Terms of Reference. Challenges and opportunities for health finance in South Africa: a supply and regulation perspective

Transcription

1 Terms of Reference Challenges and opportunities for health finance in South Africa: a supply and regulation perspective 28 October 2015

2 Page 2 1. Introduction Health risks are experienced by most households across the Southern African Development Community (SADC). These risks frequently impose significant financial burdens that can push families into poverty. However, very few people within the region use prefunded health finance as a means to mitigate for these risks. This is often due to a lack of appropriate products combined with limitations in health service delivery. The South African health care and health finance systems are the most developed in SADC, but only 23% of the South African adult population (those over the age of 16), have any form of health insurance (FinScope, 2014). This study seeks to provide an update on the regulatory and supply landscape of health finance in South Africa to inform FinMark Trust (FMT), regulator and provider strategies within SADC. About FinMark Trust. Created with initial funding from UKaid from the Department for International Development, FinMark Trust is an independent trust whose business is controlled by five trustees from countries in Southern Africa. FinMark Trust s purpose is Making financial markets work for the poor, by promoting financial inclusion and regional financial integration. It does this by conducting research to identify the systemic constraints that prevent financial markets from reaching out to these consumers and by advocating for change on the basis of research findings. Thus, FinMark Trust plays a catalytic role, driven by its purpose to start processes of change that ultimately lead to the development of inclusive financial systems that can benefit all consumers. This Terms of Reference (ToR) is issued by the Centre for Financial Regulation and Inclusion (Cenfri) on behalf of the FinMark Trust. 2. Background The links between healthcare, individual well-being and economic development have been widely recognised 1 2. This is reflected in the Southern African Development Community (SADC) s Regional Indicative Strategic Development Plan (RISDP) 3. The plan notes that A healthy population is a necessary catalyst for economic and social development. Some of the health challenges that the region faces include: How to reduce the heavy burden of major diseases particularly HIV and AIDS, TB, malaria, cholera and cancer as well as how to strengthen mechanisms for addressing emerging communicable diseases such as SARS, EBOLA. Challenges pertaining to affordability, access to essential drugs, including antiretroviral drugs (ARVs), and quality of health care and the need for the mobilisation of adequate resources and strengthening of key stakeholder for the provision of health care infrastructure, health services and the training of health personnel. Healthcare has therefore been identified as a priority for the governments of the Southern African Development Community (SADC) 4, which can be deduced from the following objectives contained in the Protocol on Health of WHO Commission on Macroeconomics and Health. Macroeconomics and health: investing in health for economic development. Revista Panamericana de Salud Pública

3 Page 3 SADC of , noting that governments shall support activities: Promoting, coordinating and supporting individual and collective efforts of State Parties to attain an acceptable standard of health for all their people Promoting healthcare through better access to health services The high priority that individuals place on health, and the impact that illness can have on the well-being and economic productivity of individuals and families, has also been reflected in studies such as the MAP (Making Access Possible) diagnostics, done in partnership with FinMark Trust, UNCDF 6, and Cenfri. However, health costs are generally managed through use of credit or savings, which often turns out to be expensive and inefficient, rather than prefunded mechanisms such as insurance. An increased use of prefunded health finance mechanisms would play an important role to improve both health service delivery and usage. FinMark Trust would like to commission this project to improve the role that finance can play to achieve better health outcomes in SADC. Within the South African context The South African regulatory environment for health finance is the most developed in SADC. A range of health services are means-tested and free to the poor, yet many poor South Africans incur significant out-of-pocket expenses to access private health care, to replace income when ill or to fund transport or childcare-related costs. South Africa has a two-tiered healthcare system: a public means tested system that caters for poorer South Africans, and a private healthcare system which serves largely wealthier South Africans. Private health care and other out-of-pocket expenses are funded by medical aid schemes, insurance savings, and credit. The focus of this study is on prefunded health finance models, such as medical schemes and other health-related insurance models. Prefunded health finance mechanisms are generally expensive for low-income households, and do not always cover the required health-related needs of South Africans. This excludes millions from appropriate access. South African regulators have recognised this challenge and are in the process of making significant changes to the regulatory environment, including the recent introduction by the Council of Medical Schemes of Low Cost Benefit Option medical schemes. This study will also provide an update on the supply and regulatory landscape of health finance in South Africa, with a focus on: health financing mechanisms currently available and the health needs do they cover; challenges and opportunities posed by new regulatory changes; and insights from the South African experience that can inform policy and regulations in other SADC countries. 5 The protocol entered into force in United Nations Capital Development Fund (UNCDF)

