What are the key takeaways from the gazetting of the NHI Act? Is your business ready for the change?

The recent gazetting of South Africa's National Health Insurance (NHI) Act 20 of 2023, without an implementation date, has thrown the healthcare sector into a state of uncertainty. However, healthcare companies need to be aware of some industry that may be hard hit (e.g the medical aid industry), for others, there may be new opportunities.

What is the aim of the NHI?

The NHI Act aims to centralise Healthcare services to South Africans and ensure equitable access to Healthcare. Private Healthcare is considered to be many times better than public Healthcare. However, only 20% of South Africa and have access to private Healthcare. This access is unfortunately also divided amongst racial and poverty lines, ensuring that the lowest access to quality healthcare is amongst black people. NHI really aims to ensure healthcare access is equitable and at a high standards, and that all South Africans receive quality healthcare, regardless of race and economic status.

The signing of NHI has been received with mixed reactions with associations such as the Health and Allied worked Indaba trade union, serving over 20 000 healthcare workers endorsing NHI. Organisations such The World Health Organisation (WHO) advocate for universal health coverage to ensure equitable access to Healthcare.

However some organisations, while agreeing with the need for equitable healthcare access, did not agree with the current legislation in its current form. Business groups and healthcare service providers such as medical aids have vocally disagreed with the NHI Act.

Likely BBBEE Impact -

To understand if NHI may have a BEE element to it, one has to understand its structure: The NHI Act has authorised the establishment of an NHI Fund, A Benefits Advisory Committee and Healthcare Benefits Pricing committee. These three bodies will determine the services the NHI will offer and fund, and the relevant pricing. Medical schemes cannot offer the same services NHI offers.

Other healthcare companies who wish to offer services will need to register and contract with the NHI Fund. 

The likely effect is NHI fund gaining bargaining power. Although uncertainty may slow progress towards BEE, businesses looking to pivot and align with NHI may need to consider BEE compliance as a factor.

While there is no clear indicator that BEE will be a factor in companies partnering up with the NHI, it is very clear (historically) that any partner will be expected to create jobs, will be expected to create the next crop of healthcare professionals through skills development ,and to contribute to healthcare related socio-economic issues. All these outcomes are directly BEE or transformation related. This indicates that BEE is unlikely to be removed as a requirement for partner companies (even if it may be given a different name). Because of its leverage, NHI fund could make BEE (or similar principles like specific goals) a pre-requisite for contracting with the fund - as is done in many tender processes. Similar trends in the industry is SAHPRA's (South African Health Products Regulatory Authority) draft policy to consider BEE as a factor in registering any products and issuing of licenses.

Uncertainty of how the healthcare supply chain will be managed

The NHI fund is tasked with managing the Healthcare system procurement and spend throughout. However, no guidance has been given on how tenders will be distributed: will there be a difference for types of tenders healthcare facilities, for e.g. clinics, regional hospitals, provincial hospitals, or psychiatric hospitals. Although, distribution of procurement spend is not clear, there is a likely opportunity: NHI serves at country level, depending on the type of healthcare needs, contracts and tenders could be valued higher amounts because of the need to centralise and optimise the supply chain.

Some clear changes announced by the NHI Act – Medical Aids will be affected

According to the NHI Act, the Medical Schemes Act should be amended, as NHI will serve pregnancy and maternity related Healthcare needs. This demonstrates that the medical Aid industry will have to amend parts of their business model. Companies that offer services related to maternity care will likely have to contract with the NHI fund in order to continue in the South African market. This is because the legislation is clear that maternal care will be covered by the NHI.

What are some of the likely key strategic areas for NHI to focus on

Although opposition to NHI has been vocalised by many companies, it is also important to understand the overall aims of the South African government in terms of Healthcare. The National Development Plan 2030 outlines quite well some of the key health issues the National Department of Health (NDoH) would like to solve. The top goals, along with universal healthcare coverage are to increase life expectancy of South Africans to 70 years (currently at around 67 years), combatting TB and HIV, improving Primary healthcare infrastructure, and improving human capital development in Healthcare. According to the National Department of Health Strategic plan 2024/2025, the government is also pushing to align to UN sustainable development goals related to Healthcare.

At the 2023 SAMED, one of the key reasons, particularly by representatives at the NDOH, advocating for NHI, was centralising healthcare information and using the data to make data driven healthcare decisions. This is a strong indicator that the NDoH will use ICT and data infrastructure to drive healthcare decisions.

The key takeaway is, while certain business models may be negatively affected, such as the medical aid industry (hence companies Discovery Health has diversified its offering, including creating a bank and insurance company) there are some aspects of Healthcare that will likely have more opportunity for growth due to NHI: key industries and areas integral to the NDOH Health outcomes.

The unknown area is the key criteria to be used in order to work with the state on the key chosen Healthcare interventions and become a supplier.

Is there a risk to your healthcare business and how can you plan for it

There is no implementation date for NHI as per the Act. However, it has been widely speculated that is at least 5- 10 years away. There are a number of reasons for this. The main aim of the NHI is to create a high standard of Healthcare across the full Healthcare value chain. That means that one of the important phases leading to the implementation of NHI is the upgrade of current Healthcare facilities. Many hospitals are working to ensure they have the necessary infrastructure to provide quality healthcare, these include ensuring adequate levels of certain medicines and machinery, adequate standards of wards, improving waiting times for admission, to name a few aspects. Healthcare facilities, many of them hospitals are tasked with becoming Ideal hospitals, ensuring they have equipment and infrastructure to serve at the best possible level. This is a positive step for healthcare access. More equipped and efficient hospitals increase access, and gives companies opportunities to reach more people because the infrastructure is there to assist patients at a high volume, and better quality. It is clear that the healthcare upgrade alone, will require years of renovation.

This means, for now, business as usual, but plan on pivoting.

Moving Forward, what is required

Clear and decisive communication from the government, along with phased implementation plans, could help mitigate these uncertainties and provide a more stable transition towards the envisioned healthcare reforms. As we navigate this period of limbo, it is crucial for all stakeholders to stay informed and adaptable.

While the NHI Act has been met with much scepticism, it is important to remember there are a number countries which have universal healthcare and the healthcare industry still thrives in those countries.

Implementation is a good minimum 5 years away (likely more), so for now, it is business as usual, but also prepare to pivot.

Contact our team today if you would like to set up a quick meeting to:

1. Enquire over the NHI and potential impact on BEE strategies;
2. How to build or optimise your BEE plan to include healthcare business objectives and outcomes;
3. How to align all transformation strategies, including BEE; D&I; ESG to ensure a sustainable and impactful plan and
4. How to leverage low cost; high impact transformation strategies into your BEE plan