Despite its overwhelming beauty, abundance of natural resources and unlimited economic potential, post-apartheid South Africa in many ways remains a barely functional country.
And nothing is more illustrative of the challenges the nation has yet to overcome -- as well as its hopes for the future -- than its beleaguered healthcare system.
South Africans are proud to note that the nation invests nearly 8.5% of its annual gross domestic product in healthcare, clearly an impressive sum for a country struggling to redefine itself as an integrated democracy since apartheid laws were scrapped by Parliament in 1991.
In 1994 President Nelson Mandela's black nationalist African National Congress swept into power following the nation's first open elections. Until 1996 the ANC shared governance with the white supremacist National Party, which had reigned over the nation since 1948.
Despite its history of racial and political turmoil, the country has a rich tradition of clinical excellence. For example, Cape Town surgeon Christian Barnard, M.D., performed the world's first heart transplant in 1967 at Groote Schuur Hospital. And South Africa's eight medical schools, all government-controlled, are on par with many of those in Western Europe and the U.S.
However, like the U.S., South Africa lacks a national health insurance program. The result is a widely divergent, two-tiered delivery system separated mostly by race and wealth.
The insured and affluent are served by a well-heeled collection of private-sector hospitals, medical groups and clinics. The private sector's 220 hospitals treat about 9 million of South Africa's 41 million people. That 22% of the population consumes two-thirds of the nation's estimated $11 billion in healthcare spending, leaving the public sector with one-third of the money to care for almost 80% of the population.
In addition, the bulk of public-sector resources traditionally has been earmarked for academic medical centers. Mandela and his supporters are determined to steer more money into primary-care clinics serving poor rural and urban areas.
The results are funding cutbacks in medical research and teaching, as well as in patient-care budgets, at the academic hospitals. For instance, Groote Schuur and other public hospitals were forced to cope with a 30% reduction in their 1997-1998 budgets, which ended April 1.
To their meet financial goals, only emergency operations were permitted at Groote Schuur during the first three months of 1998. Its nursing staff has dwindled 31% to 2,310 in January from 3,330 in 1995. Total staffing in January dropped 26% to 5,900 from 8,000 in 1994. Funding for South Africa's eight medical schools has been sliced by 25% since 1996 and faces another 25% cut over the next three years.
Conversely, the percentage of public health funds earmarked for primary care is expected to increase to 16% over the next two years, compared with 11% in 1996.
But building more clinics won't necessarily make it easier to lure physicians to South Africa's impoverished, remote areas. Hundreds of physicians have fled the country in recent years, and most of those who remain would rather practice in urban areas than in villages that lack creature comforts.
That's the main reason Mandela has recruited some 300 Cuban physicians to work a year each for the public health service. Cuban President Fidel Castro is a longtime supporter of Mandela, who also hopes to expand a one-year community-service conscription program for graduating doctors, dentists and pharmacists.
The changes, controversies and fiscal balancing act in healthcare mirror the friction found in most sectors of the country, including education, housing, financial services and the military. And because the overall economy is growing at a rate of less than 3% per year, options are limited.
"South Africa is like a newborn baby," says Aslam Dasoo, M.D., policy director of a health plan group called the Representative Association of Medical Schemes. "Everybody wants to hold, hug and observe this country. We appreciate the attention, but it can makes things more difficult."
Despite myriad social, economic and political problems, a spirit of hope and patriotism fuels the country. And it will take dogged determination to bring growth, political stability and a partnership among races at a time when street crime and unemployment can dominate daily life.
About 68% of the population is black, 18% is white, and 10% is mixed race. Most of the remaining 4% are of Asian descent. In addition to English, there are 10 recognized languages, including Afrikaans, Xhosa and Zulu.
In healthcare, tensions are muted somewhat by limited expectations and general agreement among providers, insurers and government officials that the nation needs a workable health policy. But their talks are stymied when the subject turns to the cost of treating AIDS patients, primary-care funding or the wisdom of implementing managed-care techniques.
And once special interests begin dominating the debate, the process can completely break down. Attempts to reform healthcare are "bedeviled by suspicion and antagonism fueled by differences of language, culture, race, politics and the legacy of apartheid," according to a report from consultants with the London-based King's Fund.
Keith Hollis, chairman of Medscheme, the nation's largest health plan, is convinced managed care can help slow medical inflation in the private sector and help mend some of the rips in the public sector's safety net. Yet he says he realizes change will be slow in coming.
