It’s time we fix the way we fund health care

It’s time we fix the way we fund health care

A shortened version now online in Bhekisisa M&G Health:

Picture caption: Nurse accomodation at a deeply rural hospital faced with a staffing crisis in the Eastern Cape. Few healhcare workers agree to come and work here.

It’s time to fix the way we fund healthcare

Russell Rensburg and Marije Versteeg-Mojanaga

On 22 February, Finance Minister Pravin Gordhan gave his annual budget speech. In it, Gordhan touted inclusive economic growth and radical transformation that are far overdue in South Africa.

Each year, the minister’s speech outlines the broad brushstrokes of South Africa’s economic policy. From there, money begins to flow from the country’s coffers or the national revenue fund into national, provincial and municipal departments. Who gets what is a matter of calculations based on various equitable share formulas. These equations are meant to ensure that money is allocated fairly across provinces and among South Africa’s 278 municipalities.

The Equitable Share Formula and rural provinces: is it enough?

The division of revenue is a powerful tool for redistribution of wealth. In his speech last week Gordhan announced that rural provinces will continue to receive a higher per capita proportion of equitable share allocations This is an attempt to redistribute resources to areas of greatest deprivation and need. But is it enough and and is it effective? Data from the most recent census tells us that about 40% of South Africans call rural areas home – and it is these areas in which much of the country’s poverty hides. A 2014 Statistics South Africa report found that six out of every ten people in rural areas live below the poverty line.

Whether it is enough to overcome the historical neglect and the pervasive levels of deprivation in rural areas is questionable. From the levels of understaffing in rural health care to statistics on deprivation we believe not. Research by the Social Policy Institute of South Africa has demonstrated that former homelands, which are all rural, are experiencing levels of inequity as high as pre-democracy. In addition, service delivery in rural areas simple costs more, be it road maintenance, health care or education. Treasury’s announcement that it is “exploring the possibility of adding rural-focused indicators to the provincial equitable share formula to further strengthen the equity of intergovernmental transfers” is thus to be welcomed.

Is it effective?

This leads to the second question: Is it effective? There are a number of serious flaws in the way health is funded.. First of all, once provinces receive their share, they have full discretion on the allocation within the province. So, North West Province, for instance, only allocates 26% of its share to health, whereas other provinces allocate between 34% and 36% to health. We are thus not surprise that health facilities in North West are under severy distress. The process at a provincial level is non-transparent and vulnerable to priority-setting, and resource allocations, that are out of tune with national goals of equity and transformation. Secondly, once a health department receives its share from the province, another layer of decision-making affects what funding ultimately reaches those most in need. In the past years, we have seen the emergence of ad hoc, ill-considered cost-cutting measures of which Gauteng’s deadly decision to move almost 2000 mental health patients out of state-sponsored care at Life Esidimeni facilities is but one. In the rural areas, we have seen small facilities serving most impoverished communities being reduced to skeleton staffing levels, hardly able to maintain the existing service. Outreach services to clinics and households have come to a complete halt. Treasury confirms that indeed there has been a 0.6 percent reduction in medical posts nationally. Whereas the Treasury’s call to provinces to cut posts came with the mandate to protect fronline health professionals, organogram reviews and “post rationalization” processes have most definitely affected health care delivery to the most vulnerable. This has occurred outside of the public domain with little or no consultations with communities that ultimately feel their impact.

We need targeted funding to address historical inequities and unmet need

Times have changed and so have government priorities and disease patterns. Whereas pre-democracy, we funded on basis of race, today we intend to fund on basis of equity and health for all.. Whereas previously only HIV/AIDS services received conditional grants to protect this critical programme, today we have an additional burgeoning non-communicable diseases epidemic which now account to 60% of deaths according to the latest StatsSA report. In the current system, with all its constraints and gaps explained above, little is left to secure rural impoverished communities with diabetes, cancer, hypertension, mental health illnesses, receive their fair share of the pot. What we have seen is that the most impoverished communities lose trust in the system and have to consider whether to spend their own scarce resources on travel to reach a facility that may not have medicine in stock; a doctor on call; an occupational therapist on the organogram. The travesty then is that we use past utilization rates to inform budgets and we overlook the high unmet need in the most deprived districts in our country.

Lost in translation

In short, we are lost in translation from high level policy goals to reaching those most in need. Parallels with the education system abound. Whereas it cannot be denied that we are faced with an economic crisis, radical transformation goals require radical transformation in how we fund health care. We hope the National Health Insurance will provide the answer but we cannot wait another few years. NHI is still in its infancy and the roles of provinces, and by extension district health services, in relation to it remain unclear. Will provinces purchase services from the fund or will districts become the fund’s service providers? Whatever is decided upon finally, the end goal of access and equity must be protected. As it is because of the high levels of deprivation that impoverished communities need a reliable, functional, accessible, comprehensive health care service.

Ultimately, its all about priority-setting, from the very top down to the provinces to health department to communities.There is no better time for radical transformation than now.