Primary Health Care
Financing in the
Public Sector
12
Authors:
Mark S Blecheri
Candy Dayii
Sandy Doveiii
Rob Cairnsiii
Abstract
This chapter examines trends in expenditure and funding of Primary Health Care
services. It builds on previous models to develop an updated funding norm for
Primary Health Care services in the public sector. Spending on public sector Primary
Health Care services amounted to R297 per capita uninsured in 2006/07 and
budgeted amounts rise to R395 per capita by 2010/11 (stated in 2007/08 prices). An
updated funding norm is proposed of R401–R444 per capita (2007/08 prices) for
visit rates ranging from 3 to 3.5 visits per person per year. The majority of districts
are currently funded below the norm and progressive funding improvements are
recommended. However, these also need to be linked to performance and efficiency.
Inequities between districts are large with per capita annual expenditure ranging
from R191 to R633. Nevertheless, the differences in per capita spending on Primary
Health Care are gradually declining. These differing expenditure patterns point to the
need for a better developed and more equitable approach to determining resource
allocations to health districts.
i National Treasury
ii Health Systems Trust
iii The Valley Trust
179
Introduction
This chapter discusses recent trends in health budgets with
The uninsured population numbers in districts were derived
a particular focus on Primary Health Care (PHC) services
using data drawn from Statistics South Africa’s General
spending. The chapter consists of four parts.
Household Surveys of medical scheme coverage by district.3
Trends in overall health care financing in South Africa,
1.
with particular emphasis on provincial budgets and the
District Health Services programme.
More detail on the methodology is described elsewhere.4,5
Private spending data is drawn mainly from the annual
reports of the Council for Medical Schemes, of which the
most recent is for 2007/08.6 Whereas the public sector
2.
Total and per capita PHC spending by health district.
publishes forward budgets for three years in advance, the
3.
Intra-district analysis from selected District Health
private sector does not, and forward projections of private
Expenditure Reviews.
spending were based on 2007/08 baselines, to which has
Development of an updated funding norm for public
4.
sector PHC services.
been added the CPIX inflation projections, plus 3% (of which
1% is membership growth). Out-of-pocket expenditure was
based on Reserve Bank estimates of total private sector
spending on health services and goods. The methodology
Methodology
for the PHC funding model is described later in the chapter.
This chapter presents the most recently available information
Trends in health expenditure and
budgets
on health service spending over the past three years and
forward budgets over the Medium Term Expenditure
Framework (MTEF). Expenditure and budget data of public
sector health services are drawn mainly from publications
and unpublished provincial databases of the National
Treasury.1,2 These data sets have been updated to reflect the
Overview of health sector funding public
and private
final published nine provincial budgets for 2008/09, final
The latest published data, including some of the authors’
expenditure data for 2006/07 and pre-audited expenditure
calculations and estimates of funding for health services in
data for 2007/08.
the South African public and private sectors are presented in
Data are presented in nominal prices in terms of the
standardised budget programme structure of provincial
departments of health. Real growth estimates are based
on the Consumer Price Index (CPIX) measure to adjust for
inflation to 2007/08 prices.2 Local government expenditure
data is drawn from the local government database of the
National Treasury. The analysis of district-based funding is
based on the five core provincial PHC sub-programmes (of
programme 2) within the official budget structure, with
the addition of local government ‘own’ contributions to
health. Pre-audited spending data was downloaded from
Table 1. The table shows that funding flows through financial
intermediaries in millions of Rands. Estimated health services
funding will exceed R200 billion by 2009/10 equivalent to
8.4% of the gross domestic product (GDP). Over the six
year period from 2004/05 to 2010/11 funding is anticipated
to grow 7% annually in real terms through public sector
financing streams (from R48 billion to R97 billion). Spending
growth in the private sector is projected to grow from R78
billion to R129 billion or 3.2% annually in real terms. This
is considerably lower than the six proceeding years when
private sector funding growth averaged 6.4% per annum.
the financial system (Vulindlela) for 2007/08, and the many
There remains however a very large per capita difference
thousands of cost centres were grouped according to facility