4 Page 4 The findings of this project will also inform further study on the affordability of health finance services, and willingness of consumers to pay for particular services. 3. Project Objective The objective of the project is to provide an update on the supply and regulatory landscape of health finance in South Africa, and to assess the challenges, gaps and opportunities that are posed by a shifting regulatory environment. This study should inform regulators and providers of health finance, as well as FinMark Trust s initiatives in this market, both within South Africa as well as the wider SADC countries. 4. Project Scope The study should identify the challenges and opportunities for health finance in South Africa based on an update of the supply and regulatory landscape. Additionally, key questions that require further research should be identified. Supply and regulation overview. An overview of provision of prefunded health finance models in South Africa should be provided, including a product and provider map that gives an overview of different models. The following areas should be included in the discussion of these models: Which type of benefits the model typically provides; Cost range per model; What the pricing and cost drivers within the model are outside of direct health care costs; What advantages and/or disadvantages each model has from a low income client perspective; Provider types in the value chain (finance and health); How contributions are made and claims are paid (payment mechanism); Technology enablers or other innovations; Target markets reached by the models (number of individuals and income level if available); and Channel for acquiring a product. The study should also provide an update on the regulations that influence low income health finance in South Africa. Specific attention should be given (but is not limited) to how current regulation has shaped the existing health finance models in place, regulatory changes under consideration, and the opportunities and challenges this presents for lower-cost health finance in South Africa. This study should also provide a brief description of the public services in South Africa that are available for different income groups, as a range of free services exist that affects financing needs of individuals and households. Health finance models. This study should consider all prefunded finance models that aim to defray health-related costs, including for example health transport vouchers or credit repayment adjustments when ill (e.g. credit healthy models). These models should include, but are not limited to, medical schemes (open, restricted and exempted), hospital cash plans and gap cover. Disability cover-related insurance is excluded from the scope of this study. Research approach. The study should largely be informed by desktop research and interviews with key regulators and providers. The study should clearly set out the following from the research conducted:

5 Page 5 The current challenges and opportunities for health finance in South Africa, to inform regulators and the market; Strategic issues for FinMark Trust to address; and Opportunities in the SADC context. 5. Deliverables The deliverables of the project will be comprised of: A typed report setting out the product, provider and regulatory overview, as well as the challenges and opportunities identified by the research. A Product and Provider mapping in Excel per health finance model. A PowerPoint presentation adaptable to engage with various market participants, including regulators as well as health finance providers. A stakeholder workshop where the main findings of the project will be disseminated. 6. Timeline 6.1. Intent to propose. Notification of intent to submit a proposal should be sent via by 5 November 2015 (see contact details below) Deadline for submission of proposals. Proposals for the projects should be submitted by 12 noon on 11 November Proposals should be submitted electronically via (see contact details below) Let of project. It is expected that the project will be let by 20 November Inception report. An inception report setting out the agreed approach including the health finance models to be investigated should be provided by 27 November First draft of the report. The first draft of the final report will be due by the close of business on 29 January Final draft of the report. The final draft of the report will be due by the close of business on 19 February Presentation. The presentation to the forum of stakeholders is to take place the first week of March Contents of proposal Proposals to undertake this project must include: 7.1. Statement of qualifications of firm(s) (if no previous work record for FinMark Trust) Name and CV of staff members responsible for (i) overseeing the work; (ii) undertaking the work Proposed approach to the work Fee proposal and costs estimate, indicating the basis of calculation of fees Capacity empowerment is a key objective of FinMark Trust. In rendering the service, the consultant must endeavour to achieve this goal. The proposal must comment on the manner in which the consultant intends to give effect to the capacity empowerment objective. An understanding of a Making Financial Markets Work for the Poor approach will be required. See Porteous D, 2004, Making Financial Markets Work for the Poor (available here:

6 Page 6 8. Basis of award FinMark Trust will award the contract based on: 8.1. Relevant, demonstrated competence of firm(s) in this area (15%) 8.2. Demonstrated expertise of key individuals to be involved in this project (25%) 8.3. Content, quality and originality of proposal (25%) 8.4. Affirmative action scorecard (if South African firm) or use of local professional capacity if non-south African firm (consulting, analysis, coordination etc.) (15%) 8.5. Fee basis (20%) Guidance notes to bidders FinMark Trust reserves the absolute right to use its discretion in the interpretation of these award criteria. The following notes are intended to provide broad guidance only on how proposals will be evaluated. Bidders may be required to clarify their proposals by way of a telephone call or presentation. Relevant, demonstrated competence of firm(s) in this area - you should aim to demonstrate how the firm s collective past experience can be applied (or adapted) to address the specific brief set out in the terms of reference. You are welcome to describe the firm s general experience of financial sector development issues (e.g. in other geographies or topical areas) but the evaluation will focus particularly on the application of that experience for the specific task at hand. Demonstrated expertise of key individuals to be involved in this project the evaluation places considerable emphasis on the role and demonstrated expertise (i.e. track record) of the key individuals to be involved on the project rather than on the expertise of the firm itself. Content, quality and originality of proposal proposals should address the brief set out in the terms of reference in a comprehensive manner. Bidders should aim for innovation as well as professional presentation. Whilst similar, relevant experience in other markets will be an advantage for a bidder, each market is different and so proposals need to reflect the particular characteristics of that market, as well as the challenge set by the terms of reference. Affirmative action scorecard - ownership, management, staff development and Use of local professional capacity (consulting, analysis, coordination etc.) FinMark Trust wishes to ensure that local capacity is used and developed. International firms are therefore encouraged to partner with local organisations. Fee basis value for money, as well as absolute cost, will be taken into account. 9. Contact: Questions or comments in respect of these terms of reference should be directed to: Contact person : Neal Estey address : neal@cenfri.org Office number : In line with FinMark Trust s policy of transparency, answers to queries from one candidate will be circulated to all who indicated their intention to submit a proposal. For this purpose, please send an Neal Estey by 5 November 2015 to indicate whether you intend to submit a proposal.