Government protects private hospital profits as COVID-19 rages


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[This article was completed before President Ramaphosa announced the national lock-down on 23 March. The measures he announced, and the direction of these measures, continued his policy of private sector leadership of the fight against the pandemic. In this article, we show how this self-regulation in the health sector poses serious dangers to the country’s ability to fight the pandemic]

Early on a rainy Sunday morning (22 March 2020) Community Health Workers waited for busses to take them to training on Covid-19 from various pick-up points around Gauteng. CHWs left after the training was cancelled due to transportation issues. Later they were called back when the transport was available.

At the training workshop of 60 people, one CHW wrote: “There was no demonstration equipment available on how to protect ourselves. They said we must go to our facilities and demand that we get the flu vaccine to prevent flu symptoms. The Department of Health does not have enough protective gears but they insist we request them from facilities. This training was not organised at all….”

On Friday 19 March, the Mayor of Johannesburg, promised that “the 79 clinics within the City have received protective equipment and personnel have been briefed on how to manage and handle suspected and/or otherwise confirmed cases of COVID-19 in line with the national and provincial guidelines and protocols”.

There is a big gap between the state’s promises that are dished out daily, and the reality and experience of working class communities in particular. The old habit of the South African ruling class and its governing elite to manage discontent through promises is now more dangerous than ever. Professional medical evidence shows that in SA the coronavirus will kill thousands if no adequate response is forthcoming. All people agree that an adequate response will be led, in the first instance, by the National Department of Health. The regulations issued by the Minister of Trade and Industry (19 March) on private health are crucial indicators of how the country is going to respond to the coronavirus.

COVID-19 – Block Exemptions for the Healthcare Sector, 2020

The government regulation, titled “COVID-19 Block Exemptions for the Healthcare Sector, 2020 (Regulation No 11056, 19 March 2020), deals with the attitude of the state to the role of the private sector in the fight against COVID-19. The fact that the government’s first set of regulations directly dealing with the health sector focused on the private health sector and not public health, is significant. Equally significant is that the regulations give a concrete understanding of the state’s approach to combat the pandemic. Lastly, these regulations – and the absence of regulations on public health – opens a window into the scale of the catastrophe facing the South African working class in the coming months of the coronavirus.

For the working class, the state’s regulations must be judged from the point of view of whether they meet the needs of working class communities in the fight against the virus. The weakness of SA’s public health system, its lack of supplies and complete dependence on equipment, medicines and other supplies produced by big business was noted in all the public meetings held. Only state direction and coordination of all big business’ production efforts can save South Africa and its people from the impending disaster.

We discuss the regulations against the background of the demands and ideas coming out of a number of gatherings by members of communities. In the meeting of movements on 14 March, demands relating to health services were raised (see https://karibu.org.za/organising-against-coronavirus-campaign-demands/ for detailed demands.)

In summary, the key demands with respect to health were:

  • Free testing and healthcare at all facilities, including at private hospitals irrespective of whether patients are on medical aid or not.
  • Free distribution of essential medical supplies, equipment to public. This includes masks, sanitisers and so on.
  • Price control and rationing of essential medical products.
  • Shopstewards from the General Industries Workers Union of South Africa (GIWUSA) demanded that pharmaceutical companies focus production on essential products, and not luxury products.
  • In many discussions (temporary) nationalisation of private health hospitals and production facilities has been raised.

The regulation dealing with the role of private health companies, including medical aid schemes, is therefore a matter of life and death for the working class and all the people.

Exemption of the health companies from Competition Act

After the failure of the new democratic government to “nationalise the commanding heights of the economy” and implement a radical transformation of the economy envisaged in the Freedom Charter and other programmes of the liberation movement, a weak version of controlling capital was adopted in the Competition Act of 1999. This Act tried to prevent capitalists form colluding against the public.

