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South Africa not Gaining the Full Benefit of PPPs in the Healthcare Sector, Says Frost & Sullivan
Date:5/6/2009

CAPE TOWN, South Africa, May 6 /PRNewswire/ -- The healthcare industry in South Africa faces substantial challenges, including vast inequalities in access to care. The public sector is responsible for serving approximately 85.0% of the population, yet accounts for around only 49.0% of healthcare spend.

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Public-private partnerships offer an innovative means to address some of these inequalities.

"Several mutually beneficial opportunities exist for collaboration between the public and the private sectors," says Frost & Sullivan (http://www.healthcare.frost.com) healthcare analyst Lore Kannegiesser. "Government has taken some steps to encourage implementation of such partnerships, and several partnership contracts are on-going."

The private sector could clearly play an important role in the country's healthcare system by stimulating competition between providers, and encouraging greater levels of efficiency and quality. However, the positive spin-offs for them should not be discounted.

"PPPs offer private healthcare providers access to a wider patient base and the potential for generation of additional revenues," Kannegiesser says. "They also offer the opportunity to engage in transformational issues to improve their socially responsible image. This is particularly important in an environment where they are facing increasing allegations of contributing to rising healthcare costs."

Partnerships can range from the private sector providing a single incidence of care to a public sector patient, to concessions where a private sector organisation supplies the capital required for development of new facilities, or upgrading of existing facilities. In the case of the latter, operation is initially the responsibility of the private organisation, with ownership transferring to the public sector after a period of time.

There have been a number of PPPs in South Africa, but there is currently debate around the form they should take. The private sector presently only delivers clinical services to the public sector in one ongoing partnership - the renal dialysis unit at Polokwane Hospital in Limpopo.

"This is despite the fact that the provision of clinical services is the core business of the private hospital companies, and therefore the area in which they could add the most expertise and value to the public sector," Kannegiesser notes. "While the private sector would like to be more involved in the provision of clinical services to Government, the Ministry of Health's seeming aversion to such agreements is currently a major restraint to their development."

There are extensive opportunities for partnership in South Africa that would benefit both sectors. These include the delivery of training for nurses by private hospital companies, and co-location of private hospitals in public facilities.

Long-term opportunities include the provision of temporary mobile solutions for the relief of lengthy treatment waiting lists, and the provision of the full set of clinical services. However, these opportunities are highly dependent on a well-functioning regulatory structure that is fully engaged in the development of these partnerships.

"The South African Ministry of Health currently has poor foresight into the benefits that PPPs could offer the current public health crises," Kannegiesser concludes. "Therefore the full benefits that could be gained by both the public and private sectors are not being realised."

If you are interested in more information on Frost & Sullivan's analysis of the South African healthcare industry, then send an e-mail to Patrick Cairns, Corporate Communications, at patrick.cairns@frost.com, with your full name, company name, title, telephone number, company e-mail address, company website and country.

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 35 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com.

    Contact:
    Patrick Cairns
    Corporate Communications - Africa
    P: +27 18 468 2315
    E: patrick.cairns@frost.com

http://www.frost.com


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