Government hospitals are likely to run out of beds before the end of July. The national health department has negotiated agreements with the private healthcare sector for additional beds at set prices. But how does this work in practise? We’ve asked Nicholas Crisp, one of the health department’s chief negotiators. 

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Provinces are under pressure to finalise their respective service level agreements (SLAs) with private hospitals and health practitioners, as South Africa is likely to run out of intensive care unit beds within the next three weeks as the coronavirus epidemic gains momentum. Bed capacity is expected to be breached in all provinces, Health Minister Zweli Mkhize told Parliament last week.

In Gauteng, now the epicentre of the outbreak, some hospitals have already reached capacity and there could be an acute shortage of Covid-19 beds — in both public and private hospitals —  by the end of the week, according to health sector sources. At a Covid-19 command council briefing last week, Health MEC Bandile Masuku said his department expected a shortage of at least 800 beds by the end of July, but South African Medical Association CEO Angelique Coetzee told Bhekisisa it could be substantially more.

The national health department negotiated for months with the private healthcare sector to purchase beds and services ahead of South Africa’s Covid-19 peak, which according to current projections, will occur at different times in each province between July and September. This approach is different from countries such as Ireland and Spain, where private beds were temporarily nationalised.

In early June, the South African health department and the private sector finally reached an agreement on a common set of tariffs and a common structure.

Critical care beds, which are the type of beds that the government is most in need of, do not traditionally exist in South Africa’s private sector. The American College of Emergency Physicians defines critical care services as the delivery of medical care to a critically ill patient that involves decisions being made to prevent any further life-threatening deterioration of the patient’s condition. Critical care services are rendered by critical care specialists in critical care units, also called intensive care or high care units, although the level of care in intensive care units (ICUs) is greater than that available in high care units (HCUs).

The beds that the government needs are a hybrid between HCU and ICU beds in the private sector, explains Nicholas Crisp, a public health consultant with the health department. Crisp is part of the team leading the consultations between government, the private healthcare sector and medical associations. He was also appointed to lead the establishment of the National Health Insurance (NHI) office in 2019.

ICUs are, however, managed in different ways in the private and public sector. The public sector is forced to ration access to such units because of the limited availability of specialists and the costs involved, Crisp says, so criteria for admission are far stricter than in the private sector.

Although the national department agreed on the common structure for procurement of access to private care beds, each province still has to sign SLAs with the respective private firms and medical practitioners in their areas. These public/private partnerships will be administered and financed by the provinces.

The Western Cape was the first province to sign an agreement. This agreement may be used by other provinces as a model. The Western Cape SLA determines that public patients who test positive for Covid-19, or suspected cases, could be transferred to private facilities when public facilities are unable to accommodate them. Public sector clinicians will decide when it is necessary to buy private healthcare services for state patients.

The government will pay hospitals (for beds, medicine, equipment and nursing care) and healthcare professionals — such as doctors, therapists, X-ray and lab services — who have their own independent practices, separately for their services.

The daily rate for a private specialist or team of specialists providing care to public patients in intensive care or high care units in private hospitals is R2 493, according to the Western Cape’s SLA. This covers basic care, but not additional procedures like surgical operations, cardiac interventions and dialysis.

There are, however, concerns that provinces have very different capabilities, says Alex van den Heever, chair of social security systems administration and management studies at Wits University’s school of governance.

“Some platforms do not function properly and lack the capability to respond to a crisis. There are weaknesses in the administrations,” he says.

Where will the money to pay for private healthcare come from?

Van den Heever warns that the R21.5 million allocated to provinces — announced by Finance Minister Tito Moboweni in his supplementary budget speech in June — to make more money available for the Covid-19 response, was not earmarked. The funds will be shared between  provinces and the national health department, but there is no plan that prescribes how provinces should use the money, he says. 

Van den Heever raises the question: “What happens when the money runs out?”

Bhekisisa asked Crisp nine questions about the agreements.

1. Why did the negotiations take so long?

Our private healthcare sector structure is incredibly complicated. Private hospitals are independent companies that deliver hospital services, but they don’t deliver healthcare services. Those services are provided by health professionals who work in private hospitals, but are not employed by the hospitals.

