The Healthcare year in retrospect

The healthcare industry is still in a state of flux and there remains much uncertainty because of significant proposed changes to the regulatory and legislative landscape; 2018 has set the stage for 2019 to be a challenging healthcare year.

All of the proposals so far are in bill form, and none of the laws has yet been finalised. This includes the draft National Health Insurance Bill and draft changes to the Medical Schemes Act. Most of the changes are aimed at addressing, as the health minister puts it, the “terrible twins of the healthcare system” or rather, the high costs of private healthcare and the poor quality of public health services. Once the draft bills have been tabled in Parliament and are passed, the industry will at least have clarity and certainty as to the future, though it will probably be massively disrupted.

However, it seems doubtful much progress will be made in 2019 in what is an election year and where it appears there have been recent significant amendments to the NHI draft (not seen or considered in any broader or parliamentary consultative process). The battle of ideologies regarding a national healthcare system continues both internally at a governing party level and industry level. In addition, there has now been ministerial acknowledgement that the country is not in a financial position to implement the NHI as contemplated (certainly not on the timing as initially proposed).

Progress on the National Health Insurance system is set to proceed simultaneously with changes to the medical schemes industry. The legislative reforms to the medical scheme landscape aim to regulate schemes more heavily and attempt to bring them in line with the principle that these are not meant to be profit-making enterprises.

The amendments to the Medical Schemes Act will also heavily affect the medical scheme brokerage market, with some statements from the minister of health indicating that broking services in relation to medical aids will be abolished completely or at least modified. There will likely be pushback from the industry and this may affect the final changes. Brokers may have to explicitly justify the fees they charge in relation to value

The healthcare industry is an interconnected web of various pieces of legislation which are not always dealt with holistically. In order to create the NHI, the health minister has identified at least 12 pieces of legislation to be amended, the Medical Schemes Act being just one of them. The draft NHI Bill seems to be moving forward, notwithstanding the latest unpublicised amendments (National Treasury has confirmed that the bill will soon be tabled in Parliament) along with the amendments to the Medical Schemes Act.

The health market enquiry, conducted by the Competition Commission, will also have an impact on the medical scheme industry and on the private healthcare sector. The enquiry has been ongoing for over four and a half years and a preliminary report was only produced in July 2018, after the draft NHI Bill and draft changes to the Medical Schemes Act were put forward. These bills may need to be reconsidered in order to align the drafts with the recommendations, otherwise what would have been the point of this lengthy enquiry?

The enquiry broadly found that the private healthcare industry in South Africa is The healthcare year in retrospect characterised by lack of competition, rising prices, minimal transparency and disempowered users of the healthcare system due to an asymmetry of information. They recommend changing medical scheme benefit options, in order to “increase comparability between schemes and increase competition” in the market. Increasing market transparency and improving competition through a supply-side regulator are also recommended. How these recommendations will tie in with the NHI Bill and the Medical Schemes Act amendments is yet to be seen.

The enquiry report ‒ coupled with the NHI and Medical Scheme drafts ‒ have done little to reassure an already skittish private healthcare industry, whose relationship with government has not been comfortable for years. Although having recently shown signs of improvement, this relationship is likely to remain challenging due to ideological differences and different views on funding. Everyone agrees on the desirability of quality universal healthcare and accessibility of affordable healthcare for all. It is in how this is to be achieved where the differences arise.

We also have the Law Reform Commission enquiry into medical negligence and related litigation, ordered by the health minister, but await the recommendations from the commission. The commission said in its discussion document that this is the first step in the investigation into medico-legal claims against the state and therefore it does not contain clearly defined recommendations for law reform. This highlights the significant medico-legal challenges faced by the public health sector, and enormous contingent liabilities across all provinces for medical malpractice claims.

