Netcare CEO Richard Friedland, a medical doctor himself, is urging the ANC to dust off its original Healthcare policy which was a workable alternative to a polarising and unaffordable NHI – which will cost the country an extra R500bn a year (21% VAT anyone?). In an address yesterday to the Hospitals Association of SA, Friedland reminded the nation of the ‘mandatory cover’ approach, which has been used successfully elsewhere, including widely in Africa. He spoke to BizNews editor Alec Hogg.
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Read Dr Richard Friedland’s speech “Viable and near-term opportunities to providing enhanced healthcare in South Africa” below
Edited transcript of the interview ___STEADY_PAYWALL___
Alec Hogg (00:10.126)
Well, I haven’t had any opportunity to interview Dr. Richard Friedland, the chief executive of Netcare since December, 2021. Those of you who have some memories may recall that he said at the time, it looks like Omicron was not the next terrible wave that was going to hurt us with COVID. He said, it looks like COVID may well be the worst behind us. My goodness, he was right. Everybody else seemed to be wrong at the time. And it wasn’t long afterwards that we got back to normality. So he’s got another big story for us today.
Alec Hogg (00:53.262)
Richard, good to be talking with you. You know, it’s hard to imagine now how impactful that interview of yours was in December, 2021. were, the whole country was in almost a paralysis over the COVID crisis. And you said, ‘Hang on, there is bright light. We at Netcare are seeing things that we did not expect. And it appears as though the worst is over.’ Of course, not too many people believed you right then. But my goodness, you were on the money.
Richard Friedland (01:25.901)
Thank you Alec. Those were terrible times in our country’s history and globally, and the tragic loss of life was shocking. In our organisation, we lost 75 frontline heroes. I was on the floor in our hospitals and could see the difference in the fourth wave. This wasn’t a theoretical construct. So I did come in for enormous criticism and flak, but the reality on the ground was very different. We published our results in the Journal of the American Medical Association, and we were the first to come out with this. But, as you say, hugely controversial. I’ve never been afraid to stick out my neck if I believe that what we’re saying is the truth.
Alec Hogg (02:26.136)
Well, you’ve been running Netcare for almost two decades. We’ll talk about your departure in a moment, but let’s start with the address you gave yesterday to the Hospitals Association of South Africa. Right now, the whole subject of national health insurance, NHI, is extremely polarizing. It feels like we’re going into the American election. You’re either with Trump or Kamala. And in this case on NHI, you either with it or against it. Yet, there has to be, as you explained, a middle way. And that’s what we’d like to unpack with you today.
Richard Friedland (03:14.007)
Yes, certainly. Health care is in crisis in our country. We’re at a pivotal time in terms of health care delivery and access. The debate is very polarized. We’ve got to put an end to the divisive rhetoric. What we’re suggesting is a middle ground. This idea of mandatory cover for all of those formerly employed. It’s a viable solution. In over 61% of African countries, there’s some form of mandatory cover. There’s mandatory cover in China and Japan and many Asian countries, in Latin America, the Caribbean, and in Europe.
Alec Hogg (04:39.032)
When I was reading through the speech, I was just trying to find parallels. For instance, with mandatory pensions where a percentage of my salary went into a pension fund, could something similar apply here?
Richard Friedland (05:13.261)
Yes, absolutely, but there are different mechanisms based on affordability levels. We’ve done a lot of actuarial analysis, and this will come at a substantially lower cost than what’s contemplated by the NHI. The NHI is contemplating increasing the spend by $200 billion, but that’s a figure from 2010. The estimate is closer to 500 billion. We can’t afford that. If you were to raise that money, you’d have to increase corporate tax by 75%, personal income tax by 31%, or VAT to 21.5%. We can’t afford it. Mandatory cover means everyone who’s employed is covered, and the rich subsidize the poor, the young subsidize the old, and the healthy subsidize the unwell.
Alec Hogg (07:22.946)
But presumably someone’s going to pay for this in the private sector. Would it not hurt smaller businesses?
Richard Friedland (07:50.945)
You raise a valid point. For small businesses, there are solutions. This is more affordable than what’s being suggested by the NHI. Improved health care has a significant impact on the economy’s well-being and reduces absenteeism. Unemployment is the root cause of many issues in our country, including health care. This is a viable option that is affordable and comes at a fraction of the cost to taxpayers.
Alec Hogg (10:16.653)
We have a government of national unity. We have lots of people talking about public-private partnerships and here’s a working model or a model that everyone accepted 20 years ago but has never really been implemented.
Richard Friedland (10:37.517)
I can’t answer that exactly. I know that in 1997, the National Department of Health’s Social Health Insurance Working Group advocated for mandatory cover. We’re suggesting that as the economy grows, we can consider those below the tax line and ultimately an NHI type of fund for the public sector.
Alec Hogg (12:33.942)
Why wasn’t it gazetted back then?
Richard Friedland (12:37.517)
I don’t have the exact answer. We’ve said to the government we’ll take up the flak on those extra 50%, the doubling that you have to train. We’ve actually got to train 87,000 nurses because 50% of our registered nurses are nearing retirement.
Alec Hogg (14:08.59)
So, it seems like there is a lot of strong rhetoric on both sides. How are you going to break through to get some maturity, some logic, some rationality into this argument with what you’ve proposed?
Richard Friedland (15:19.277)
Alec, I think you make a very good point, but I don’t think we must be distracted by divisive rhetoric. This is about what’s best for South Africa, what’s affordable, and what is sustainable. There are many public-private initiatives that can assist the government. Training is a massive example. We’ve got to train more doctors and nurses. We’ve got to look at this as a real partnership between different sectors to find something that really works.
Alec Hogg (17:27.246)
Perhaps to look at the optimistic side, politicians love flying kites. Then everyone celebrates when the proposal is brought back to normality.
Richard Friedland (18:12.479)
I think it’s always about common purpose. We’ve got to come together and find something that is rational, affordable, sustainable, and utilizes the current strengths. We’re looking forward to engagement and are not going to be distracted by divisive rhetoric.
Alec Hogg (19:45.23)
Dr. Richard Friedland is the chief executive of Netcare who’s raised this issue at the Hospital Association of South Africa yesterday. I’m Alec Hogg from BizNews.com.
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