between public and private financing. The ratio between
location and aggregated into a particular health district.
public provincial and private medical schemes per capita
Some provinces in their financial systems did not classify
expenditure is predicted to decline from 7 to 5.2 over
all PHC expenditure by district or facility and such residual
the period 2004/05 to 2010/11, but this latter ratio is still
amounts were allocated proportionally to districts. This
above the levels that existed in the mid 1990s. The forward
had the potential for introducing some bias. However, the
estimates should be treated with caution as there is
residual amounts were generally small in relation to the total
uncertainty particularly for the private sector.
expenditure.
The term PHC is used here in a narrow sense of primary level health
services delivered by departments of health, and does not include
the broader conceptualisation of PHC such as in the Alma Ata
Declaration.
180
Donor funding, although contributing only 2% of total
health funding, is growing strongly above 20% annually.
Personal communication, South African Reserve Bank, 2007.
Primary Health Care Financing in the Public Sector
Public sector funding for health services comprises 3.5%
where most PHC services are located are estimated to
of the GDP and 14.1% of total government expenditure,
grow by 8.2% annually. Forecasted spending on health
excluding interest payments in 2008/09 (12.1% otherwise)
facilities management (infrastructure) is estimated to
and is expected to grow by 6.1% in real per capita terms over
increase by 19.4% annually and emergency medical services
the period.
(ambulances) by 12.4% annually. This is a reflection of the
recent budget priorities of hospital revitalisation and a new,
Provincial departments of health
faster and responsive ambulance service. The relatively high
Provincial health budgets are shown in Table 2. Budgets
following an improved occupation-specific remuneration
are estimated to grow at 7.6% in real terms annually over
dispensation, where the packages of health professionals
the period 2004/05 to 2010/11. District health services,
(e.g. nurses and doctors) have been increased.
real growth rates are partly because of higher personnel costs
Table 1: Overall health sector funding public and private sectors* (Rand million)
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
Annual real
change
National Department of
Health core
1 011
1 029
1 131
1 210
1 414
1 472
1 562
2.1%
Provincial departments
of health
40 526
47 015
53 648
62 594
69 440
77 164
86 103
7.6%
1 320
1 557
1 683
1 831
2 001
2 278
2 460
5.3%
174
188
199
211
224
237
251
1.0%
Local government (own
revenue)
1 247
1 317
1 478
1 566
1 597
1 629
1,662
3.8%
Workmens
Compensation
1 322
1 414
1 499
1 574
1 653
1 735
1 822
3.7%
489
520
554
589
627
753
938
5.8%
1 423
1 565
1 721
1 833
2 134
2 350
2 503
4.3%
47 511
54 605
61 913
71 408
79 090
87 619
97 302
7.0%
Medical schemes
52 211
54 905
58 349
64 654
72 736
78 918
85 153
3.0%
Out-of-pocket
23 125
25 480
27 231
29 954
33 699
36 563
39 452
3.8%
1 879
1 956
2 056
2 179
2 452
2 660
2 870
1.9%
898
935
982
1 041
1 172
1 271
1 372
1.9%
78 113
83 277
88 619
97 829
110 058
119 413
128 847
3.2%
947
986
2 000
3 000
3 500
4 000
4 240
21.9%
126 571
138 867
152 532
172 237
192 648
211 032
230 389
4.9%
Rand million
Public sector
Defence
Correctional services
Road Accident Fund
Education
Total public
Private sector
Medical insurance
Employer private
Total private
Donors or
Non-governmental
organisations
Total
Total as % of GDP
8.8%
8.8%
8.4%
8.4%
8.4%
8.4%
8.4%
Public as % of GDP
3.3%
3.5%
3.4%
3.5%
3.5%
3.5%
3.5%
Public as % of
total government
expenditure (noninterest)
13.9%
14.0%
14.0%
14.2%
14.1%
14.2%
14.1%
Private financing as %
of total
61.7%
60.0%
58.1%
56.8%
57.1%
56.6%
55.9%
Public sector real Rand
per capita 2007/08
prices
1 404
1 542
1 651
1 750
1 811
1 899
1 999
6.1%
Note: *Numbers are stated in nominal rand values (Rand million) and include flows through funding intermediaries.
Source: National Treasury publications and databases; authors’ calculations.1,2,6
181
12
Table 2: Provincial departments of health: Spending and budgets
Rand million
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
Annual real
growth 2004/052010/11
Administration
1 703
1 627
1 922
2 038
2 543
2 593
2 782
3.0%
District Health
Services
16 016
18 387
21 053
25 602
28 241
31 381
35 065
8.2%
Emergency Medical
Services
1 341
1 758
2 059
2 515
2 919
3 340
3 694
12.4%
Provincial Hospital
Services
10 422
11 696
13 055
14 683
15 799
17 637
19 517
5.4%
Central Hospital
Services
7 009
8 161
8 757
9 395
9 627
10 741
12 057
3.9%
Health Training and
Sciences
1 229
1 556
1 779
2 111
2 554
2 601
2 809
9.0%
571
772
819
992
1 131
1 169
1 331
9.3%
2 252
3 103
4 251
4 992
6 683
7 760
8 909
19.4%
40 526
47 015
53 647
62 274
69 440
77 164
86 103
7.6%
Health Care
Support Services
Health Facility
