Optimism for the NHI
Netcare has been encouraged by the government working with the private sector over the National Health Insurance (NHI).
In May of this year, President Cyril Ramaphosa signed the NHI Bill into law.
The NHI is set to be a centralised national insurance fund, with the government buying healthcare services from providers in both the public and private sectors.
However, the law has also faced widespread controversy over its funding and constitutionality.
“Netcare has long recognised the need to address the deficiencies and inequities in healthcare access
and delivery in South Africa and remains fully committed to achieving Universal Health Coverage,” said the group in its latest results for the year ended 30 September 2024.
“However, there are genuine concerns regarding the feasibility and legality of the NHI Act.
“The Hospital Association of South Africa presented a proposal for enhanced healthcare access and delivery through a proven and phased solution of mandatory medical cover for the formally employed, and greater private-public collaboration to ensure system strengthening, along with joint efforts on human resource training initiatives.”
Netcare said that there are several immediate opportunities where the private sector can collaborate with the government to address critical healthcare gaps and demonstrate quick wins on the path to universal healthcare.
The HASA proposal would also alleviate the strain on public health resources and extend the public budget per capita, which would improve healthcare access for all South Africans.
In a written response to a parliamentary question, the Minister of Health, Dr Aaron Motsoaledi admitted that of the 3,092 public healthcare facilities inspected by the Office of Health Standards Compliance (OHSC) only 1,226 or 39.65% comply with the legislated standards.
“Netcare is encouraged by the government’s recent engagement with the private sector to discuss matters related to the NHI Act.
“The President requested Business Unity South Africa to submit specific proposals on solutions or issues of concern as a basis for further engagement.”
“We believe a collaborative partnership between the public and private sector is critical in finding
sustainable and affordable solutions aimed at achieving universal healthcare for all South Africans.”
Results
The group’s views on the NHI come following a decent financial performance, where revenue grew by 6.3% to R25.2 billion.
The group’s adjusted Headline Earnings per share also increased to 113.7 cents, while it increased its total dividend by 7.7% to 70.0 cents.
“The group reported a solid financial performance for FY 2024, successfully achieving key operational
and strategic goals. Notwithstanding a challenging macroeconomic and competitive landscape, steady
results were driven by resilient demand for private healthcare services,” said Netcare.
“While seasonal inconsistencies affected volumes in H1 2024, activity levels normalised in H2 2024, resulting in a 0.3% growth in total paid patient days (PPD) across acute and mental health services for the full year.”
Moreover, following several changes to the Netcare Board, as well as the ongoing transition in executive leadership, the recent launch of the final two phases of the Group’s strategy, and evolving NHI deliberations, the group has requested that Dr Richard Friedland extend his tenure as CEO.
This will ensure a smooth transition and handover.
Friedland was initially supposed to leave the group in September 2024 and enter early retirement.
The group has identified a preferred external candidate to succeed Friedland as group CEO. Further communication on this is expected to follow in due course.
The group’s salient features can be found below:
- 6.3% increase in Group revenue to R25,202 million
- 10.1% growth in normalised Group EBITDA, demonstrating strong operating leverage
- 60 basis point improvement in normalised Group EBITDA margin to 18.0%
- 7.6% increase in adjusted HEPS to 113.7 cents
- 1.2 times net debt to EBITDA unchanged
- R1.6 billion returned to shareholders in dividends and share buybacks
- 7.7% increase in total dividends to 70.0 cents
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