The health-care industry is in dire need of an empowerment charter. The industry has one of the lowest levels of black commercial involvement, including hospital care, pharmaceuticals and medical administration. Only 0,5% of the total R100bn industry is in black hands. Government wants to increase this to 26%.
Yet early signs indicate that drawing up a charter for the sector will be far more challenging than in other sectors such as finance and mining. Those tasked with setting up the framework for the charter have to consider ownership issues within the sector, as well as planning how to make health care more accessible and affordable for more people. This is a huge undertaking.
Nearly 40m South Africans are dependent on public health care. Government spent about R39bn on health in 2003/2004 - about 11% of its total budget. In contrast, expenditure on private-sector patients was about R35bn over the same period, though less than 7m South Africans have private health-care insurance, says the Health Systems Trust, a health research organisation.
A big challenge for the charter process is that the industry is deeply fragmented. Efforts to establish a united front in the private health-care industry have been plagued by infighting. Also, the private sector's relationship with government has tended to be litigious and distrustful, with doctors, pharmacists and pharmaceutical companies having recently fought court battles with the health minister.
Still, the charter offers an opportunity for all parties to come together and steer the way forward. All agree on the fundamentals of the charter: increasing equity within health care; encouraging transformation; and increasing black ownership. Both sides want to establish public-private partnerships to improve access to health care.
Progress on the charter has been steady, but the private sector has reservations.
Last year, the minister set up a task team to plot the way forward on the charter. This included equal numbers of representatives from the public and private sector, totalling 20 (see table).
However, there is concern that this may not be inclusive or representative enough.
There are representatives for hospitals, doctors, nurses, pharmaceuticals manufacturers and from some industry bodies, but important sectors such as radiology and pathology , medical schemes and pharmacists have been left out.
"The private sector is concerned that the ministry is driving the process," says National Association of Pharmaceutical Manufacturers vice-president Stavros Nicolaou. "We support the process wholeheartedly, but we could help to make it more inclusive."
In most other charters, government played a role, but it did not dominate the process as the health ministry has. Since the mining charter leak, government departments have allowed the private sector to lead the process. This has not happened with the health-care charter process, where the minister appointed representatives with little consultation. The industry is worried that some appointments may not be representative of an entire industry.
There is also concern that there is no clarity on how the process will be managed, and no timelines or targets have been set. The minister has said that the charter should be completed by April 2005, but most players feel this is too ambitious and trying to meet that deadline could result in a poorly constructed charter.
Nicolaou says problems with the draft codes of good practice for black economic empowerment (BEE) released by the trade & industry department need to be ironed out first - specifically codes relating to how black ownership in companies is to be calculated.
Regulations and legislation within the health- care environment may also need to be changed. For example, discounting shares to health professionals such as nurses or doctors may be in breach of regulations set out by the Health Professions Council.
As a large proportion of the industry comprises multinational companies, particularly in the pharmaceutical manufacturing sector, excluding those companies from ownership requirements will probably be considered.
Afrox Health MD Mike Flemming has warned that the charter should set targets that won't scare away foreign investors in the sector.
But for both local and foreign-owned companies, one of the biggest challenges will be to meet empowerment procurement requirements. Hospitals, for example, outsource many functions, ranging from cleaning and catering to building maintenance. However, many of the products for other sectors such as medical and surgical devices or chemicals to manufacture pharmaceuticals are imported.
Still, draft proposals set out by the task team last year and presented at the national health summit have been welcomed by the private sector. Hospital Association of SA legal adviser Kurt Worrall-Clare, who is involved in the drafting of the charter, says that though the proposals lack detail, they represent an attempt by the minister to reach out to the private sector.
"Importantly, there is the recognition that the private sector needs to make profits and that businesses need to remain sustainable," he says.
In a speech last year, health minister Manto Tshabalala-Msimang said: "We're developing this charter with a clear understanding and strong conviction that we need a viable public- and private- health sector to meet the increasing health needs of our people."
Worrall-Clare says government has also acknowledged that imposing unrealistic mandates on either the public or the private sector would have a big financial impact on the provision of health-care services generally. "The team has worked hard to ensure that the language used in the charter is clear," he says.
This is vital, as all parties want to avoid a repeat of last year's debacle over medicine pricing regulations.
"A vague definition of what constitutes basic health care, for example, would put both sectors under serious strain and undermine the charter's objectives," says Worrall-Clare.
If the ministry has learnt any lessons from last year, it should be that there is no point in rushing the job.