Management
Total
Source: National Treasury publications and databases.1,2
contributions for health services, spending on upgrading
District health services
PHC facilities (programme 8) and on PHC training
The District Health Services programme is the largest
programme in the budgets of provincial departments of
health. The composition of the programme is shown in
Table 3.
(programme 6). Together these will amount to R15.6 billion
in 2008/09 (R12.9 billion on the core five sub-programmes)
or R358 per capita uninsured person. Spending is projected
to rise from R263 per capita in real terms in 2004/05 to
R395 in 2010/11. PHC spending by this definition amounts
Spending on PHC services, using one potential definition, is
to 22% of total health spending in 2008/09. This figure
shown in Table 4. This approach includes the first five core
excludes HIV and AIDS and district hospitals, and would be
sub-programmes of Table 3 and adds local government
higher if these were included.
Table 3: District health services
Annual real
growth 2004/052010/11
Rand million
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
District
Management
1 030
963
983
1 166
1 451
1 617
1 776
4.0%
Community
Health Clinics
3 299
3 854
4 056
5 302
6 486
7 148
7 944
9.9%
Community
Health Centres
1 796
2 074
2 346
2 808
3 095
3 404
3 696
7.1%
CommunityBased Services
579
762
1 040
1 188
1 276
1 453
1 607
12.6%
Other Community
Services
424
512
558
605
614
669
816
5.9%
Subtotal five
core PHC
subprogrammes
7 128
8 164
8 983
11 069
12 923
14 291
15 838
8.4%
HIV and AIDS
1 147
1 692
2 376
3 051
3 593
4 310
5 068
21.6%
159
172
170
187
223
253
252
2.5%
Coroner Services
3
7
313
612
394
428
485
117.0%
District Hospitals
7 552
8 302
9 131
10 575
11 003
12 024
13 411
4.5%
16 016
18 387
21 053
25 602
28 241
31 381
35 065
8.2%
Nutrition
Total
Source: National Treasury publications and databases.1,2
182
Primary Health Care Financing in the Public Sector
Table 4: Public sector Primary Health Care services expenditure
Rand million
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
7 128
8 164
8 983
11 069
12 923
14 291
15 838
8.4%
Local government
own revenue
1 247
1 317
1 478
1 566
1 597
1 629
1 662
-0.4%
Community health
facilities
445
588
620
968
984
1 467
1 515
16.4%
65
85
74
148
133
199
213
15.6%
Five core PHC
subprogrammes
2004/05
Annual real
growth 2004/052010/11
PHC training
Total
8 885
10 154
11 156
13 751
15 637
17 586
19 229
8.0%
Rand per capita
uninsured
224
255
277
337
380
424
460
7.0%
Rand per capita
real 2007/08
prices
263
287
297
337
358
381
395
7.0%
21.3%
21.0%
20.2%
21.5%
22.0%
22.3%
21.9%
PHC as proportion
of total
Source: National Treasury publications; provincial and local government databases.1,2
PHC spending has grown by 8.6% annually in real terms over
in which some districts only spent R41 per capita.8,9 Of
the past three years from 2004/05 to 2007/08. During the
the 10 lowest funded districts, three are in the Free State
same time PHC visits have increased by 1.1% per annum from
(Lejweleputswa, Thabo Mofutsanyane and Fezile Dabi), two
101 million to 104 million.
are in the Eastern Cape (Alfred Nzo and Oliver Tambo), two
in Mpumalanga (Gert Sibande and Nkangala) and one each
Inter-district inequities
in Northern Cape (Siyanda), KwaZulu-Natal (Amajuba) and
Limpopo (Greater Sekhukhune).
There are large inequities in funding across districts.7
Table 5 shows per capita (uninsured) spending in each of the
Greater detail of health district spending by sub-programme
health districts of South Africa over the past three years. The
in 2007/08, expressed in per capita terms is shown in
best funded district is Namakwa in Northern Cape (R633
Table 6. Metropolitan districts are financed 28% higher
per capita uninsured in 2007/08) and the worst funded is
than other districts (R356 vs R279 per capita) partly because
Lejweleputswa in the Free State at R191 per capita. The ratio
of local government revenues. This table also shows total
of these is 3.3, which represents a large difference, but is
spending on the district management sub-programme.
smaller than the 9.4 fold difference found in a 2001 study
Table 5: District Primary Health Care spending per capita (Rands), 2005/06-2007/08*
District
2005/06
2006/07
2007/08
Annual real growth
2005/06 to 2007/08
498
633
16.3
DC6
Namakwa
415
DC5
Central Karoo
294
321
526
26.1
DC1
West Coast
373
464
466
5.3
CPT
City of Cape Town
354
384
445
5.6
DC4
Eden
325
347
435
9.0
DC43
Sisonke
239
273
416
24.3
DC38
Ngaka Modiri Molema (Central)
280
328
398
12.2
DC16
Xhariep
331
361
387
1.9
DC7
Pixley ka Seme
236
294
376
18.9
JHB
City of Johannesburg
288
313
371
7.1
2.6 visits per capita uninsured, provincial quarterly reporting and
District Health Information System (DHIS).
183
12
District
2005/06
2006/07
2007/08
379
320
367
Annual real growth
2005/06 to 2007/08
DC39
Dr Ruth Segomotsi Mompati (Bophirima)
-7.2
ETH
eThekwini
282
305
365
7.2
DC45
Kgalagadi
