Dr Nicholas Crisp – Case for NHI (and why vested interests are pursuing Operation Fear)

Chief protagonist for universal healthcare in South Africa, Dr Nicholas Crisp, has been taking plenty of punishment from private sector commentators. He believes this public debate has been missing the point because SA’s healthcare system is uneven, broken and needs massive restructuring. While criticism of NHI comes mostly from those in companies serving the middle class, Crisp says the bulk of the NHI Bill targets complete reform of the public sector, on which 80% of citizens rely. The Deputy DG at the Department of Health put his case to Alec Hogg of BizNews. – Alec Hogg

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Relevant timestamps from the interview

  • 00:00 – Introductions
  • 01:15 Dr Nicholas Crisp on his work in the public health sector
  • 02:43 – Dr Crisp on the intention of the NHI Bill
  • 07:34 – On the furore surrounding the NHI Bill
  • 10:35 – On concerns that the public sector will not be able to successfully implement NHI
  • 13:30 – On the cost of the NHI Bill for the taxpayer
  • 20:32 – On the planned staggered implementation of NHI
  • 25:43 – On the likely timeline for NHI implementation
  • 28:07 – Concludes

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Edited transcript of the interview

Alec Hogg: National Health Insurance has become the hottest topic on many social media boards here on BizNews. The private sector seems to be overwhelmingly against it. However, today we have Dr. Nicholas Crisp with us, the man responsible for implementing National Health Insurance, here to explain why it’s crucial. He serves as the deputy director general at the Department of Health. Nicholas, your LinkedIn profile provides some interesting insights into your background, including your work in the public sector and your involvement with a startup that was later acquired by EOH. I’m sure you have your own stories about that time. After retiring and spending some time in the private sector, you were then drawn back into government for this highly controversial role. Do you have any regrets?

Nicholas Crisp: No, Alec, I’ve dedicated 40 years of my career to working in the public service, both in this country and six other African countries. Every job I’ve undertaken has been challenging, from my early internship to my current position. Throughout my career, I’ve often been told that certain tasks cannot be accomplished. However, I have consistently proven otherwise. For instance, during the transition out of the homeland times into the present, I served as the first head of department in what is now Limpopo province. I also played a key role in establishing the National Health Laboratory Service and have been involved in various other challenging projects in both South Africa and Nigeria. So, no, I have no regrets. While this job presents significant challenges, if we fail to address the shortcomings of our health system, we will find ourselves in even greater trouble.

Read more: Discovery Health CEO challenges NHI, begs closed door ANC to open its eyes and ears

Alec Hogg: I think it’s safe to say that no one would argue against the fact that our health system is not delivering the desired outcomes. However, the disagreement arises when it comes to the proposed solution in the NHI bill, which seemingly eliminates the private sector’s involvement. Many in the private sector advocate for a public-private partnership to jointly address these issues. Can you shed some light on the intentions behind the NHI bill? After all, we all want better health in South Africa, and the outcome should not be divisive.

Nicholas Crisp: Yes, you’ve captured it quite well. The tension arises from the different ideologies of centralisation and devolution that exist in the country. The National Health Insurance Bill leans towards centralisation, which is causing some of the anxieties and debates we are witnessing. It’s important to note that the bill does not exclude the private sector; it recognises the various players within the private healthcare space. The bill emphasises the accreditation and contracting of all private healthcare providers, regardless of their size or specialisation, be it independent GPs, pharmacies, optometrists, or large hospitals. The private sector plays a critical role in service provision.

Furthermore, the private sector is also integral to the procurement of healthcare products. They are responsible for manufacturing, importing, distributing, and managing the logistics of pharmaceuticals and other health-related products. We have a functional working relationship with them, although occasional disagreements over pricing may arise. However, we anticipate this partnership to continue, as it brings market certainty and facilitates negotiations for better prices through larger volumes.

The main area of contention and debate revolves around the funding aspect. Currently, medical schemes, insurance companies, and out-of-pocket payments serve as the financing mechanisms for approximately 8.5 to 9 million people in the country. The majority of these individuals rely on medical schemes for their healthcare needs, while a smaller percentage opt for insurance products from non-medical scheme providers. The issue lies in the fact that some individuals can afford comprehensive care, while others, about 22% to 25%, can only afford hospital plans or have certain exclusions within their coverage. This situation creates perverse incentives, leading to unnecessary hospital admissions and a lack of emphasis on primary healthcare. We believe that general practitioners are often overlooked in the healthcare system.

