Health minister warns of negative impact of 'cost containment' on quality of healthcare services

Health Minister Joe Phaahla addresses a media briefing in Midrand, Gauteng, on 28 September 2023. (Photo: Mark Heywood)

By Mark Heywood

28 Sep 2023

Although Dr Joe Phaahla said that in the current economic climate, ‘we understand we have to cut’, he lamented that the public health sector was very sensitive to budgetary cuts and was already under pressure from a growing burden of disease.

On Thursday morning, at a meeting with members of the media, Health Minister Dr Joe Phaahla said he was concerned that “cost containment” measures ordered by the National Treasury would have a negative impact on the quality of healthcare services. “We understand we have to cut … as long as there’s an understanding [that] there’s a limit” to what the health system can bear, Phaala said.

Phaahla’s frank admission was in response to a question from Daily Maverick about the effect austerity would have on the right to access healthcare services.

cost phaahla Health Minister Joe Phaahla addresses a media briefing in Midrand, Gauteng, on 28 September 2023. (Photo: Mark Heywood)

The minister, who said he preferred talking about “cost containment” rather than “austerity”, reported that his department had been raising concerns about budget cuts “continuously” even before the current Treasury “instruction” which, he revealed, was on Wednesday, 27 September amended to be “advice” to departments — perhaps reflecting the growing pushback from within and without government about the consequences of austerity on social services.

Although Phaahla said that in the current economic climate, “we understand we have to cut”, he lamented that the public health sector was very sensitive to budgetary cuts and was already under pressure from a growing burden of disease. “Anything that speaks to cutting expenditure is a red flag — we’ve said that to the Treasury.”

The minister reported that the health system “lost ground as a result of Covid-19”, mentioning HIV, TB and “an explosion of mental health issues and substance abuse” as areas where the health system had experienced setbacks.

Read more in Daily Maverick: South Africa’s delivery of crucial services under threat after Treasury desperately calls for ‘fiscal consolidation’ of public finances

Phaahla reported that on Wednesday he met senior managers in the Department of Health, including the director-general and chief finance officer, to “look where we can contribute to cost containment without significant risk”.

Mentioning planned cuts to travel and meeting costs (he pointed out that the meeting with the media was held in the offices of Health Systems Trust rather than a hotel), he said that the department had costed savings, although he would not disclose figures.

Phaahla said that they had met statutory bodies like the Medical Research Council, National Health Laboratory Services and Office of Health Standards Compliance to request that they make savings.

‘We will feel the pinch’

However, the minister admitted the budget cuts came with a price for quality healthcare.

“Our biggest expenditure is human resources and we will feel the pinch of the 7.5% salary increase” which, Phaahla says, amounts to an additional cost of R8-billion per annum.

Without additional funding from the National Treasury, the minister said, that amount had to be found within the existing budget.

“It’s unavoidable that some posts will not be filled” and that there might be cuts to budgets in areas like hospital infrastructure. Ironically, he said this at the same time as talking about the need for hospitals in Johannesburg affected by water shortages to include plans for building water storage containers in their business plans, “although that will take away from other necessary upgrades”.

In response to a question about why the cash-strapped department and government had paid so much for Covid-19 vaccines, Phaahla (who was deputy minister of health at the time) talked about how the government had been “held at ransom” by multinational pharmaceutical companies as the clamour for access to vaccines in South Africa grew in early 2021.

Read more in Daily Maverick: Health Justice Initiative slams ‘bullying’ $734m SA Covid-19 vaccine contracts

“In retrospect, we accept the fault,” said Phaahla, but he claimed the government was “between the devil and the deep blue sea”.

He said that on the one hand, people were “screaming, where are the vaccines?” and pointing fingers at the government. On the other hand, big pharma was telling the government, “Take it at this price or leave it.”

He talked of “midnight meetings pleading for stocks”, recalling being part of a very late-night meeting with Pfizer, which wanted “an upfront deposit of a couple of hundred of millions of dollars”.

According to the minister, “We said we don’t have that money.” The only upfront payment was made to the WHO-overseen Covid Vaccine Facility (Covax). DM

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‘We will feel the pinch’