253
277
353
11.3
DC2
Cape Winelands
272
291
353
7.4
DC40
Dr Kenneth Kaunda (Southern)
292
311
342
2.1
DC27
Umkhanyakude
273
308
340
5.1
DC10
Cacadu
193
223
339
24.7
TSH
City of Tshwane
245
311
335
10.3
DC3
Overberg
212
246
320
15.6
DC9
Frances Baard
202
261
314
17.6
DC29
iLembe
195
217
310
19.0
DC12
Amathole
251
265
305
3.9
DC13
Chris Hani
235
256
303
7.1
DC36
Waterberg
187
205
303
20.0
DC34
Vhembe
217
203
301
10.9
DC37
Bojanala Platinum
222
280
290
7.9
DC33
Mopani
218
235
290
8.7
DC46
Metsweding
198
150
287
13.4
DC26
Zululand
201
216
280
11.2
DC28
Uthungulu
227
229
278
4.2
DC23
Uthukela
171
195
277
19.7
DC22
UMgungundlovu
216
236
276
6.4
DC17
Motheo
254
296
274
-2.1
EKU
Ekurhuleni
243
286
273
-0.2
DC21
Ugu
204
217
272
8.9
NMA
Nelson Mandela Bay Metro
220
241
264
3.1
DC24
Umzinyathi
198
227
263
8.7
DC35
Capricorn
165
193
256
17.6
DC32
Ehlanzeni
164
187
256
17.8
DC14
Ukhahlamba
186
209
239
6.6
DC48
West Rand
242
221
236
-6.9
DC42
Sedibeng
188
196
233
4.9
DC20
Fezile Dabi
228
222
230
-5.3
DC31
Nkangala
160
195
226
12.1
DC15
O.R. Tambo
188
199
223
2.4
DC47
Greater Sekhukhune
121
163
221
27.2
DC25
Amajuba
151
177
220
13.6
DC30
Gert Sibande
137
185
211
16.9
DC19
Thabo Mofutsanyane
206
213
211
-4.6
DC8
Siyanda
119
150
206
23.8
DC44
Alfred Nzo
177
202
198
-0.5
DC18
Lejweleputswa
187
190
191
-4.7
Total
232
256
302
7.6
Note: * Ranked from highest to lowest per capita spending in 2007/08.
* Includes five core sub-programmes and local government but excludes health facilities management, PHC training, HIV
and AIDS and district hospitals sub-programmes.
Source: Analysis by authors of 2007/08 expenditure data drawn from Vulindlela and National Treasury local government databases.
184
Primary Health Care Financing in the Public Sector
Table 6: Primary Health Care spending per capita uninsured 2007/08*
Rand
thousand
Rand per capita uninsured
Province
EC
FS
GP
KZN
LP
District
management
District
Clinics and
community
health
centres
Community
based
and other
community
services
Local
government
excluding
transfers
Total
District
management
DC10
Cacadu¤
146
143
29
21
339
52 541
DC12
Amathole
31
224
39
11
305
51 205
DC13
Chris Hani
61
201
41
0
303
50 127
DC14
Ukhahlamba
60
126
53
0
239
19 396
DC15
O.R.Tambo
35
155
33
0
223
60 496
DC44
Alfred Nzo
43
123
25
7
198
26 501
NMA
Nelson Mandela Bay
Metro
12
170
53
29
264
10 181
DC16
Xhariep
56
173
158
0
387
6 920
DC17
Motheo
18
205
51
0
274
10 882
DC18
Lejweleputswa
21
104
65
0
191
13 702
DC19
Thabo
Mofutsanyane
16
38
155
1
211
11 988
DC20
Fezile Dabi
16
132
81
0
230
6 708
DC42
Sedibeng
29
183
21
0
233
23 188
DC46
Metsweding
90
149
48
0
287
14 968
DC48
West Rand
52
110
62
13
236
33 691
EKU
Ekurhuleni
16
126
20
112
273
31 801
JHB
City of
Johannesburg
23
200
54
95
371
59 710
TSH
City of Tshwane
69
136
54
76
335
109 116
DC21
Ugu
26
186
59
1
272
17 408
DC22
UMgungundlovu
18
173
47
38
276
15 464
DC23
Uthukela
21
190
45
21
277
12 510
DC24
Umzinyathi
17
180
66
0
263
7 435
DC25
Amajuba
21
145
45
9
220
11 225
DC26
Zululand
21
217
42
0
280
16 322
DC27
Umkhanyakude
19
204
117
0
340
10 933
DC28
Uthungulu
13
186
62
16
278
10 359
DC29
iLembe
13
235
49
13
310
7 728
DC43
Sisonke¤
123
233
60
0
416
36 755
ETH
eThekwini
7
209
61
89
365
17 604
DC33
Mopani
14
215
58
3
290
14 051
DC34
Vhembe
19
221
56
5
301
22 782
DC35
Capricorn
23
193
33
7
256
25 986
DC36
Waterberg
52
160
83
8
303
29 081
DC47
Greater Sekhukhune
41
153
26
0
221
40 128
185
12
Rand
thousand
Rand per capita uninsured
Province
MP
NC
NW
WC
District
District
management
Clinics and
community
health
centres
Community
based
and other
community
services
Local
government
excluding
transfers
Total
District
management
DC30
Gert Sibande
41
149
0
21
211
32 500
DC31
Nkangala
41
167
0
18
226
40 638
DC32
Ehlanzeni
39
207
0
9
256
56 050
DC45
Kgalagadi¤
163
169
5
17
353
28 322
DC6
Namakwa
92
502
38
1
633
8 759
DC7
Pixley ka Seme
21
315
35
4
376
3 355
DC8
Siyanda
27
184
9
-14
206
5 389
DC9
Frances Baard
16
199
78
22
314
5 104
DC37
Bojanala Platinum
44
220
15
11
290
49 118
DC38
Ngaka Modiri
Molema (Central)
75
303
14
6
398
52 859
DC39
Dr Ruth Segomotsi
Mompati (Bophirima)
87
267
14
0
367
38 027
DC40
Dr Kenneth Kaunda
(Southern)
63
241
17
21
342
30 964
CPT
City of Cape Town
27
289
38
92
445
65 814
DC1
West Coast
47
251
166
2
466
10 254
DC2
Cape Winelands
29
283
39
2
353
14 746
DC3
Overberg
0
312
7
0
320
0
DC4
Eden
30
304
49
51
435
12 096
DC5
Central Karoo
0
388
137
1
526
0
33
193
44
32
302
1 342 887
Total
Note: * The table shows PHC spending per capita by component. The last column shows spending on the District Management programme in thousands of Rand.
¤ It is likely that some districts have misclassified district management expenditure (e.g. Cacadu, Kgalagadi and Sisonke).
Source: Analysis by authors of 2007/08 expenditure data drawn from Vulindlela and National Treasury local government databases.
District Health Expenditure Reviews
A useful tool for the district management team to plan and