The structural issues in how healthcare is purchased, both in the public and private sectors, are not functioning optimally. While the media tends to focus on the private sector, it’s worth noting that the majority of the NHI bill’s content is centred around restructuring the public sector. Currently, we have ten different health departments, each funded separately and operating autonomously. This fragmentation leads to frustrations and challenges in accountability and service delivery. Section 32 of the NHI bill aims to address this issue by centralising functions at the national level and allowing the minister to delegate provider functions back to the provinces. This realignment of functions and service purchasing is what is causing the most significant concerns.

Alec Hogg: I think I understand now. The tension arises from the clash between ideologies favouring centralisation and devolution in the country. The NHI bill leans towards centralisation, which has sparked debates and concerns.

Nicholas Crisp: Indeed, Alec, the NHI bill aims to centralise funding while decentralising service provision. One aspect that has sparked criticism is the provision for hospitals to operate as autonomous entities. Many argue that hospital managers should be allowed to run their facilities, like private hospitals, with control over budgets, human resources, procurement, and service development. The bill addresses this concern and grants hospitals the autonomy they need once it is passed into law. Similarly, in the primary healthcare environment, the goal is to decentralise planning to the 52 districts, bringing decision-making closer to the people. Actual service delivery is designed to integrate multidisciplinary teams within contracting units in the primary healthcare space. So, there is both centralisation and decentralisation at play.

Read more: 50 Reasons why the NHI will never work

Alec Hogg: Some of the criticisms stem from doubts about the public sector’s ability to manage these assets effectively. You’ve touched on the issue of cadre deployment, which is a significant concern throughout the country. People are sceptical, seeing this as yet another move in that direction.

Nicholas Crisp: Regarding cadre deployment, I prefer not to comment on politics as I have no involvement in that sphere. However, I can discuss management in the public sector. While some public sector facilities are well-managed, there are others that have struggled with poor management for an extended period. Studies have been conducted to understand the underlying problems, and political interference is one factor that hinders effective management. Even if a competent individual is deployed, interference and changes in political leadership can disrupt operations. This is a widely acknowledged challenge within the public sector, and it’s difficult to prevent such interference. In the proposed changes outlined in the NHI bill, greater autonomy for managing services is crucial. However, we also face challenges with the physical environment of some facilities, particularly where budgets are controlled by departments other than health, such as public works or premier’s offices. Inconsistent payment of bills and the lack of prioritisation in the health departments further exacerbate the situation. While the specifics vary among provinces, this erosion of local responsibility in facility management has been an ongoing issue that we must address. The plans currently in progress, including those related to the National Health Act and the NHI, aim to tackle these challenges and provide a framework for improvement. It won’t be an easy or quick process, but it will set the stage for positive change.

Alec Hogg: Speaking of costs, as a country, we are already spending a significant amount of money on healthcare, a large percentage of our GDP. I believe it’s reaching double figures or close to it. Can we be confident that taxpayers will get better value for money?

Nicholas Crisp: Absolutely. Let’s start with the public sector, as the private sector is often the focus of cost discussions. In the public sector, we need to address the imbalance in personnel allocation. Currently, over 70% of the budget goes toward human resources payments. We also face challenges with doctors and other health professionals who, despite being paid with tax money, choose to work in the private sector, leading to underutilisation of resources. Better management of this situation, including tackling issues like remuneration for work outside the public service (RWAPs), could ensure more professionals are available and delivering care. Furthermore, we have nurses who moonlight, and that needs to be managed more effectively. Fraud and corruption are also problems that demand collective action from society.

Tender inefficiencies contribute to overspending as well, with instances of purchasing items at inflated prices. This occurs at both the national and local levels due to complex procurement procedures. While the public sector has room to improve management and spending, challenges exist in the private sector too. According to the health market inquiry, approximately 15% of healthcare spending is allocated to administration. This includes the costs associated with the administration of medical schemes, which can be highly complex with numerous options and pre-authorisation processes. Duplication of care is another cost driver, particularly when patients transition between practitioners without seamless transfer of medical records and test results. Instances of duplicate procedures highlight the need for a portable health record system that follows individuals throughout their healthcare journey.

Efforts are underway to address these issues. Collaboration between the public and private sectors aims to establish interoperable health record systems that could lead to significant cost savings. Potential savings are estimated to be as much as 50% in the private sector and 5 to 7% in the public sector. However, it is important to note that national health insurance is not about multiplying the cost of the current fee-for-service system by the entire population. Instead, it involves fixing the healthcare budget at a manageable percentage of GDP, which may vary depending on the country’s affordability. Currently, South Africa spends around 8.5% of GDP on healthcare, while economically comparable countries spend around 6%. Countries like the UK allocate approximately 12% of GDP to healthcare. The focus should be on wise spending within the defined budget.

