The High Court in Pretoria has ruled that the provisions of the National Health Act (NHA) that will require doctors to register for a “certificate of need” (CON) violate the Constitution.
The CON requires healthcare service providers and facilities that offer healthcare services to apply for a certificate for the place where they wish to render services. It is regarded as essential to establishing National Health Insurance (NHI).
In a decision handed down yesterday, Judge Anthony Millar declared sections 36 to 40 of the NHA to be invalid in their entirety and are consequently severed from the Act, saying they were “akin to an attempt to indenture the private medical service in the service of the state”.
The judgment must still be confirmed by the Constitutional Court. The apex court may decide that only certain provisions of the sections are unconstitutional. If the Constitutional Court confirms the High Court’s ruling, or parts of it, Parliament will probably be given two years to amend sections to address the unconstitutionality.
Essentially, sections 36 to 40 provide that no one may operate a health establishment, increase the number of beds in such an establishment, or construct or open a new health establishment without being in possession of a CON.
The NHA’s definition of a “health establishment” is wide and could include almost any place where a health service is available, including a pharmacy, a general practitioner’s consulting rooms, and a hospital.
Through the issuing of certificates, the number of healthcare practitioners and facilities, such as hospitals or private medical practices that are permitted by law to operate within a particular area, can be limited. The scheme criminalises the provision of healthcare services in a particular area or the operation of a facility if a CON has not been issued.
Besides applying to all new entrants to the market in a particular area, the CON places a time limit of 20 years on any certificate that may be granted. After 20 years, an application for renewal must be submitted.
The application against the CON was brought by trade union Solidarity, the Alliance of South African Independent Practitioners Associations, the South African Private Practitioners Forum, four healthcare practitioners, and the Hospital Association of South Africa. The application named the Minister of Health, the President, and the Director-General of the Department of Health as respondents.
The High Court ordered the minister and the director-general to pay the respondents’ costs, including the costs of two counsel.
‘An expropriation of both property and services’
Judge Millar said the CON permits the director-general of health to compel private healthcare establishments and private healthcare providers who administer prescribed healthcare services to enter public-private partnerships, and in so doing, to share all their resources as a condition of their right to operate and practice.
All persons who require a CON, particularly those who own or operate private healthcare establishments, or private healthcare service providers, will find themselves compelled to accept the imposition of conditions and their compliance with those conditions against the threat of the withdrawal of the certificate.
“This is by all accounts is an expropriation of both property and services, and to my mind, is akin to an attempt to indenture the private medical sector in the service of the state,” Judge Millar said.
He said the refusal to issue a certificate for an existing facility or if a certificate is issued, to renew the certificate in 20 years may have a deleterious effect on the willingness of any person to invest in a healthcare establishment.
The Hospital Association of South African submitted it can cost more than R500 million to construct a hospital.
“It seems to me a matter of common sense that if the time period over which a R500m investment can be recovered is limited to 20 years, this will necessarily create a situation where no investor would invest unless their investment (and more) could be recouped over the 20-year period. This would have the effect of driving up the cost of healthcare in respect of not only new facilities to be constructed but also existing facilities, the value of which absent a certificate would be a fraction of their true worth,” Judge Millar said.
Apart from impacting upon the rights of the owners and operators of private healthcare establishments, the CON will directly impact the public who use their services.
If the conditions imposed by the director-general are not accepted and a certificate is not issued, the private healthcare establishment and private healthcare providers’ services will no longer be able to operate where they have been. They will be become unavailable to the people who relied upon them, Judge Millar said.
He described the power to withhold issuing or renewing a certificate as “nothing more than a blunt instrument”, which the director-general would use to reduce the number of private healthcare establishments and providers who could lawfully provide medical care within a particular area in the hope that, “having been deprived of their property and ability to earn a living”, they would relocate to an area in respect of which the director-general had determined that a certificate would be issued.
“Even if this did occur, there would be no certainty. The sword of Damocles hangs over every private healthcare establishment and private healthcare provider in perpetuity for so long as they are required to renew a certificate of need,” Judge Millar said.
Solidarity’s response to the decision
Solidarity said the High Court’s ruling means “a major cornerstone” of NHI has been taken down.
“The government wants to change to a system in which healthcare is nationalised and healthcare practitioners become servants of the state so that the provision of all healthcare can be centrally controlled by the state. This victory thwarts those disastrous plans,” said Solidarity’s chief executive, Dr Dirk Hermann.
“This judgment is a major blow to the total NHI idea, as the principle of central management is a core pillar of the NHI Act itself. A more extensive consequence of this ruling with regard to the certificate of need is that parts of the NHI Act are now probably also illegal in principle,” Hermann said.
The organisation said its sights are still set on the court battle against the NHI Act. In May, Solidarity served court documents on the government after President Cyril Ramaphosa signed the NHI Bill into law.
‘Once and for all’
Solidarity challenged the constitutionality of the CON in December 2021. In June 2022, Acting Judge Thembi Bokako ruled that sections 36 to 40 were unconstitutional and invalid and should be set aside.
The Department of Health subsequently said the Minister of Health had not been notified of the proceedings, and it applied to both the Constitutional Court and the High Court to have the ruling rescinded. The Constitutional Court said in December 2022 that the High Court should decide the matter.
In a ruling handed down in June last year, Judge Brenda Neukircher agreed with the department’s argument that the minister had not been properly informed when Solidarity instituted legal proceedings. The applicants failed to comply with the Uniform Rules of Court setting out how the sheriff may serve papers initiating proceedings on a respondent, she said.
Following that decision, Dr Nicholas Crisp, the Department of Health’s deputy director-general for NHI, said the (new) High Court case would provide the department with an opportunity to deal with the CON issue “once and for all”.
“There are already provisions in the Pharmacy Act and other places for pharmacies to comply with certificates of need, and there are many other examples of this in our society where you can’t just open a school or a bottle store or various other things at any place you want, and it’s deliberate for planning,” he told the National Council of Provinces’ Select Committee on Health and Social Services.
Read: ‘Win’ for health department in battle over NHI-linked Certificate of Need
