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South Africa's NHI Has Major Ramifications for Private Healthcare Finds Frost & Sullivan - The proposal for a National Health Insurance (NHI) was without doubt the most significant development in South Africa's healthcare sector in 2010. The aim of the NHI is to create universal healthcare coverage for all the country's citizens
South Africa's NHI Has Major Ramifications for Private Healthcare Finds Frost & Sullivan

 

PRZOOM - /newswire/ - Cape Town, South Africa, 2010/01/25 - The proposal for a National Health Insurance (NHI) was without doubt the most significant development in South Africa's healthcare sector in 2010. The aim of the NHI is to create universal healthcare coverage for all the country's citizens.

   
 
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The government has stated that the NHI would benefit everyone in the country by improving the public healthcare system and giving all citizens access to the level of care currently reserved for those able to afford private treatment. However, the impact on the country's private healthcare industry promises to be immense.

"The mention of the NHI has led to uncertainty in the industry," says Frost & Sullivan healthcare analyst Lizelle Wentzel." A lack of transparency as to how the system will work has caused speculation and assumptions being made by various role players in order to forecast the impact of the changes on their businesses."

Wentzel believes that the NHI will have a significant effect on the fortunes of most players in the South African market, including hospital groups, medical schemes and medical device vendors. It is however difficult to forecast what the effects will be, as the structure of the NHI and the potential role of each of these players has not been clarified.

"Frost & Sullivan believes that the private hospital groups will be co-opted into the NHI in one way or another, which implies that they will see more patients through their doors," she says. "However, we also expect the NHI to add further pressure on prices, so margins will be squeezed."

Pharmaceutical companies, particularly local producers, will in all likelihood benefit from the proposed changes. This is because increased funding in the healthcare system will lead to greater uptake of drugs, particularly locally-produced generics.

"Medical aids are the most likely to be negatively affected," Wentzel adds. "There is already significant rationalisation amongst schemes and the NHI will certainly accelerate this."

Overall, Wentzel believes that the opportunities created by the NHI are likely to be in the fields of Infrastructure improvement and human capital development. For instance, private players could play a role in upgrading hospitals and training nurses.

In this scenario, public private partnerships (PPPs) are likely to become a key feature of the South African healthcare landscape. For instance, the government may become involved in supporting skills development, using the private sector as the base.

"One example is Netcare, which is already highly active in the PPP market," Wentzel notes. "Through a number of initiatives it is finding ways to increase its number of beds and support revenue generation. Netcare established a 91-bed hospital together with Nalithemba in Port Alfred in February last year and opened a hospital in Grahamstown in June."

There is however also a very real danger that private healthcare providers will mitigate the challenges in the local market by seeking growth opportunities elsewhere. Frost & Sullivan believes that the longer uncertainty around the NHI persists, the more pressure they will feel to seek revenues in more certain international environments.

If you are interested in more information on Frost & Sullivan's analysis of the South African healthcare industry, then send an email to Patrick Cairns, Corporate Communications, at patrick.cairns[.]frost.com, with your full name, company name, title, telephone number, company email address, company website and country.

About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 40 offices on six continents.

 
 
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South Africa's NHI Has Major Ramifications for Private Healthcare Finds Frost & Sullivan

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