South Africa is in the grip of a major health crisis. Life expectancy at birth has dropped dramatically: from 63 years in 1990 to 48 years in 2007. The country is confronted with an HIV/AIDS and TB epidemic; increasing diabetes and heart disease, high levels of injury from road and other accidents and violence. The country is heading for the bottom of almost every table of international health indicators.

How does a nation compete if the majority of its workers are unemployed or on sick leave? Infant and child health problems reduce the effectiveness of education.

Adult illness makes it difficult to secure and retain employment. Inefficient health treatment reduces national productivity with knowledge and skills being lost before they are consolidated or transferred to new workers.

The country’s health system is institutionally fragmented with starkly different health outcomes. Privately insured people receive better care and live longer healthier lives than those who attend state institutions. The costs of private care are beyond the reach of most citizens and public care is in a worrying state of decline and dysfunction. The Department of Health’s 2009 ‘10 Point Plan’ is already behind schedule, with rising concerns about management, implementation and monitoring capacity. Given the declining quality of state care, it is hard to understand the priority given to a national health insurance scheme when so many other fundamentals of health care in South Africa urgently need to be turned around first.

At a recent workshop jointly hosted by the Centre for Development and Enterprise and the Aurum Institute for Health Research a group of local and international experts discussed a range of questions about health systems, health funding and health policy including lessons from Columbia and Costa Rica and from South Africa’s health system. A number of important insights emerged from this wide-ranging discussion.

There is a lot of good will, but little direction. Mistrust and mutual misunderstandings between public and private sectors need to be overcome if the country is to reverse its downward health spiral. There is general recognition that South Africa’s health crisis demands collaboration, but no clear national vision of how public and private sectors could most usefully collaborate.

It is vital to set up a system with the right incentives. Designing a working health system, requires paying careful attention to the incentives for individuals, insurers, funders, and providers of care whether private or public. Risk-sharing is essential, because many health problems happen with low frequency and can only be treated at catastrophic expense. There are different ways of achieving this, including private insurance, social insurance and national health programmes. Rationing is unavoidable, and here too there are numerous policy options.

Urgent attention needs to be given to improving management in the public system. This is required irrespective of what changes (including an NHI) might be made to funding models in the future. Co-operation needs capacity. Only some parts of the public health system – mostly the larger hospitals – have the contracting and management capacity to engage in partnerships with other sectors. In those cases, co-operation is dependent on political will and a much changed attitude to how companies and market forces can play larger roles to the benefit of all South Africans.

South Africa needs more doctors, nurses, and managers. We subsidise the education of many medical practitioners who subsequently leave the country. We limit inflow of medical personnel through inefficient, sometimes overtly xenophobic, sometimes confused policies which limit the numbers of foreign skills we allow into the country. We need to facilitate the entry of appropriately qualified doctors and nurses to work in South Africa and help train citizens so as to expand capacity in the sector.

The private sector can (and does) serve the poor. According to a major report on “The Business of Health in Africa” published in 2008 by the IFC, some 60% of health care financing in Africa comes from private sources, and about 50% of total health expenditure goes to private providers. These numbers are set to increase rapidly. Just as important the vast majority of the region’s poor people, both urban and rural, rely on private primary health care. Whether the motive is to improve productivity for a single company, or to make a profit by delivering a service more efficiently than competitors, private companies can have good reason to deliver low cost health services, where regulations permit it. In South Africa, private health providers often serve the poor.

Public private partnerships are underutilised. There are relatively few PPPs in health in South Africa; those that do exist are mostly for non-clinical services. The primary strength of private hospital groups in South Africa is hospital management, and clinical services have successfully been sub-contracted in other countries. In Lesotho an ambitious project is demonstrating how private investment and management can expand services to more people and deliver high-quality care. We should be looking for ways of expanding the number of partnerships, and the range of services they embrace.

However, PPPs are not a cure-all. They are often complicated with lengthy set up times. For some purposes, there may be more effective, simpler ways of collaborating. These include portable subsidy arrangements (such as vouchers where citizens choose their service-provider, whether public of private).

Sometimes clearing the obstacles to effective market action can do even more good. There would be more private facilities training nurses and doctors in South Africa, but for the difficulties with accreditation. It is possible that there would be private medical schools, were any allowed to exist. Who knows what ways of delivering health care would be found, and by whom, if it wasn’t the case that by law only the state, and under some conditions the mines, can employ doctors?

NHI could play a positive role, but would require higher rates of economic growth and higher levels of employment. South Africa’s high level of unemployment presents a major challenge to the affordability of an NHI. The way to get to the point where an NHI is affordable is to focus on higher economic growth that is sustained for decades and includes formal sector jobs for millions more people.

Better, more accountable health management is required. Whether health care is funded with general taxes, or via a national insurance scheme, there have to be working services for individuals to access, or for their insurance scheme to buy. The reasons why the public sector does not consistently provide such services, despite the efforts of many clinical staff, are not related to funding but inconsistent management and weak accountability.

South Africans are dying too early, and too often, in ways we can afford to prevent. The private sector is already playing an important role in health care, including providing care to poorer people. Its role could be greatly expanded offering more affordable care to many more South Africans if we had the appropriate regulatory environment. With the right incentives market players in the health sector (current and potential) could become active partners in improving South Africa’s deteriorating public health services.

Bold and determined state leadership including a dramatically new approach to the private sector, market forces and the recruitment of foreign skills, is urgently required.