Calculating unit costs and comparing them among
budget effectively is the District Health Expenditure Review
facilities of similar types. This can assist in highlighting
(DHER). The district level is a key level of decentralised
inefficiencies through matching workloads to personnel
management of PHC services in the health system. One way
distribution and budgets. One of the most important
in which it can be progressively strengthened is for better
efficiency gains that can be made in a district is to
management of resources, especially financial, and the DHER
optimally match personnel distribution to workload.
can assist with this (see Figure 1).

Examining inequities between sub-districts.
The DHER is useful in providing information to district

Monitoring trends in performance.
managers in making decisions in:

Balancing between services provided in PHC facilities

Distribution of expenditure among different facilities
and the district hospital (some districts treat too
and different services in the district.
many PHC patients in district hospital outpatients and
consequently spend too high a share of the district
budget on the district hospital).
186
Primary Health Care Financing in the Public Sector
Figure 1: Data required for the District Health Expenditure Review
Activity:
The DHER relies on the combination of the
activity, personnel, financial and services
information in order to provide indicators:
Personnel:
In-patients
Out-patients
Hours worked
Usable beds
Number of
Nurses and
doctors
DHER
Financial:
Human
Resources
Goods and
Services
Transfer Payment
Capital Items
Services:
In-patients
Out-patients
Hours worked
Usable beds

patient day equivalents

bed occupancy

average length of stay

expenditure per capita

expenditure per visit

utilisation per capita

workload

variances
Source: Figure developed by authors from The Valley Trust.


