State reaches pricing deal with private hospitals for Covid-19 patients
The Western Cape is likely to be the first province to broker deals with private hospitals, as many of its ICU wards are already overstretched
The health department has finalised the fees it will pay private hospitals for severely ill Covid-19 patients, paving the way for the provinces to negotiate contracts with service providers to take pressure off overburdened facilities.
It has also prescribed rates for some of the services required in hospital, such as radiology.
The agreements with provincial health departments are unlikely to provide much financial relief to private providers hard-hit by plummeting patient volumes during the lockdown, as the tariffs have been calculated on a cost-recovery basis.
“This is a significant agreement as it allows us to utilise private sector facilities during this disaster,” the health department’s Anban Pillay said on Thursday.
“This is an emergency procurement so we did not have much time to spend on negotiations. In general the providers were keen to respond to our request, which reduced the need for lengthy negotiations,” he said.
The health department has set the daily tariffs for state Covid-19 patients in critical care at no more than R16,156. This figure includes R11,749 for a private hospital bed, R2,498 for a specialist team, R588 for pathology, R632 for radiology, and R694 for allied health services. It has also set rates for general-acute beds and palliative care.
Western Cape, which has reported two thirds of SA’s more than 37500 Covid-19 cases, is likely to be the first province to secure service level agreements with private hospitals and other healthcare providers, as it is already struggling to meet the demand for ICU beds in Cape Town.
Western Cape head of health Keith Cloete said the provincial health department was working on contracts to secure 300 beds with six private hospital groups. He did not name the companies, but the three JSE-listed private hospital groups Netcare, Mediclinic and Life Healthcare are likely to be among them, as they all have a significant footprint in the Cape Town metropolitan area, which bears the brunt of the region’s Covid-19 epidemic.
As of Wednesday, the city had recorded 80 % of the province’s 24,564 cases. The National Hospital Network (NHN), which represents smaller private hospital groups, also has a presence in Western Cape.
Cloete said the provincial health department wanted to use private hospitals near to public hospitals such as Groote Schuur and Tygerberg, and in transmission “hot spots”.
Groote Schuur and Tygerberg have 135 ICU beds between them, but only 100 are currently operating due to staff shortages, according to Cloete. Separate agreements need to be set in place for other private providers.
Radiological Society of SA executive director Richard Tuft said radiology practices had taken a huge financial blow during the lockdown, and while patient volumes had begun to recover, many practices were barely covering their costs.
“We have, without discussion or any negotiation, been handed down a per diem rate, for a limited basket of services. Our members are likely to accept these rates, in the interests of our patients, but would have preferred appropriate discussions beforehand,” he said.
Mediclinic’s chief strategy officer, Corné Heyns, said the group did not see admitting state patients as an opportunity for commercial gain.
“As has been discussed in the media, most parties are approaching it from a cost-recovery basis,” he said. Negotiations with the Western Cape health department were at an advanced stage, he said.
NHN CEO Neil Nair said the association’s hospitals had all agreed to treat state patients at a reduced cost.