Private hospital group Netcare is proposing that business and the government extend their collaboration for kick-starting the economy to healthcare, arguing this could quickly resolve some of the public sector’s most pressing problems. These include long waiting times for procedures and a shortage of training posts for doctors and nurses.
Business and the government launched a pact in June 2023 in which they agreed to work together to restore public and investor confidence by addressing constraints to economic growth in three key areas — energy, logistics, and crime and corruption. Netcare now wants to add a fourth.
“We think there could be similar collaboration (on) healthcare,” Netcare CEO Richard Friedland said in an interview with Business Day on Monday.
His comments come as business and the government wrestle with the ANC’s National Health Insurance (NHI) Act, signed into law by President Cyril Ramaphosa shortly before the general election in May. The act is facing three separate legal challenges — from medical schemes, trade union Solidarity and medical specialists — even as ANC health minister Aaron Motsoaledi presses ahead with laying the groundwork to implement it.
At the same time Ramaphosa is considering a confidential alternative proposal on NHI from Business Unity SA (Busa), an umbrella body for organised business.
‘Stark choice’
“We face a stark choice between the low road and the high road. The low road is that various parties go to court and this process is stuck in (court) for five to 10 years and the high road is that our president galvanises the resources, the know-how and the infrastructure of the private sector together with the public sector, and we find a solution to SA’s healthcare issues,” said Friedland.
“There are solutions that allow us to begin that process now: that’s the choice that faces us,” he said shortly after the company released its annual results for the year to September 30.
Netcare had extensive experience contracting with the UK’s National Health Service (NHS) which could be brought to bear in SA, said Friedland, emphasising that such deals would have to be commercially viable. The company secured several five year contracts from the UK government in the early 2000s to provide ophthalmic and orthopaedic surgical procedures to NHS patients. It contracted with the NHS again after it acquired a stake in the UK hospital business General Healthcare Group in 2006.
Friedland’s proposal was welcomed by Business for SA (B4SA), a business organisation formed during the Covid-19 pandemic that includes the Black Business Council and Busa.
“Our approach to addressing the challenges in the sector is to maximise the scope for business-government collaboration,” said B4SA chair Martin Kingston.
“The current partnership approach is founded on alignment between the parties where the private sector can assist and play a role. That has yet to emerge with health,” he said.
Netcare reported a 11.9% increase in headline earnings per share (HEPS), which rose to 113.7c, despite what it described as a challenging market due to low economic growth, high inflation and a flat medical scheme market. HEPS is the primary profit measure used by management, as it strips out certain one-off items.
Revenue rose 6.3% to R25.2bn, while earnings before interest, tax, depreciation and amortisation (ebitda) were 12.6% higher at R4.49bn. Growth was driven by operational efficiencies and lower strategic costs.
Netcare, which operates 49 acute hospitals and 14 mental health hospitals, reported a modest 0.3% increase in paid patient days in its core hospital and emergency services segment, which rose to 2.46-million paid patient days. Full week occupancy in its acute hospitals improved to 64.3% compared with 63.5% last year.
The stabilisation of the electricity supply from state-owned utility Eskom led to a marked reduction in diesel costs, which fell to R47m compared with R124m last year, but these savings were offset by higher electricity costs, COO Keith Gibson said in a presentation to investors.
In line with its capital allocation strategy of returning excess cash to shareholders, Netcare executed a share buyback scheme and acquired 60.4-million shares at an average price of 1,193c, or a total cost of R722m during the period under review.
The company declared a final dividend of 40c per share, making a total dividend of 70c, up 7.7% on last year.
Update: November 25 2024
This story has been updated with new information.
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