Spending on programmes such as HIV and AIDS,
In developing this model some of the previous approaches
nutrition, community health workers, environmental
used for PHC modelling in South Africa were reviewed and
health, malaria control and others.
built on.10-16 One of the most useful recent estimates of a
Spending on medicines, laboratory services, security,
maintenance and patient food.
Once district managers are well informed about workloads,
unit costs, spending, personnel distribution and other key
indicators in the district, they are better able to optimally
allocate resources in the district.
national funding norm for PHC was R310–R420 per capita
(2007/08 prices).,17 The developed model follows.
District office
One potential structure for a district office is shown in
Table 7. Further refinement would be worthwhile here and
it is possible that greater provision should be made for
sub-district management and facility supervision, and that
Modelling a funding norm for
Primary Health Care
Norms and standards are one mechanism for achieving
greater equity and improved performance for PHC. The last
part of the chapter develops a model and potential funding
norm for PHC. A simplified version of the model is presented
in three main parts.
the specialist support proposed is something to aim for
rather than what districts currently have. The model makes
provision for 40% non-personnel costs including transport
and office costs, rental, telephone, etc. The model suggests
that a reasonably staffed district office can be established
for around R24.7 million (2007/08 prices). Currently
about half of the 52 health districts exceed this level of
spending on the district office and half spend less than this
(see Table 6, last column). However, given that most district
1.
District office.
2.
Facility-based care (including clinics, community health
of the existing expenditure against this sub-programme
centres and mobiles).
has been misclassified.
3.
offices in the country are relatively weak, it is likely that some
Community-based services (including some additional
public health programmes).
This work was based particularly on rising utilisation levels and on
the extent to which PHC work was performed at higher unit costs
within district hospitals.
187
12
188
558 306
1
2
District Manager
Secretary
2
1
1
1
1
1
1
3
1
1
HIV Deputy Director
STDs Deputy Director
Child health Deputy Director
Maternal health Deputy Director
Family planning Deputy Director
Health promotion Deputy Director
Mental health Deputy Director
Infectious diseases Deputy Director and
outbreak response
Chronic diseases of lifestyle Deputy
Director
Trauma Deputy Director
2
1
1
1
1
1
Health service planning and evaluation
Community Paediatrician
Community Psychiatrist
Community Obstetrician
Surgeon
Physician
Source: Modelling developed by authors.
2
Clinical services Director and support +
Secretary
Health service management and support
1
TB Deputy Director
411 188
411 188
411 188
411 188
411 188
411 188
411 188
411 188
411 188
411 188
411 188
2
Information Officers
136 338
2
Public health Specialist + Registrar
558 798
558 798
558 798
558 798
558 798
822 377
556 100
411 188
411 188
714 625
411 188
411 188
411 188
411 188
411 188
411 188
822 377
411 188
272 676
Total
Non-personnel
Personnel: total
Clinical Engineer
78
2
4
Maintenance
1
Drivers
8
2
2
2
1
4
8
1
8
1
8
1
N
Manager
Transport and logistics office
Store workers
District Pharmacist
Pharmacy
Security
Kitchen
Groundsmen
Cleaning
Domestic
Clerks
Deputy Director
Personnel
Clerks
Deputy Director
Procurement
1 029 422
Clerks
546 367
2
Director
Finance
Health Programme Director and Assistant
449 718
558 306
Cost (Rand)
Public health and programmes
72 376
Unit cost
N
Table 7: Potential structure for district office
136 338
72 376
238 462
72 376
60 287
65 129
60 287
60 287
72 376
411 188
72 376
411 188
72 376
473 991
Unit cost
24 754 355
7 072 673
17 681 682
272 676
289 504
238 462
579 008
449 718
120 575
130 258
60 287
241 150
579 008
411 188
579 008
411 188
579 008
473 991
Cost (Rand)
Primary Health Care Financing in the Public Sector
Facility-based Primary Health Care
services
A model for facility-based services for a district of 100 000
uninsured persons and for the country has been developed.
The model is based on nurse-based clinics, community health
centres and mobiles. Seventy percent of visits are managed
in nurse-led clinics, 25% in community heath centres and
5% in mobiles. There are approximately seven clinics for
each community health centre in a tiered system by which
the community health centre supports the clinic with a fulltime doctor, radiology, laboratory, midwife, rehabilitation
and other services. The model has various components. The
personnel component (see Table 8) builds on work done for
the 1995 Committee of Inquiry and a PHC staffing model
linked to workload ratios developed by Daviaud.,10
Table 8: Personnel in a district of 100 000 uninsured persons*
Staff required
Staff
Wage
Total Rand thousand
Total per 100 000
population
Doctor
5
466 981
2 232
22
Midwife
3
181 558
567
6
Professional Nurse
49
181 558
8 930
89
Enrolled Nurse
13
90 169
1 185
12
Enrolled Nursing Assistant
15
68 304
1 028
10
9
68 304
602
6
10
109 650
1 106
11
General Assistants
7
60 287
424
4
Security
3
60 287
181
2
Pharmacist
2
181 558
363
4
Social Worker
1
148 406
148
1
Dentist
2
466 981
934
9
Dental Therapist
1
90 169
90
Oral Hygienist
1
148 406
148
1
Pharmacy Assistant
2
90 169
180
2
Physiotherapist
1
148 406
74
1
Physio Assistant
1
90 169
90
1
18 433
183
Counsellor
Administrative
Total
126
Note: *Based on visit rate of 3.5 with 70% visits managed in nurse-based clinics.
Source: Author’s modelling; Department of Health, 1996;10 Personal communication, E Daviaud, South African Medical Research Council, 2006.
Personal communication, E Daviaud, South African Medical
Research Council, 2006.
189
12
PHC costs have risen with the introduction of the new
Occupation
Specific
Dispensation
for
nurses
from
1 July 2007, which for the first time introduces a new
Community-based services and
programmes
remuneration dispensation for appropriately qualified
A simple model for community-based and public health
PHC nurses. Specific sub-component models have been
services based on environmental health, community health
developed for medicines, capital (buildings and equipment)
workers, school health and some others has been developed
and other aspects (see Table 9). The medicines model is
(see Table 10).18,19 These suggest the country should be
based on an average dispensing of 1.5 medicines at
spending about R3.1 billion annually on such programmes,
R8 unit cost for clinics and three items averaging R11
while the actual expenditure is R2.2 billion.
each in community health centres. The methodology
for capital builds on an approach developed by Bennett
Table 10: Community-based services
cross-checked against a set of recent facility builds.
Table 9: Cost per visit
Clinic
Personnel
Medicine
42
Community
Health
Centre
91
Mobile
Total
Programme
Basis
Environmental
health
1:15 000
661 774
Community
health worker
1:250
households
466 000
2 community