"We need to find the proper balance between clinic-based primary care and specialized hospital care," says Hollis, whose health plan covers 700,000 households. "We have to create the kind of jobs that provide private health insurance. We need more interaction between the public and private sectors. And we need to improve the quality of care as we attempt to manage its cost."
These internal clashes are not the only soft spots confronting the public health system. More cases of cancer and heart disease are being reported as the affluent white population ages. Diseases associated with poverty, such as tuberculosis, and infant/maternal mortality rates also have increased significantly. HIV/AIDS is the healthcare wild card. Testing and screening of patients show that as many as one in every five South Africans admitted to public hospitals is HIV positive. Officially, the government estimated about 3 million cases at the end of 1997.
Health Minister Nkosazana Zuma believes AIDS looms as a bigger problem than apartheid once was. "AIDS presents a serious threat to our human and economic development," she says, adding that as many as 1,500 South Africans become infected with HIV every day.
Meanwhile, South Africa's Medical Research Council acknowledges the nation is facing one of the worst TB epidemics in the world, with disease rates more than double those of most developing countries and 60 times higher than in the U.S. Public health officials estimate there were some 160,000 TB cases in 1996. About 27% of South Africans with TB in 1996 also were infected with HIV, the government believes.
Coping with these clinical challenges requires an infusion of management talent. "The distinct roles of government, education, research and healthcare provision are entangled in unproductively intricate ways," the King's Fund report says.
The bottom line: too many bureaucrats, too many academicians, too many researchers and not enough managers trained in finance, strategic thinking and organizational efficiency.
"We need to separate the hospitals from the medical schools," says Lieb Loots, economics professor at the University of the Western Cape in Bellville. "The hospitals must have the authority, responsibility and accountability to manage their finite resources."
Mandela is already transferring oversight of health spending from the central government to a district healthcare system and is giving more fiscal discretion to hospital and clinic managers.
Meanwhile, the private health sector has its own problems. Insurance premiums accounted for about 7% of a worker's annual salary and benefits in the 1980s. By 1996 the cost had skyrocketed to more than 17% of average annual compensation.
Some private health insurers, which are called "medical schemes," have turned to managed care to combat the medical inflation spiral. In a highly publicized effort, Minneapolis-based United HealthCare Corp. in 1995 partnered with Southern Life, a South African life and property insurance company, and Anglo-American, one of the nation's largest employers, to offer employers an American-style managed-care plan.
Still, South African physicians share American doctors' fear of losing control through managed care, just as patients in both countries dread intrusion and the loss of choice. And managed-care efforts are hampered by the lack of established clinical and financial coding systems.
But an excess supply of hospital beds in the private sector is likely to bolster managed-care development. The number of fee-for-service hospital beds skyrocketed to 20,991 in 1996 from 9,825 in 1988, resulting in an average 70% occupancy rate for the nation's 220 for-profit hospitals. Despite the obvious oversupply, health insurers say their medical costs have increased more than 20% a year since 1991. Expensive drug prices, overutilization of high-technology medical equipment, and cozy relationships among physicians, hospitals and suppliers are among the reasons cited for the outrageous private-sector healthcare inflation.
In the strongest sign of a private-public partnership, the government and some larger medical schemes are advocating that employers be required to fund half the cost of a defined medical benefits package for all workers. Premiums would reflect community rating, and part of the money would be diverted to subsidize the launch of a national health insurance program. Parliament is expected to consider such legislation later this year.
However, other insurers are pushing individual medical savings accounts as the most efficient way to control costs and build the ranks of the insured. Companies like Johannesburg-based Momentum Health are convinced that more South Africans will have access to insurance if MSAs and other lower-cost benefit plans are marketed to young, black workers.
"They are the future," says Adrian Gore, Momentum's chief executive officer. "You have to remember that a community rating system also would subsidize the aging white population. There would be resentment."
In the end, job creation will determine the future of South Africa and its healthcare system.
With less than a quarter of the population insured and the jobless rate estimated anywhere between 30% and 50%, the nation faces a difficult battle.
As far as drawing foreign capital to the healthcare sector, a 1997 report by Taylor Associates International of Annapolis, Md., said outpatient services, step-down units, home health and long-term care offer investment potential.
Jonathan Lewis, who led a group of U.S. healthcare executives on a recent trade/study mission to South Africa (See story below), came away smitten with the spirit of the people and infatuated with the nation's potential. Yet, reality quickly sets in.
"Healthcare in South Africa is not for the fainthearted, although there is clearly a role for the tools of managed care," says Lewis, president of the Academy for International Health Studies. "But for now, the challenges are expanding employment, treating the water supply, access to primary care and improving other essential parts of the infrastructure."