Changes in South Africa’s health-care system, such as the introduction of the National Health Insurance (NHI) scheme, would expand the market for medical schemes and private services in future as opposed to threatening the industry, private hospital group Mediclinic said yesterday.
The NHI “would not” have any significant effect on the private sector in the immediate future, the JSE-listed firm said. Instead, the recent decision by Finance Minister Pravin Gordhan to change the tax subsidy system to a tax credit system should make private health care more affordable for lower-income earners.
Mediclinic was eager to work with the public sector to reach the universal health-care coverage goal through the new health insurance scheme, which is in its pilot phase.
That given, the hospital group had budgeted R727 million for capital projects and new equipment at its southern African operations. Another R250m had been earmarked for the replacement of existing equipment and R274m for repairs and maintenance.
Mediclinic increased the number of its licensed hospital beds to 7 378 during the year under review from 7 103 in March 2011. This financial year, the number of licensed beds is expected to grow to 7 483.
This followed increased demand at the country’s three biggest private hospital groups, Netcare, Mediclinic and Life Healthcare.
Mediclinic Southern Africa increased the number of bed days sold by 3.3 percent in the year to March 2012, and the number of patients admitted to its hospitals grew 2.4 percent. This saw the revenue at the southern African operations increase by 9 percent to R9.42 billion, while the region’s contribution to normalised attributable income went up to R787m from R731m in 2011.
The group’s overall revenue rose 18 percent to R22bn. Normalised headline earnings rose by 12 percent to R1.211bn. Normalised headline earnings a share of R1.93 were 7 percent higher than the previous comparable period. Operating profit rose to R3.8bn from R3.4bn.
But Mediclinic’s debt also rose, to R24.8bn from R22.2bn in March 2011. This was mainly as a result of a change in the exchange rate between the rand and the Swiss franc.
“It is important to note that the foreign debt of the group’s Swiss and Middle Eastern operations, amounting to R21.1bn, is matched with foreign assets in the same currencies. The foreign debt also has no recourse to the southern African operations’ assets, as stipulated by the Reserve Bank as well as applicable financing arrangements,” the group said.
Jean Pierre Verster, an analyst at 36One Asset Management, said that from a revenue point of view, Mediclinic’s local operations performed less well than Life Healthcare’s, but slightly better than Netcare’s.
But what set the company back compared with both rivals was that more cost pressure led to a decrease in the earnings before interest, tax, depreciation, and amortisation (Ebitda) margin of the local operations, whereas the competitors increased their Ebitda margins.
“In addition, it would seem like they are experiencing issues as a result of regulatory changes in Switzerland.
“It’s ironic that when Netcare and Mediclinic made these offshore acquisitions investors were keen on developed market exposure,” Verster said.
Now it seemed Life Healthcare was in a better position as it did not have this exposure.
Mediclinic fell 2.98 percent to R37.40 on the JSE yesterday.