Sections 4 and 5 of the Competition Act prohibited practices whereby companies agreed to fix selling or purchasing prices. It prohibited them from dividing markets (and customers) between themselves, and prohibited them from lessening competition between them. The Act also tried to prevent the formation of monopolies that could dominate the market and enable these companies to raise prices and generate excessive profits. Although the Competition Act was friendly to capital, the large companies continued to cheat and fix prices. One of the cases in which they were fined was when they fixed the price of bread and thereby compromised the food security of many poor South Africans.

The COVID-19 Regulation No 11056 now exempts companies involved in the health sector (including medical aid schemes) from these sections of the Competition Act. According to this regulation, the companies will now be allowed to coordinate actions between them as part of “fighting the pandemic”. Private hospitals and clinics, medical suppliers, radiologists, laboratories, pharmacies can now coordinate their actions, including the following:

  • allocation of patients between them
  • coordinate the utilisation of intensive care units between them
  • coordinate the purchase of supplies including medicines
  • coordinate the allocation of nurses, doctors and other medical professionals between them
  • standardise protocols
  • transfer medical equipment between them

Self-regulation in the time of COVID-19

The government’s removal of restrictions imposed by the Competition Act, leaves the oversight and direction of the collaboration between the private companies to the private companies themselves. In the article “Worshipping the markets while South Africa burns,” (https://karibu.org.za/worshipping-the-markets-while-south-africa-burns/) I showed that although successful cases of fighting the pandemic required state-led national coordination of all resources – as in China – the South African state’s commitment to defend the profitability of South African capital has led it to choose the road of allowing the private sector to regulate itself and ensure its own profitability. In its fight against the pandemic, Spain has been forced to nationalise private hospitals temporarily so that these institutions can be closely coordinated in the fight against the pandemic.

The Ramaphosa government’s decision to give the private health sector freedom from regulation, comes after more than 5-years of investigation into the competition in this sector and the effectiveness of this sector in providing quality health care. The report of the Competition Commissions said that:

1. “In our review of the South African private healthcare market we found that it is characterised by high and rising costs of healthcare and medical scheme cover, and significant over utilisation without stakeholders having been able to demonstrate associated improvements in health outcomes”.

2. “We have identified features…. that distort competition. The market is characterised by highly concentrated funders and facilities markets, disempowered and uninformed consumers, a general absence of value-based purchasing, practitioners who are subject to little regulation and failures of accountability at many levels.”

3. “We have found there has been inadequate stewardship of the private sector with failures that include the Department of Health not using existing legislated powers to manage the private healthcare market, failing to ensure regular reviews as required by law, and failing to hold regulators sufficiently accountable. As a consequence, the private sector is neither efficient nor competitive”. [All these citations are from The Health Market Inquiry Executive Summary, by the Competition Commission, November 2019]

According to the Competition Commission, a state organ, the private health sector has not “been able to demonstrate improvements in health outcomes”, it is “highly concentrated”, “has disempowered and uninformed consumers”, is not properly regulated, and “is neither efficient nor competitive”. And this was in November 2019! Now, faced with the gravest crisis in the history of the country’s health system, and against the findings of an organ of state – the South African state led by President Ramaphosa removes the little regulation that exists, and gives private health free reign to continue on the road that the Competition Commission wanted to move the private sector away from.

In a period with no national emergency the Competition Commission recommended stronger regulations of private health and price controls (setting maximum prices) for certain procedures. Now, in a period of a rampant pandemic, not a word is said about price control of medicines and other essential supplies. Although the regulation says “discussion and/or agreement on pricing between the private healthcare companies or providers must be specifically authorised by the Minister of Health”, there is no indication of the creation of new capacities to enforce even this weak regulatory provision. After all, the Competition Commission’s report pointed to the failure of the Health Department to use existing laws to manage the private health sector.

There is no rationality in the decision by the Department of Trade and Industry to deregulate private health in the face of a major national crisis. The only conclusion is that we are here dealing with a ruling elite that is deeply captured and integrated into the private interests of white monopoly capital in the health sector. Throughout its history, the post-apartheid state and the tiny black elite at its head has disregarded sound advice from many honest and competent sons and daughters of this country who have brought their expertise to the service of people. This demonstrates the servility and cowardice of this elite when faced with an intransigent white monopoly capital. This servility began with the thrashing of the report of the Macro Economic Research Group (MERG) in 1992, and runs through the entire democratic period and now into the days of the coronavirus.

