achieve it.  With:

  1. population level structural planning
  2. a variety of new commercial organisational models based on teamwork and useful competition between integrated systems
  3. supportive State funding
  4. supportive State regulation
  5. clear process and outcome measures
  6. outcome linked rewards

Unfortunately, the document is largely silent on supply side reform, appearing to believe that the public sector needs a few tweaks to make it a viable basis and that any gaps can be contracted from private providers.

This simply isn’t realistic.

In our view, the key to reform are new models of care delivery that are based on:

  1. population medicine and patient centered care
  2. integrated team care with strong self-governance and management
  3. the value contract measuring and rewarding quality outcomes
  4. modern patient care IT systems driving proactive measured care


PPO Serve is based on this insight.