Netcare’s Lesotho project could be a model for SA

WHEN Sir Lowry Cole ordered that a pass be carved through the Hottentots Holland mountains between the Cape colony and the newly settled farmlands of the Overberg, he failed to get Foreign Office approval from Whitehall. Communications in 1829 were slow and the project was half finished by the time an order came to stop spending scarce public money on what London bureaucrats regarded as a folly. Colonists were furious. They saw the benefit that building crucial infrastructure would bring, and embarked on what was probably South Africa’s first case of crowdfunding and what we would call a public-private partnership today.

So crucial was the development of the pass for the local economy that colonists put their own money into the project. The British government eventually refunded the colonists — but charged road users a toll.

Sometimes, if you want to get things done, you need to think laterally and take risks.

Such is the case with South Africa’s deeply inadequate public healthcare system.

Netcare made much this week of its public-private partnership in Lesotho — touting it as a model for countries, like South Africa, that struggle to deliver adequate healthcare.

Although most of the Netcare group’s earnings are still from South Africa, it has a growing business in the UK, where it has 2 800 of its 13 200 beds. About 40% of its patients in Britain are referred to it and paid for by the state, which is struggling to fund the National Health Service.

Now Netcare wants a similar deal with the South African Department of Health.

More than 80% of Netcare’s South African patients have their bills picked up by a medical aid. So there is a business model in place that could be adapted for the public sector, which is crumbling under the weight of demand. In the case of Charlotte Maxeke Johannesburg Academic Hospital, literally at risk of partial collapse, a healthcare partnership makes sense.

But, like economy-class passengers on an airline, state patients would not receive all the luxuries available to private patients — travellers in first class — because that could lead to the collapse of medical schemes.

A dilemma the government faces is that, should it support such a partnership, it would appear to be condoning inequality in healthcare.

This is made clear in an article in a recent edition of the medical journal The Lancet, which described the 425-bed Queen Mamohato Memorial Hospital as “an outpost of stylish architectural functionalism in threadbare Maseru . . . a spacious clinical oasis with technologically advanced care units and patientfriendly lounges and wards”.

Co-operation sounds like a nobrainer in a society where business and the state have to solve common problems, but the Netcare project in Lesotho is not without its critics.

Detractors warn that although partnerships are useful for improving services in the particular facilities they serve, this usually comes at a cost to the rest of the public health system. For example, an Oxfam investigation found that the Lesotho contract was unfairly skewed towards Netcare as the service provider.

An internal report by the World Bank — which helped to negotiate funding for the hospital — warns that the partnership could become unaffordable for Lesotho’s health department.

What does such a partnership mean for the ambitions of Netcare and other private hospital groups that want to do business with the South African government?

Well, the lesson from Lesotho is instructive: contracts need to be mutually beneficial. It would be suicide for our government to agree to pay more for a service that it provides already.

Netcare knows it needs to show the value of what it does.

Private-sector players would need to earn the right to be service providers — by training and mentoring staff from the public sector to improve skills levels, for example, or contributing to the construction of facilities that would eventually become the property of the state.

With proper contracts and appropriate regulation, medical outcomes for millions of South Africans could be improved. It’s worth looking at. Urgently.

Whitfield is Sanlam financial journalist of the year