Private Healthcare Under NHI: What Accountants Need to Know

This week we take a look at the implications that the signing of the new National Health Insurance has for accounting professionals and the healthcare industry.

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Current Affairs

National Health Insurance Signed In By President Ramaphosa

As I’m sure nearly every South African is aware, the NH(National Health Insurance) bill has been signed as an act and is no subject to implementation.

We don’t want to give you an essay to read so we’ve provided a brief breakdown below as well as a supporting article with much more comprehensive coverage of the NHI itself.

Quick Break Down

The National Health Insurance (NHI) is a newly signed public fund designed to provide universal healthcare coverage in South Africa. It will purchase healthcare services from both public and private sectors, ensuring free treatment at the point of service for all South African citizens, permanent residents, refugees, and children. Asylum seekers and illegal foreigners will have limited coverage.

Managed by a board appointed by the Minister of Health, the NHI will be funded through increased income and payroll taxes. Comprehensive services, including palliative and mental health care, will be covered. Private healthcare providers will contract with the NHI at set fees. Full implementation of the NHI is expected to take several years if ever actually acted on.

Check out this post by “The Daily Maverick” for a comprehensive breakdown of what the NHI is.

Business Implications Of The NHI

Medical Aid Schemes

My main point of concern regarding the NHI and it’s implications for businesses, chartered accountants, emerging professionals and students, lies in the Medical Aid Scheme sector and the professionals with positions in this sector.

Medical aid schemes have been a consistently profitable player in the healthcare industry and have a major footprint in South Africa with massive companies such as Discovery, Bonitas, Momentum and much more.

With the NHI aiming to provide free coverage for all healthcare services, this is bound to deter people from paying for these medical aid , regardless of whether they believe the NHI will be a reliable simply due to the compulsory nature of the NHI contribution.

This is amplified by the shift in consumer to that of a more cost-conscious one, as a result of a somewhat stagnant national economy with many challenging prospects ahead.

This raises the concern of how these medical aid schemes can compete with the goliath of the NHI due to it’s government backing. Many medical aid scheme companies have announced their intent to pursue legal action to protect their business model.

However, if the NHI is fully implemented these schemes may need to restructure their operations. Potentially to a more premium luxury scheme, providing coverage for all advanced-elective medical procedures(i.e. plastic surgery and other procedures along these lines).

This is an important point of focus for chartered accountant professionals in this sector, and should definitely be a reality that is planned for.

Private Healthcare Providers

On the other hand players in the private healthcare space while still slightly concerning have a much more prospective outlook.

With regard to the standardising of healthcare fees, accounting professionals in this sector would play a huge role in facilitating financially viable contracts with the NHI based on what would be a fair middle ground between profitability, increased need for operating capacity and the cost implications thereof.

Another important factor to consider, would be the feasibility of employing extra medical professionals, especially specialised doctors and surgeons, due to their high market rate.

The financial and business acumen of the chartered accountants in this field would be a great asset in hand with their ability to provide relevant solutions for complex problems in the business landscape.

Despite the implications mentioned, it is highly unlikely that much of the NHI will come into fruition due to the track record of government facets, but even if this is the case the ability to preventatively plan for adverse circumstances threatened by the signing of the NHI provides a great cognitive exercise for professionals and students to consider.

Extra Tip/Suggestion

Time Management

For all you busy bees, we’ve included a video on time management from Ali Abdaal below.

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