Fair reimbursement is key to NHI | Fin24
  • Load Shedding Schedules

    Find information for Johannesburg, Durban, Cape Town and other cities.

  • Channelling Thatcher

    A battle with unions will be the biggest test for Ramaphosa and Mboweni, writes Pieter du Toit.

  • Liberty

    We are no longer turning around, we are growing, says the group's CEO as profit surge.


Fair reimbursement is key to NHI

Oct 28 2013 20:15
Cape Town - Establishing a fair playing field for reimbursing public and private healthcare providers, such as hospitals, is key to ensuring that the proposed National Health Insurance (NHI) system will work efficiently. 

Speaking at the Hospital Association of South Africa (Hasa) conference in Cape Town, the director of the economics of social and health care research unit at the Centre for Health Economics University of York, Professor Andrew Street said: “All providers should be subject to the same regulatory and reporting arrangements.

"Failing which differentiated prices could be more appropriate to encourage the entry and participation of different providers and if providers were delivering different services.

“Providers face different, unavoidable costs,” added Street. 


He mentioned regulatory factors affecting private and public hospitals differently – private hospitals were taxed, while public hospitals were not. 

They also faced different production constraints, such as accounting for their infrastructure and capital stock, accessing funding and capital and different costs of borrowing. 

If a differentiated price system were to be implemented, it would require price adjustment and for prices to vary in line with the influence of the unavoidable costs. 

“Ideally you’d need to pay specific payments to compensate for the influence of each specific unavoidable cost factor,” said Street. 

He said it was critical to figure out a way to determine a way to define “work”.

“In many countries, hospitals used diagnos related groups, which help them describe not only the number of patients, but what they were treated for,” says Street.

“For example, whether they were in hospital for a hip replacement or were being treated for a stroke.”


These were the building blocks of fair reimbursement, because they enabled hospitals and regulators to compare costs on a like-for-like basis.

Street suggested that differentiated pricing is not about ownership, but about external constraints on the provision of healthcare. 

The Hasa CEO, Dr Dumisani Bomela said that there were key differences in input costs between private and public hospital sectors in South Africa. 

“Private hospitals are required to pay VAT and corporate tax and also cross subsidise the reduced prices of drugs and surgicals procured by the public sector on tender and they also need to raise capital at market-related rates.

"This creates an unequal playing field that needs to be considered when reflecting on relative pricing.”

He said Hasa shared the government’s vision of delivering sustainable, quality healthcare – accessible to all - and private hospitals stand ready to engage on public health delivery.

Photo of empty hospital beds from Shutterstock

cape town  |  health  |  nhi


Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot


Cuts to the public sector wage bill took centre stage at this year's Budget

Voting Booth

Do you support a reduction in the public sector wage bill?

Previous results · Suggest a vote