The private sector has its own challenges in dealing with increased costs and values of medical malpractice claims and professional indemnity insurance. Amendments to the State Liability Act were proposed this year to allow for (under certain conditions) payments in instalments of damages awarded against the state. This was met with substantial opposition in submissions made to Parliament on the draft legislation. The objections are largely based on the alleged flaws in the financial benefits that would flow from such orders. As a matter of principle, whatever the economics may be, there is no reason not to legislate to also allow periodic payments in medico-legal damages awarded against private healthcare practitioners and facilities. An attempt to have the court develop the common law to allow for periodic payments of such damages was unsuccessful, essentially on the facts of the case raised, so it remains open for the appropriate case supported by the necessary evidence to convince the court to allow for such payments in the future.

Even assuming there are funds to implement NHI as envisaged, the scheme will be stillborn if the huge historical medico-legal exposure of public healthcare institutions is not urgently resolved together with the quality of healthcare provided. Starting with a clean slate (or at least a substantially clean slate) is necessary to avoid the situation where billions are taken from the annual health budget to resolve a large historical list, and current list of medico-legal claims; this would mean money is not spent on delivering and improving healthcare quality and facilities, creating a spiral of ongoing claims which the public healthcare sector will have difficulty in escaping. The large number of historic claims must be dealt with innovatively, aggressively and urgently. Every month it is delayed makes it more and more difficult to resolve existing and new claims cost-effectively because, with the passing of time, records are lost, witnesses disappear or memories fade, expectations of the claimants harden, and the costs of medical interventions that may be needed to assist deserving claimants increase significantly.

In the courts, the highly litigious environment in the healthcare sector is spurred on by huge awards; the appeal court in Khoza v MEC for Health in 2018 increased an award of general damages related to brain damage of a child from R200 000 to R1.8 million.

Apart from the grand scale changes to the healthcare landscape, medical law continues to develop, with the courts grappling with issues ranging from the best interests of children (when it comes to the refusal by parents of medical treatment for their child, for instance) to the legality of euthanasia, for example. The courts did not satisfactorily resolve the question of the lawfulness of euthanasia when that last came before them. The law reform commission long ago proposed appropriate legislation to allow for euthanasia in certain circumstances. No health minister has had the political appetite to push for those suggested legislative reforms (neither did the Constitutional Court have any equivalent judicial appetite when it was seized of the matter). The recent murder charges against Professor Davison may bring the debate to a conclusion in the new year.

Apart from the grand scale changes to the healthcare landscape, medical law continues to develop, with the courts grappling with issues ranging from the best interests of children (when it comes to the refusal by parents of medical treatment for their child, for instance) to the legality of euthanasia, for example. The courts did not satisfactorily resolve the question of the lawfulness of euthanasia when that last came before them. The law reform commission long ago proposed appropriate legislation to allow for euthanasia in certain circumstances. No health minister has had the political appetite to push for those suggested legislative reforms (neither did the Constitutional Court have any equivalent judicial appetite when it was seized of the matter). The recent murder charges against Professor Davison may bring the debate to a conclusion in the new year.

Looking at the medical negligence cases heard in the latter part of the year by the Supreme Court of Appeal, it is striking that most related to injuries to babies during birth. This is in keeping with the trend of obstetricians and gynaecologists being the most litigated of the medical profession. Notably, recent judgments (echoing earlier and other jurisdiction’s judgments) recognise that an adverse health outcome does not The healthcare year in retrospect necessarily mean causative negligent conduct on the part of the relevant health professional; the courts are cautious to simply infer fault in those circumstances. Therefore, it has not been a one-way street of successful medical malpractice claims.

The NHI Bill, the Medical Schemes Act amendments, the Competition Commission enquiry into the private health market and the Law Reform Commission investigation into public health medico-legal claims are some of the issues that need to be finalised. Together, they signal huge changes to, and challenges for, the healthcare industry. For now, these strands are not being woven properly. They must be brought together to coherently and practically reform the healthcare industry.

Donald Dinnie Group CEO and Aneesa Bodiat Head of Legal
Natmed Medical Defence (Pty) Ltd
First published January 2019