Medi-Clinic is slowly but surely moving their capital out of the country. I predicted this more than a year ago, no rocket science though, as they have been doing this for some time now. Other private hospitals will surely follow suit in time to come.

June 2010: (See their website for more):

“Shareholders are advised that the Board of Directors of Medi-Clinic ("the Board") has resolved to raise equity capital for the Company by way of a rights offer for an amount of approximately R1.4 billion ("the Rights Offer").

Rationale for the Rights Offer

The proceeds of the Rights Offer will be used to finance growth opportunities available in Switzerland. These growth opportunities present themselves through expansion projects where capacity constraints or specific market opportunities exist at a number of hospitals, in particular Klinik Hirslanden in Zurich, Klinik St. Anna in Luzerne, Clinique Bois-Cerf in Lausanne and other smaller projects which will enable the Company`s Swiss operations to continue on its current growth path.”

Why are they doing this? With the new NHI government will provide a mandatory “medical scheme” to the whole population of 45 million plus, regardless of income. Most people will not be able to afford both and will be forced to go with the NHI, for which you will pay according to income (I’ve heard talks of 5% of gross salary), and will be collected by SARS.

This means that the current less than 7 million people having access to medical aid schemes will decrease immensely, by a few million I guess, making it impossible for private hospitals to survive. This state of affairs will be detrimental to private hospitals and private medical schemes. Medical schemes are already looking at ways to re position themselves with top up products for those who will be able to afford it as their market segment will decline.

No problem. Government will now negotiate Service Level Agreements and packages with private hospitals, on their (governments) terms and conditions. You can read more about that on the ANC website. Private hospitals will maintain their autonomy, but will serve ALL patients in a given catchment area, regardless of income. The NHI makes it clear that everyone will be treated equal and threatens to penalize hospitals giving preference based on income or social stand.

Now you do the math. 5 Million taxpayers will be carrying the entire population plus a few million illegal immigrants who will now have access to the same health care facilities a priviledged few million had for years. Private hospitals will be forced to act as “agents” for the state and serve the 40 million who in the past only had access to state hospitals and clinics. Private hospitals will have to provide the capital, maintain their buildings and equipment, remain competitive in the market etc, yet be fully dependent on government contracts.

That, my friend, is how the health system will be hijacked. The consequences will be that private hospitals will lose interest in investing in South Africa, private doctors and properly trained nurses will (again) leave en masse. What I’m concerned about is what type of medical services I can anticipate ten years from now, when I may really need it...