Updated 10 April 2013

NHI: economic suicide for doctors?

Is it fair to expect private doctors who treat NHI patients to be paid less for a consultation? The South African Medical Association thinks it's economic suicide.


The South African Medical Association (SAMA) represents the largest proportion of the total national medical workforce, with a membership of more than17 000 doctors both in private practice and state employ, and is therefore the most representative body for doctors in South Africa.

The views expressed in this article, however, are restricted to what SAMA envisages as the role of private practitioners within the proposed National Health Insurance (NHI) system.

Doctors play the central role in the provision of health to the nation, not only in the prevention of disease and in the management of acute and chronic conditions, but in administering the entire healthcare system.

It is for these reasons that SAMA’s declared intention is to be engaged at every stage of the NHI process.

The NHI Green Paper states that accredited “providers” will be contracted and reimbursed on the basis of payment levels yet to be determined by the NHI system. Since there is still no clarity as to what those payment levels should be, SAMA would like to request that the Department of Health consider the following crucial facts:

  • All doctors have the right to make a decent living.
  • Any payment level should take into consideration the costs of rendering a service and must include a reasonable return on investment.
  • Price control under the guise of cost containment will not be acceptable.
  • No patient must be penalised for using the services of a non-accredited service provider, especially in an emergency.

Failure to address the above issues will result in the non-participation of doctors, and may even force them to leave the profession.

A fair living for doctors
SAMA believes that the fairest way of calculating a salary is to compare the total career earning potential of a doctor with that of another profession which requires a similar investment in time for its training. The comparison must then be made by calculating opportunity cost and the time value of money to compensate for the length of time it takes for doctors to complete their studies. Only then can apples be compared with apples.

It must be remembered that doctors start working harder than other students from Grade 1 at school
because they have to maintain high marks throughout their scholastic careers in order to meet the exceedingly strict qualification criteria required to be accepted to study medicine. It can be argued that these criteria could be relaxed, but this is an extremely short-sighted view since the country still needs dedicated and studious individuals to become doctors because of the fact that the profession deals with real life or death situations requiring the most intelligent and most ethical professional intervention.

Doctors study for six years and do two years of internship and a year’s community service before being allowed to register as a private general practitioner. This means that GPs only start practising their profession and building a nest egg nine years after beginning their studies. It is not unfair to expect that the earning potential lost in those years needs to becompensated for.

If doctors decide to specialise, they have to work as a medical officer for an average of two years and then specialise in their chosen field for an average of five years. Super-specialists study for up to eight years, which means that most specialists only start practising their profession 16 years after beginning their university studies – on average 10 years after other professions.

When calculating the opportunity cost of this delay, one has to determine not only what other professionals will have earned by the time a GP or specialist qualifies, but also how much they were earning while doctors were studying. This is because any salaried individual functions in a zero overhead cost environment and also has the opportunity to start investing their money much earlier.

The economic phenomenon of compound interest allows them to build a larger retirement nest egg by virtue of them having spent a longer time contributing towards their retirement. Any insurance company will confirm that retirement funding is more sensitive to time than to value. This means that due to the delay in starting their careers, doctors need to earn more money than other professionals once they start working because they have a shorter window in which to prepare for retirement.

The final fact that has to be considered is that doctors can only sell time, meaning that while private practitioners are treating NHI patients, they cannot treat other cash-paying or insured patients.

Furthermore, they will be expected to spend a considerable portion of their time performing administrative duties since they will function as the foundation of the NHI system. At present it appears that this will be done free of charge, as there is no mention of an administration allowance in the NHI Green Paper.

Economic suicide to treat NHI patients?
In this scenario it is economic suicide for doctors to treat NHI patients at a lower rate than other patients.

Unfortunately it would appear that the Department of Health showed its hand in the ill-considered 2012 Tariff Guideline published by the Health Professions Council of South Africa (HPCSA) and gazetted in September 2012 for public comment. Herein the Department proposed to pay doctors 5% less than what SAMA determined doctors should have earned in 2003. To put this in perspective, the Consumer Price Index (CPI) inflation and therefore the cost of living has increased by 55% and medical schemes contribution inflation has increased by 119% since then. At this unacceptably low rate it would be impossible for private doctors to contribute to NHI.

In conclusion SAMA wants to reiterate that we are willing to contribute towards making NHI a success, but only if doctors are:
  • recognised as the foundation of the healthcare system;
  • treated as equal partners in the planning process; and
  • remunerated commensurate to our level of expertise.

Anything short of this is unacceptable.


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