Implementing these changes takes time and requires a systematic approach. The National Health Insurance Bill provides a framework for the transformation and introduces regulations gradually. It involves notifying and preparing stakeholders for upcoming changes, such as introducing new benefits covered by the fund. Medical schemes would need to adjust their coverage accordingly. Many details still need to be worked out, and we are not yet at the stage of readiness. It is crucial to approach these changes methodically and establish a clear pathway for the future.

Alec Hogg: A major concern for the middle class is whether they will solely rely on the public sector for healthcare or if they can still have private insurance to address their medical needs. Many South Africans worry about the state of public hospitals and question if they can maintain access to quick medical care as they would with private schemes in countries like the UK, which has both national health and private options.

Nicholas Crisp: Let’s distinguish between purchasing and providing healthcare for now. As a middle-class individual living in a suburb with two private hospitals nearby and no public hospitals within a 25-kilometre radius, my current choice is to pay out of pocket for visits to my GP, pharmacy, optometrist, and other services. When I require care, my GP, who is less than two kilometres away, would refer me to the nearest hospital based on bed availability and the necessary resources. If those hospitals cannot provide the required care, I would need to seek an alternative facility. However, for someone residing in a township or an area where both private and public hospitals are available, the referral would depend on proximity and capacity, arranged by their primary care provider. In rural areas like Lesotho, where private hospitals are scarce, the public hospital becomes the primary point of referral. The situation varies from place to place.

The challenge lies in areas like Diepsloot in Johannesburg. Individuals in Diepsloot currently have to travel to Charlotte-Maxeke Hospital or Tembisa Hospital, passing several private hospitals along the way. In the future, under the NHI, the fund (not the medical scheme) would cover the care of those individuals. The fund would then direct them to the nearest hospital, which could be a private facility located just 15 minutes away instead of the previous 45-minute to one-hour drive to central Johannesburg. These examples aim to personalise and illustrate the point.

Read more: National Health Insurance: A revolutionary disaster for South African healthcare – Katzenellenbogen

Currently, as an individual, when I require healthcare, I must pay out of pocket. If I need an investigation and they ask for upfront payment of 12,000 Rand, I may face financial hardship to cover the costs. Even with a hospital plan, once I reach the limit, additional expenses become my responsibility. These situations occur frequently. With the NHI, the fund covers the upfront costs, eliminating the need for individuals to pay at the point of care. The fund pays the same amount for each service because there is a standardised package instead of numerous options. Benefits are transparent, allowing individuals to see what is covered. If certain services are not included in the package but are desired, individuals can choose to purchase complementary coverage from their previous medical aid or another source. Consequently, we may transition from 72 medical aids to five or six, streamlining administration and simplifying the process.

Businesses built on complex administration models may resist these changes and may challenge the implementation of the NHI through legal means. This is to be expected as they will need to adapt their business models over time, just as they did 25 years ago when there were far fewer options available.

Alec Hogg: Fascinating insights into the case for NHI. Regarding the process ahead, Solidarity’s research unit has already stated their intention to take the government to court on this matter, and there may be others who adopt a similar approach. It could potentially become a lengthy and contentious process. How long do you estimate it will take to reach your desired outcome?

Nicholas Crisp: The timeline for reaching our desired outcome depends on the nature and progression of the court cases. We anticipate being taken to court, and we have already sought legal and constitutional opinions even before the bill was tabled in cabinet or parliament. Solidarity, for example, has ongoing court cases with us. The rescission hearing for Sections 36 to 40 of the National Health Act ruled in our favour, and we will now defend a case presented to the court without our participation. We expect further court challenges from Solidarity, including their objection to the minister’s right to have staff involved in the preparations for NHI. While they did not challenge my post or appointment, they disputed the creation of 44 funded positions for the technical preparatory work in the National Department of Health. They lost their urgency case, and we are prepared to defend it again. There will likely be other court cases, and that’s a normal part of democracy. Concerns are raised, debated in parliament, and ultimately voted upon. The parliamentary process is ongoing, and it will continue until about October, followed by another vote. Once the bill becomes law, there will be grounds for legal battles. Currently, there can only be arguments about the bill within the parliamentary process managed by politicians. As for me, my focus is on establishing the necessary administration to bring NHI to life. This involves defining the benefit framework, ensuring transparency and public engagement, and addressing technical details related to gazettes and structures. I’m currently engaged in these preparations so that when the bill is passed, we have the machinery in place to begin the transitional provision.

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