Private hospitals can employ nurses and cleaners, but almost all other healthcare workers – such as doctors, radiologists, therapists and lab technicians – work for themselves. They provide their services to the patients admitted to hospitals and are paid for those services directly by patients.

So if you need a pulmonologist and a cardiologist and an orthopaedic surgeon, you have to contract three different people. They all have their own administrations and they have their own tariffs and working arrangements with the hospitals.

How do you find one common way of dealing with them? We have had to consult and negotiate with literally everybody.

2. The Western Cape was the first province to sign service level agreements. What progress has there been in the other provinces?

–       Gauteng has got huge private sector capacity. They are busy with their process and waiting for tariffs. Whether it has the budget to purchase enough of that care, we’re not yet sure.

–       Limpopo already has an arrangement with the private sector, but the private sector in the province is quite small.

–      The Free State has a mechanism in place and North West already has arrangements with their private hospitals. In the North West, the mines have quite substantial capacity that may help the province. 

–      In the Northern Cape, there is not much private capacity apart from Kimberley and Kuruman.

–      The Eastern Cape has a team from the national health department helping the province. The provincial team is going to work with the same system as the Western Cape.

–      Mpumalanga has requested to use the same protocols and systems and mechanisms as the Western Cape, so the province is on the road.

–       KwaZulu-Natal has started the process. The province hasn’t procured private services yet and is waiting for tariffs.

The above information reflects progress made up until 12 July. 

3.  Would it not have been better to have had one national agreement or negotiation?

I come from an NHI perspective. If we had an NHI system in place, I believe it would have been much easier. We would have had one centralised budget, instead of budgets all over the place [on provincial levels], where nobody knows whether their budget has been approved or not.

But the provinces have statutory autonomy, so the national health department can’t instruct them how to deliver their services.

Until we have a system such as the NHI in place, which legally allows the national health department to sign agreements to provide services on behalf of provinces and supervise them to implement such agreements, we can’t have national procurement.  

4. What level of care is the government buying from private hospitals?

The public sector will procure care in a particular grade or level of care or hospital bed.

There are three specific bed categories: a critical care, general or palliative care bed. The fee for a bed includes the cost of the services of healthcare workers, which will be allocated and paid to them by a central administrator (for more information on administration, see the answer to question seven).

The type of palliative care the state will buy from the private sector is not the normal palliative care that you would find in a hospice [which, according to The Hospice Palliative Care Association of South Africa, aims to relieve suffering, helps the patient to live as actively as possible, and can be done in conjunction with other therapies that are intended to prolong life].

The state-bought palliative care would involve very little care from doctors. Rather, it would require nursing care — the type of palliative care a patient would receive when it is clear that they are going to die, and doctors have already spoken to the family.

General beds that the state will buy would be mainly for patients who are transitioning out of critical care before they’re well enough to either go into an isolation facility for the last few days of care or return home. The state would not normally want to procure general beds because it should have enough general beds of its own.

The tariffs of a bed per patient per day are as follows:

Critical care: R16 156

General care: R4 080

Palliative care: R1 142

These tariffs include the cost of a hospital bed, medicine, consumables, the services of doctors, laboratories, radiology practices, as well as physiotherapy. The tariffs, however, don’t include additional services that may arise in the course of patient care, for which (significantly reduced) tariffs have been agreed on separately.

So, while we’re paying a set fee for the bed, we had to negotiate separately for a portion of the tariff for fees of each of the other players, such as doctors, labs, therapists, and radiographers — they have separate tariffs. But those fees are included in the price of the bed, so part of that fee goes to the hospital for the cost of the actual bed and equipment and part of it is used to pay for the services of the respective healthcare workers.

5. Why are you not buying ICU beds?

The private sector doesn’t have critical care services, it only has intensive care services. But  ICU beds in the private sector cost thousands [of Rands] because the sector will go to extreme lengths to look after patients, and private facilities just keep charging patients until their medical aids run out of funds.

In the public sector, on the other hand, resources are far more constrained and the state doesn’t want to buy purely ICU beds, as they cost a fortune.