Indeed, the national crisis now facing the country is a perfect opportunity to begin a radical implementation of an integrated national health system. With the deregulation of this sector, big capital has used the cover of the coronavirus as an opportunity to claw back any ground they may have lost with the publication of the Competition Commission report.

The public sector comes begging

In order to complete the cover-up (of capitulation to private interests), we are led to understand that the deregulation of private health is necessary because it will make possible “agreements to support the public health sector”. Regulation 11056, in its vaguest part, talks of “agreements between the private health care sector and the Department of Health” to “make available additional capacity at health care facilities to the public health care sector”, and to “ensuring adequate medical supplies to the public health sector”. Again here, private health will regulate itself, and the state will be just another client that private health negotiates with and reaches “agreements”. The state will “request” cost reduction of services offered by private health but there is nothing about what happens when the public sector does not “agree”.

No regulations about public health – marching to war with no plan!

The state needs to issue important regulations in the public health sector to ensure that it can respond to the pandemic. The public health sector has been weakened over a long period, and will need radical measures to be able to respond to the coronavirus pandemic. We need, urgently, amongst others, regulations dealing with how the state will deal with vacant posts in the health sector, how it will deal with equipping the public hospitals and clinics with equipment and supplies they need to respond effectively, how it will deal with the generalised understaffing of public health services (research has established that to operate optimally the public health sector needs over 400 thousand CHWs, but has only about 70 thousand), among other key issues.

These measures cannot be undertaken on the basis of the existing budgets, and the existing organisation and leadership of the Department of Health. External and competent leadership must be brought in urgently at all levels of the health sector. The chaos we cited at the beginning of this article is a dangerous signal of what is to come if no intervention takes place urgently and without delay.

Regulations in the public health sector needs to boost the morale of the workers of the DoH at all levels of the state. Workers need to know that the state cares and will look after them. CHWs need to be made permanent employees of the Department. Understaffing needs to be addressed! The state cannot spend time fighting battles against public sector workers on behalf of rating agencies! Only when the foot soldiers in this war feel valued will we see the spirit of self-sacrifice that this war requires.

The regulations on the public health sector constitute the marching orders of the whole army going into war against the virus. Without these regulations (not yet issued), President Ramaphosa’s speech on the state of disasters is just empty rhetoric. The Field Marshal of the SA army is the Minister of Health and his role is to inform the country about the battle-plan in the war against the virus, and to execute this all-encompassing plan against the virus. In this plan, private health will be commandeered and will become just another division or brigade of a larger army of health workers and health institutions.

These regulations need to set the tone and framework for how the state approaches the role of private health. The National DoH must lead the health department and the general struggle against the pandemic. Instead, the state/Ramaphosa has reversed these roles: it put private health first, guaranteed its profits, and the DoH will go begging to the private sector.

With self-regulation our demands cannot be met

South Africa needs a radical health programme to meet the challenge of the coronavirus. The demands for free and comprehensive testing, access to medical treatment for those infected, access to all facilities without discrimination, equipping hospitals and clinics, trained staff – all these demands cannot be met by self-regulation of private health.

President Ramaphosa is a miniature version of Donald Trump and Boris Johnson. He is serving the interests of big capital and putting the lives of South Africans in danger. We need to expose the hollowness of these daily speeches and force him to change course. It is tempting to play the usual South African political game of praising the state and making “loyal criticisms” in the hope the state will change course. The impending catastrophe is too real for diplomatic games.

The state must be compelled to issue regulations that show how it will meet the needs and demands of the people. These demands are known. In particular, a battle plan for the health department – the lead department, together with allocations of new money to fund these interventions needs to be published immediately. The window on the country’s ability to fight the pandemic is closing very fast. Any delay brings catastrophe closer and closer – and brings the death of hundreds of thousands closer. Everyday we must sound the alarm! Everyday we must organise!

Oupa Lehulere

23 March 2020

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