Mediclinic has put a freeze on nonessential new hires and offered severance packages to save nearly R2bn by 2027 in a bet on AI to revolutionise its operations, becoming one of the first high-profile SA companies to stir up fears of machines displacing traditional roles.
Bertrand Levrat, COO of SA’s biggest private hospital group, told investors on Monday that while the group was in a sound financial position, the healthcare system was evolving, and to keep delivering high-quality care the company had to stay ahead of the changes.
The company has set a target of achieving $100m (or about R2bn) in annual savings to be delivered by 2027 as it wades into the unsettling waters of AI-driven automation to accelerate its objectives, said Levrat, who joined Mediclinic a year ago after overseeing operations at Switzerland’s largest university hospital since 2013.
“Our strategy which we are implementing requires a strong and lean organisation. That is the reason we have started thinking about and implementing a new operating model that will drive the company’s success,” Levrat said, speaking at an investor briefing of parent company Remgro, SA’s industrial heavyweight.
“We have put a freeze on all new recruitments in the group. This excludes nurses and doctors but [includes] all admin staff. In parallel, for SA-based corporate office people and shared services people, we have offered early retirement packages. And people [are] now in the process of accepting the packages, or not. These will enable us to reduce the administrative costs of the group.”
The company, which has about 20% market share in SA, is beefing up its radiology capabilities in SA and speeding up the deployment of AI across its operations, which it said would play a “big role” in operational excellence in the future.
“AI needs good data. So we are sorting out our data structure. Automation is well-defined end-to-end business processes and we are sorting that out,” group CEO Ronnie van der Merwe said. “We have put together a multidisciplinary team under ... a chief data officer.”
Some of the areas Mediclinic is deploying data in are bots, clinical coding and revenue cycle management — a move that will make traditional human roles redundant.
Reshaping industries
For years, the spectre of machines stealing jobs from humans loomed on the horizon. But in the past three to five years the meteoric rise of AI-powered systems has turned these fears into realities and is reshaping industries at warp speed.
In the briefing on Remgro’s underlying assets, Mediclinic said it had bought two radiology companies and aims to scale up its in-house capabilities.
“We run radiology services in the United Arab Emirates [UAE] and Switzerland quite efficiently. So, it’s only natural that we are starting to look at that in SA. The idea is to buy some of these practices and afterwards to start developing our own services,” Van der Merwe said.
“We don’t force anybody [to sell to us]. Sometimes they come to us and say, ‘Let’s talk’, and we discuss it with them. The ramp up will be incremental. It’s important for us to maintain good relationships with the doctor community, both in the radiology environment and others.”
Remgro expected “satisfying results” from its investment in Mediclinic Group, it said on Monday, with revenue growth of 5% in dollars, or 4% in constant currency terms and an adjusted earnings before interest, tax, depreciation and amortisation (ebitda) margin of about 15% compared with 14.7% a year ago.
In Switzerland, Swiss private hospital group Hirslanden expects Swiss franc revenue growth near 2% and an adjusted ebitda margin of about 13.5% from 13.4% before. Inpatient admissions were expected to increase 2%, it said.
Mediclinic Southern Africa expects revenue growth of about 7.5% in rand and an adjusted ebitda margin in line with the 18.2% of a year ago. Paid patient days are expected to increase 1%.
Mediclinic Middle East expects UAE dirham revenue growth of 5% and an adjusted ebitda margin of 15%. For the six months to December, Mediclinic contributed R152m to Remgro’s bottom line.
The Mediclinic group, which was founded by the Remgro group in the 1980s, operates 74 hospitals, five subacute hospitals, six mental health facilities, 20 day-case clinics and 28 outpatient clinics in SA, Namibia, Switzerland and the Middle East.
Mediclinic also holds a 29.9% interest in UK-based private healthcare group Spire Healthcare, which is listed on the London Stock Exchange.
Update: April 14 2025
This story has been updated with new information.
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