We know that many Covid patients don’t need to go into ICU because they don’t need ventilation and, by definition, ICU basically means ventilation. Referred Covid public sector patients will receive assisted ventilation in private hospitals if they need it, but the majority, though seriously ill, will not need ventilation.

We also know that there are interventions that can avoid ventilation for Covid patients, and those interventions can be provided in high care wards. But the private sector doesn’t have a lot of high care wards because it is designed with primarily ICU wards.

So we said to them, we’re not interested in how many machines and gizmos you’ve got in the ward, we’re interested in the care you’re going to give this patient. Our agreement with the private sector removes any perverse incentive to wait until the patient is sick enough to go onto ventilation, and then put them in ICU to be paid more money.

The hospital groups will admit patients to their ICUs, but the state is not going to pay for an ICU bed, since the care is not all truly intensive care. As a result, we spent a lot of time trying to cost a critical care bed.

The difference, essentially is, that a critical care bed provides a spectrum of specialist care, and not purely ventilation, so that’s why it’s cheaper. Private patients with medical aid packages and public patients paid for by the state will all be cared for in the same ICU of a private hospital.

Both public and private sector patients will receive the same care in the same hospital. The only difference is that for Covid, the state has come to an agreement with the private providers on simplified tariffs that amount to cost-recovery.

6. What about other services and laboratory tests?

If the patient needs to be placed on dialysis, for example, the state will pay separately for that. Once again, the state has come to an agreement with private providers on tariffs for Covid that amount to cost-recovery [in other words, no profit].

For laboratory tests, we have a package of tests that all patients will have done every day. Outside of that, we have agreed on special tariffs for 14 tests that we know from experience will be ordered frequently for referred Covid patients, but not for everybody and not for each day.

7. How will the payments be done?

The three big medical aid administrators — Discovery, Medscheme and Metropolitan Health Group — have been appointed by private hospitals and health professionals to do the administration. They’re doing this free of charge and will act as administrator intermediaries. Each patient will be identified with a public sector file number and the hospitals and doctors will use this number to submit a claim to the administrator intermediary.

The administrator will submit one invoice per patient to the department. The state will then pay one amount to the intermediary, which will divide the payment between the respective groups based on their invoice. These groups are the hospitals, the specialists, the labs and radiology practices, etc.

The state does not currently have the capacity to pay 7 000 different practitioners or 200 different hospitals, so this process reduces that burden dramatically. The government has to account for the patient and bed-day numbers, so we have to trust that patients were indeed admitted to a specific level of care and that it was justified and done according to clinical guidelines. Clinical governance committees are being established to provide the requisite clinical oversight.

The service level agreements will determine when these invoices are paid. The state is required to pay invoices within 30 days after they were received.

8. Who decides which patients are referred to private hospitals?

According to the service level agreements, it’s the sole discretion of the public sector to refer a patient to a private hospital. There is no expectation in terms of numbers required or commitment to the private sector.

If a public patient requires critical care, but all the beds of a particular state hospital are full, a public doctor can, for example, contact the nearest private hospital, and ask if it has a bed for the patient. If the private facility accepts the patient, the person remains a public sector patient (but in a private facility) and this contract, the service level agreement, kicks in.

9. In the recent supplementary budget an additional R21.5-billion was made available for health. Will that be enough? What happens when the money runs out?

Obviously, there’s a serious concern that the demand for services will exceed the supply of services and available money. It’s going to happen from place to place, let’s not kid ourselves. We don’t have a bottomless pit of resources and we don’t have an endless supply of beds and staff. As happens in healthcare normally, you do end up rationing and losing patients that you just don’t have a bed to admit, and they die while they’re waiting to get in or you give sub optimal care.

We don’t like it. Really we hate it, it distresses us badly, but it does happen and we have to acknowledge it. So I’m afraid, I can’t tell you where the money is going to come from.

It’s going to come from you and me as tax payers — there’s no other alternative, I guess.

The reprioritisation of budgets and additional allocations will help, but the size of the challenge is truly daunting. We beg the public to adhere to the social distancing regulations and help to contain the transmission of the virus.

This story was produced by the Bhekisisa Centre for Health Journalism. Subscribe to the newsletter.