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SA public sector investments to increase on the back of NHI programme

11 September 2012 1,252 views No Comment

South Africa’s public sector investments is set to expand in the following years, as South African Government paves the way for National Health Insurance (NHI) programme, according to research by Frost&Sullivan.

The South African government is in the midst of laying the foundation for the National Health Insurance (NHI) programme which, upon completion, is expected to revolutionise healthcare provision and funding in the country. Revitalisation of public sector hospitals will become a key enabler in the successful implementation of the NHI programme, said Frost&Sullivan analysts.

At the beginning of 2012, the roll out of the NHI plan had started to take shape, although this has been limited to pilot projects at selected provincial sites. Full implementation is not anticipated until 2025 but, in the interim, the Government is expected to inject vast amounts of funding into healthcare infrastructure and training.

The most important period will be in the next five years up to 2017, when the Government is poised to accelerate construction and upgrades of hospitals and other healthcare facilities.

Capital expenditure in hospital construction markets reached $676.3 million in 2010 and it is estimated to exceed $2.50 billion in 2015, according to Frost&Sullivan’s analysis, Understanding and Capitalising on the South African Healthcare Funding Market.

Robust spending on hospital revitalisation in the public sector is projected to remain the most important driver of hospital construction markets in the next five years.

“As part of the Government’s hospital revitalisation programme, at least five key tertiary hospitals have been identified, including King Edward VII and Kimberley, for complete overhaul and upgrade,” explains Frost&Sullivan’s Industry Analyst, Ishe Zingoni. “This is the continuation of a programme that commenced a few years ago aiming to establish a healthcare system on par with that of the private sector. This has been identified as one of the most important enablers for the successful implementation of the NHI programme.”

However, there remain serious obstacles to revamping healthcare provision in the public sector. The most significant challenges include healthcare infrastructure dilapidation and a shortage of healthcare professionals.

The infrastructure problem is two-fold, namely inadequate and overcrowded facilities, and an uneven distribution of hospitals beds. In terms of the latter, the public health system has particular inequities between provinces, and between specialty areas. The Government has, therefore, prioritised these issues as it embarks on laying the ground work for the NHI.

“In tackling these challenges, the Government has increased emphasis on primary healthcare. Attention has been focused on optimising its stock of relevant facilities and their distribution in the right areas,” remarks Zingoni. “In doing so, it will be imperative to enhance service provision at the primary level, whilst decreasing the case loads at the tertiary level. This plan does not envision a deterioration in tertiary level care, but, rather, aims to optimise the level of care across all levels.”

This strategic response has partly informed the Government’s restructuring and hospital revitalisation plan. Under the envisioned NHI system, overall health costs are anticipated to soar in the short- and medium-term due to increased services utilisation.

“From this perspective, it makes sense to restructure the health system in favour of primary care as opposed to the more costly tertiary care,” concludes Zingoni.

For more information, go to http://www.healthcare.frost.com or e-mail Samantha James at samantha.james@frost.com.

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