health
nurses per
community
health centre
175 897
39
11
31
11
Capital
9
13
10
Equipment
4
10
4
Other nonpersonnel
non-capital
(NPNC)
10
16
10
Cost per visit
77
161
74
Community
nursing
School health
Health promotion
97.80
Source: Authors’ modelling; Personal communication, V Titus,
Department of Health, 2004; Personal communication,
R Bennett, Department of Health, 2005.
Putting together unit costs and visit rates, the total model
suggests a funding norm for facility-based services of
R293–R336 per capita at visit rates ranging from 3.0–3.5 per
Cost (R000)
462 324
R3 million
per district
159 000
Nutrition
172 059
Malaria
100 000
Communitybased mental
health rehab
Public health
programmes
Total
Cost per
capita
Rand
10 000 places
365 000
500 000
3 062 053
76
Source: Authors’ modelling; Haynes, 2004;18 Friedman, 2005.19
uninsured person per annum. Actual spending in 2007/08
was R192 per capita for facility-based services (at utilisation
rate of 2.6) and was below R293 per capita in all but six
districts. If visit rates were to rise further to 3.85 (as proposed
by a previous review) costs would be correspondingly
higher (R366).17
Total Primary Health Care funding norm
If one combines the district office, the facility-based services
and the community-based and public health services,
a norm of R401–R444 per uninsured person in 2007/08
The model suggests that South Africa has a significant
prices is proposed, depending on visit rate (ranging from
shortage of community health centres (the higher level of
3–3.5). If utilisation rises further to 3.85 as suggested by
PHC which provides support for clinics through radiology,
a Department of Health (DoH) model, then costs would be
obstetric, laboratory, rehabilitation, minor theatre and other
even higher (R474).17 However actual utilisation was only
services) with a shortfall of 146 community health centres.
2.6 visits per capita uninsured in 2006/07 and spending is
Some of these services are currently provided by district
rising faster than utilisation, suggesting some inefficiencies
hospitals.
in delivery.
Personal communication, V Titus, Department of Health, 2004.
Personal communication, R Bennett, Department of Health, 2005.
190
Primary Health Care Financing in the Public Sector
Table 11: Calculated Primary Health Care funding norm per
capita (2007/08 prices)*
This suggests that funding for PHC services does need to
rise progressively in all three compartments (i.e. district
office, facility-based services, community-based services
Norm at visit rate
of 3 per capita
uninsured
Norm at visit rate
3.5
and programmes). Strengthening district offices is needed
Facility-based
293
336
a future role for District Health Authorities as public
District office
32
32
purchasers is being discussed as part of current debates
Community-based
76
76
around National Health Insurance as well as earlier policy
401
444
proposals.10 Strengthening of facility-based services is likely
3
3.5
Cost per capita
uninsured
Total per capita
uninsured
Visit rate
to improve and firmly establish the district tier. In addition,
to encompass higher visit rates and improved resourcing.
Note: * Per capita uninsured persons.
* Excludes HIV services.
* District office norm here is an average; in fact the authors propose a fairly standard district office of R25 million budget per annum.
Funding of community-based and public health programmes
Source: Authors’ modelling based on components above and varying
visit rates.
funding of HIV and AIDS is a large component additional
also falls short of even the relatively small number of areas
covered. Strengthening this component may have an
important role in improving health status. Note that the
to the basic PHC model, and has not been included in this
chapter.22,23 Data from Table 3 shows that by 2010/11 HIV
Discussion
and AIDS dedicated budgets will add 32% to the cost of the
The data shows that spending on PHC services is increasing
the 16% in 2004/05. However, HIV and AIDS cost models
relatively strongly at 7% per annum in real terms over the
suggest that this will continue to rise and this progressively
period from 2004/05 to 2010/11. This is encouraging given
increasing proportion may support the case for progressive
the importance of PHC in improving population health.
integration of HIV and AIDS programmes into comprehensive
However, spending is increasing at a significantly faster pace
PHC services.
five core PHC sub-programmes and will have doubled from
than visits and more information is required to determine
whether South Africa is receiving value for money and better
quality of care for the increased expenditure.
The data points to significant inequities in funding between
districts and to specific districts funded well below the
average. Provincial departments of health need to develop
Health outcomes for South Africa are in many cases well
objective methods to allocate resources more equitably
below comparable peer countries. South Africa has relatively
between districts, such as through district-based resource
low tuberculosis (TB) cure rates and sub-optimal maternal
allocation formula (e.g. Resource Allocation Working Party
and child health survival.
South Africa should therefore
(RAWP) formula in the United Kingdom).24 However, in the
review whether there is sufficient focus on the correct
short-term, consideration should also be given to the very
application of effective interventions within our PHC
different workloads between districts.
20,21
services. Part of the increasing cost in 2007/08 was related
to the long anticipated improved personnel remuneration
for nurses, such as occupation-specific dispensation.
An unresolved dilemma is whether PHC services in
metropolitan districts should be provincialised or devolved.
Beyond the debates around functional integration and
Spending on PHC services amounted to approximately R302
decentralisation, PHC services are considerably better
per capita uninsured in 2007/08 (as per Table 5) or R337
resourced in metropolitan areas (28% higher, as per Table 5
including infrastructure and training (as per Table 4). A
and Table 6) because of stronger local government revenue
funding norm of R401–R444 is proposed (as per Table 11),
capacity. Provincialisation of PHC services risks losing access
depending on utilisation (visit) rates. The revised norm is
to local government revenue streams.
higher than that of a previous estimate undertaken with the
DoH (R310–R420 per capita) despite using lower utilisation
rates.17 This difference arises from the higher unit costs
Conclusion
associated with the normative approach used in this model
as opposed to the baseline unit costs derived from DHERs in
Spending and budgets for PHC services are growing at 7%
the earlier model. Also the new model uses higher personnel
per capita per annum in real terms and constitute over
unit costs, includes a district office component and a wider
20% of public sector health expenditure. The budget for
set of community-based services.
PHC is projected to increase to R19.2 billion by 2010/11.
191
12
There is still substantial inequity between districts with the

