The government’s decision to ignore private sector input on the National Health Insurance (NHI) Act has set it up for legal confrontation that could have been avoided, the head of private hospital group Netcare said on Monday.
President Cyril Ramaphosa assented to the controversial legislation last week, confounding the business sector that had expected him to delay signing it until after the May 29 elections.
The act sets in motion the ANC’s plan for universal health coverage and aims to establish a single government-controlled fund that will purchase services for patients from public and private sector providers. While critics of the act support the principle of universal health coverage, many have expressed dismay that their concerns about weaknesses in the legislation have not been addressed.
“This entire process has been a missed opportunity, because by not engaging and by largely ignoring input over several years [from] very astute industry … and stakeholder bodies, this process of implementation … will be unnecessarily be delayed. It could have been avoided had government engaged in a constructive and sincere manner, but unfortunately that wasn’t the case,” Netcare CEO Richard Friedland said in an interview shortly after presenting the company’s interim results to end-March.
Friedland welcomed the president’s comments at the weekend, in which Ramaphosa indicated a desire for further engagement with the private sector. Netcare was nevertheless seeking legal advice on the act, and would work with the Hospital Association of SA and Business Unity SA on its response, said Friedland.
“We believe very strongly in public and private sector collaboration in ensuring universal health coverage is attainable and sustainable. That opportunity has been denied to the private sector,” he said.
Revenue improved
Netcare reported a 5.8% increase in adjusted headline earnings per share, which rose to 49c, despite the challenging macro environment. Heps is the primary profit measure gauged by management, as it strips out certain one-off items.
Revenue improved 4.3% to R12bn, while normalised earnings before interest, tax, depreciation and amortisation, or core profit, rose 7.5% to R2.167bn.
The group, which includes 49 acute hospitals, 14 mental healthcare facilities, and a primary healthcare service, declared an interim dividend of 30c per share.
Total paid patient days (PPDs) for the first half decreased by 0.8% compared with the corresponding period last year, due in part to the late start to the school year and the timing of the Easter holidays. The group also experienced fewer admission for respiratory and maternity cases, and a drop-off in lower-income patients in noncoastal hospitals due to changes in low-cost medical scheme networks, it said.
There had however been a pleasing 0.4% increase in PPDs for the seven months to April, compared with last year, said Friedland.
Netcare continued with its share buyback programme, in which it has repurchased 54.7-million ordinary shares at a total cost of R684m since September 2023.
The macroeconomic environment remained challenging due to SA’s high unemployment rate and a financially constrained consumer base, said Netcare.
“However, we are encouraged by the resilience of the pool of insured lives, underscoring the sustainable demand for quality private healthcare, which is worsened by the growing disease burden and ageing insured population,” said Netcare.
Employment is the biggest driver of medical scheme membership, which has hovered around the 9-million mark for several years.
Acute hospital PPDs for the second half were expected to grow 0.5%-1% after the 1.7% decline in the first half. The rate of growth in mental health patient days for the full year would reduce as the new Netcare Akeso Gqeberha facility was included in the base from May 2023.
Total group revenue was expected to grow 5%-5.5% and the company said it expected capital expenditure for the full year of R1.4bn.
After the successful commissioning of Netcare Akeso Gqeberha (72 beds) in May 2023, the group is exploring opportunities to meet the demand for mental healthcare and plans to expand Netcare Akeso’s footprint further by adding 164 beds.
Construction of the new Netcare Akeso Polokwane (77 beds) and Netcare Akeso Alberlito (87 beds) facilities has commenced. The Alberlito facility is expected to be commissioned in October 2025, with Polokwane in February 2026.
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