‘Win’ for health department in battle over NHI-linked Certificate of Need

The High Court will revisit the constitutionality of the Department of Health’s proposed Certificate of Need (CoN), which determines where medical practitioners may work, following a judgment in favour of the department this week. The CoN is regarded as essential to establishing National Health Insurance (NHI), the state-run monopoly that will control the funding of healthcare.

The legal tussle over the CoN also came up on Tuesday during a meeting of the National Council of Provinces’ Select Committee on Health and Social Services, where the Department of Health’s “point man” on NHI, Dr Nicholas Crisp, said there was nothing unusual about the certificate.

The NCOP started processing the NHI Bill this week after it was passed by the National Assembly on 13 June (see below).

In June last year, Acting Judge Thembi Bokako ruled that sections 36 to 40 of the National Health Act (NHA), which provide for the CoN, were unconstitutional and invalid and should be set aside. Essentially, these sections 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.

Read: Ruling on ‘unconstitutional’ certificates won’t stop NHI, says health minister

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.

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, and four healthcare practitioners. The application named Minister of Health Dr Joe Phaahla, health department director-general Sandile Buthelezi, and President Cyril Ramaphosa as respondents. However, they did not oppose the matter.

The Department of Health (DoH) subsequently said the minister 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been notified of the proceedings, and it applied to both the Constitutional Court and the High Court to have the ruling rescinded.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 that the High Court should decide on the matter.

In a ruling handed down on 14 June, 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.

Judge Neukircher gave the DoH 30 days to file its responding affidavit to the issues raised by Solidarity and its co-applicants.

‘It’s for planning purposes’

The judgment means the original decision has been rescinded and the health minister will have an opportunity to defend the CoN in court.

Crisp, the DoH’s deputy director-general for NHI, told the NCOP committee that the judgment will 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 said.

Crisp said the Health Market Inquiry into the private healthcare sector had strongly motivated for a supply-side regulator to ensure “we get facilities in appropriate places and not just higgledy-piggledy”.

The DoH’s director for legal services, Kgorohlo Moabelo, said if the High Court again decides that sections 36 to 40 of the NHA are unconstitutional, the judgment will still have to be confirmed by the Constitutional Court. The Constitutional Court may decide that only certain provisions of the sections are unconstitutional, in which case the government is normally given two years to amend them.

‘Short-comings’ will be addressed

It was clear from Tuesday’s presentations that the DoH intends on pressing ahead with NHI, adopting the position that the only options are maintaining the status quo or the NHI Bill.

Phaahla told MPs that opposition to NHI was the result of “misinformation” and because opponents wanted to protect their “vested interests” and “privileges” or feared losing some of their “super profits”.

The elephant in the room – that the state will be able to provide quality healthcare services for all despite the poor performance of Eskom, Transnet, the SA Police Service, and most municipalities, among others – did not feature in the discussions.

Instead, Phaahla was optimistic that what were referred to as “challenges” and “short-comings” in the public healthcare sector will be addressed, and these facilities will be brought up to standard.

He said NHI will be implemented in stages, starting with primary healthcare. As more and more secondary and tertiary facilities are brought up to standard, they will be accredited to contract with NHI.

Dr Aquina Thulare, the DoH’s technical specialist on health economics for NHI, said that based on the transitional arrangements in section 57 of the bill, the department expected NHI to be fully implemented by 2029.

Medical schemes will not be allowed to provide services once they are covered by the NHI Fund, otherwise the department’s ability to negotiate lower prices for those services will be undermined because it will have to compete with private funders, Phaahla said.

He said the NHI Fund’s purchasing power (it will be the sole buyer of health services and products) and economies of scale will drive down prices charged by private providers.

No detailed costing will be done

Crisp reiterated that an updated feasibility study into NHI will not be forthcoming from the department.

“This has been discussed and published and presented by us many times over the years, starting in 2012 in the White Paper when a costing was done and published […] There have also been many discussion papers by various academics, the Actuarial Society, and others that have all been published.”

According to guidance from the World Health Organization last year, it was “ill-advised to do a detailed costing of this kind of reform, and no other country has done it […] You do it incrementally, and you set the target within which you are going to design and manage your system, and you only introduce the benefits that you know you can afford within that envelope,” Crisp said.

He did not provide any details on how NHI will be funded, apart from repeating what is stated in the bill: general tax revenues, shifting the provincial health allocations to NHI, and the possible introduction of a payroll tax and a surcharge on personal income tax.

Crisp said the department believed there was “more than enough money in the system” that could be shifted to fund NHI.

What about corruption?

Crisp denied that the accreditation and procurement processes will provide abundant opportunities for tender fraud and corruption.

The NHI Fund will handle “very little by way of tenders”, he said.

“Accreditation is not a tender process. It is a voluntary registration by a service provider, public or private. As long as they meet the criteria, there’s no tender to go out. The prices will be fixed, and the way in which services will be delivered will be fixed and regulated according to what that establishment or provider is able to provide.”

Regarding procurement, he said the NHI Fund – as the DoH does currently – will only fix prices.

“The fund will not actually go about the logistics of purchasing anything. The providers must purchase once those prices are set, so there’s far less vulnerability in the fund than first meets the eye.”

Crisp said there will “definitely be a cap” on what providers can charge.

In a further attempt to allay concerns about corruption, he said the NHI Fund won’t have huge sums of money sitting in a bank account waiting to be spent, because it will be paying out to providers daily.