Greater attention must be given to making every district
ratio between the best funded and worst funded districts
a cost centre in the financial management system and
currently at 3.3, although this is a significant improvement
to ensuring that all PHC expenditure is recorded in the
from the ratio of 9.4 in 2001/02. The ten worst funded
financial system in a manner that is linked to a district.
health districts have been listed in this chapter. The district
health authority is the key management authority but is

to improve their capacity and skills in budgeting
funded at less than the proposed funding norm in at least
and finance as well as planning and programme
half of districts. District health authorities will need to be
management and support.
considerably strengthened over the next decade, particularly
if they are to also play a role as public purchasers of general
practitioner services.
District structures must be progressively strengthened

Greater use must be made of the DHER, which is a useful
tool for managers to review district spending, to better
The DHER is a useful tool for district managers to understand
inform their planning and budgeting.
spending in their districts and plan services and budgets
appropriately. Funding for facility-based services is still
highly variable across districts. The model suggests South
Acknowledgements
Africa has a shortfall of 146 community health centres. The
The authors wish to acknowledge inputs from Megan
costing model suggests community-based and public health
Govender, Nomkhosi Zulu, Keith Wimble and the reviewers.
programmes appear to be under-funded by at least one
billion rand. A funding norm for PHC services of R401–R444
per capita uninsured per annum is proposed in 2007/08 prices.
This norm is based on a particular model district with clinics
and community health centres in particular distributions.
In this model 75% of consultations are managed by basic
nurse-operated clinics. Although government budgets
for PHC in 2008/09 are approaching the lower utilisation
funding norm (there is a further R3 billion gap if visit rates
rise to 3.5) some health performance indicators are still poor,
such as TB cure rates, maternal and child mortality rates and
waiting times. This, along with rising unit costs over the
past three years, suggests inefficiencies and problems with
quality and outcomes, which require substantial attention
from district and PHC managers.
Recommendations
It is recommended that:

PHC budgets must be progressively strengthened
towards
the
funding
norm
of
R401–R444
per
capita uninsured taking into account district and
facility performance and efficiency. District offices,
facility-based services and programmes all need
strengthening.

A more systematised approach to district funding
must be adopted to reduce large inequities between
districts.

Efficiency, performance and outcomes need attention
noting that spending has risen faster than utilisation
rates over the past three years.
192
Primary Health Care Financing in the Public Sector
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