SHOULD THERE BE A PURCHASER-PROVIDER SPLIT IN SOUTH AFRICA’S PUBLIC HEALTH SYSTEM?
The National Health Insurance White Paper envisages a purchaser-provider split. This split separates institutions that are responsible for (a) the purchasing and (b) the provision of health services. The NHI Fund will be the single purchaser of personal health services for the population. The Fund will contract directly with accredited public and private facilities, including accredited private hospitals and emergency medical services. The aim is to incentivise improved quality in the public sector, whilst reducing prices in the private health sector.
Purchaser-provider splits were first introduced internationally about thirty years ago to establish business-like relationships between organisation units and, in particular, to establish ‘quasi-markets’ into public sector provision. This was the central feature of the New Public Management programme, based on optimal contract theory, and it was associated with the increase in the salience of markets from the early 1980s onwards.
Yet, just as South African policy is moving in this direction, there are indications that purchaser-provider splits have not delivered what was hoped for in a number of countries. Thus a former executive in the UK National Health Service:
We made the judgement that we would ensure that the financial pressure was not evenly distributed between commissioning and provision, but was organised so that providers would take the bulk of responsibility. We always had to make a judgment about what was possible, and one of the dangers is people asking you to do things that they know – and you know – you cannot do[1].
And in Iran: