The financial duress consumers are under raises the risk that they could cancel medical aid membership, putting the likes of hospital group Netcare under increased pressure.
This week, in an interview following the release of results for the year ended September 30, Netcare CEO Richard Friedland said while the group hasn't yet seen people cancelling their medical aid memberships, it is a "very real concern going forward" as people come under increasing pressure due to the economic fallout from the Covid pandemic.
Friedland said there were "very significant macroeconomic pressures in SA" that had been exacerbated by the recent rating downgrades by Moody's and Fitch.
He said there was a possibility that people would "buy down" and seek more affordable medical aid options as a first step before they considered losing medical aid altogether.
"I know we haven't seen a loss in medical aid membership, but it is a very real concern going forward and that is why we have launched our innovative products programme NetcarePlus, which is aimed at increasing affordability inclusivity in this market for people who are employed but uninsured, and that is a very important strategic initiative," said Friedland.
In August the group launched NetcarePlus GP Vouchers as the first of several products to be launched under the NetcarePlus brand.
Innovative products division MD Teshlin Akaloo said at the time the NetcarePlus GP Voucher product offered competitively priced prepaid vouchers that are redeemable for GP consultations.
Sarah le Roux, investment analyst for Kagiso Asset Management, said that for the private health-care sector the "potential decline in private medical scheme membership as a result of job losses and financial stress is a key metric to keep an eye on".
Hannes van den Berg, a portfolio manager at Ninety One, agreed, saying this could also potentially affect elective surgery numbers in the future. In the past, health care was regarded as a defensive sector because people had to go for elective surgical procedures regardless of the performance of the economy. But the Covid-19 pandemic had changed that with the unprecedented halt in elective surgery during the hard lockdown, and people remaining cautious about going into hospitals for procedures.
The pandemic took its toll on Netcare, with the group estimating it resulted in a loss of about R3.7bn in revenue and R2.3bn in earnings before interest, tax, depreciation and amortisation. Profit after tax fell 78.1% to R515m from R2.35bn.
But in spite of these difficulties, Friedland said the group had taken a "fundamental, principled decision not to retrench anyone".
"We believe that in our economy and country, job preservation is critically important. There is good economic evidence to suggest that preserving jobs is far more important than creating new jobs."
Friedland said Netcare staff on the frontline in the fight against Covid-19 had made "huge sacrifices over the past seven to eight months and ... we certainly are not going to be deserting them".
In 2019, Netcare cut 110 staff, mostly through voluntary retrenchment.
Netcare says its hospital volumes are improving and are at about 86% of what they were last year. Friedland expects hospital volumes to return to more normal levels by the second half of the next financial year.
The group is also getting better at treating Covid-19 patients, he said.
Friedland said that at the start of the pandemic a typical hospital stay for a Covid-19 patient was 22 days, but this was now an average of about seven days.
"Fortunately, as a country we came into the global pandemic slightly later than others so we were able to glean valuable lessons from the global experience and the fact that treatment had evolved since the early part and it wasn't necessary to put everyone onto a ventilator. There were other forms of equally effective oxygen therapy such as high-flow nasal oxygenation," he said.
Friedland said it also became clear that Covid-19 was not just a respiratory virus and that it caused clotting in patients. This resulted in anticoagulants becoming increasingly important in treatment, as well as steroids.
He said he hoped SA would not experience a second Covid-19 wave, but this depends on how people behave over the festive season.
One glimmer of light is that while the Covid-19 second wave in Europe is much bigger than the first one, the hospitalisation rates are much lower. This would indicate that the virus is "somewhat attenuated or weakened", Friedland said.
"We are also seeing lower admission rates in SA."
But the Eastern Cape, which is experiencing a much higher second spike in cases than the rest of the country, is of concern.
"We have approximately just over 180 Covid-positive patients in our hospitals [in the Eastern Cape] and we have got probably in order of about 40 persons undergoing investigations," said Friedland.
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