| Mon 12 May 2003, 10:32 | | Afrox Healthcare casts its net wider |
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KwaZulu-Natal Correspondent
DURBAN Afrox Healthcare MD Mike Flemming said at the weekend that the group would grow organically through international expansions, public private partnerships and by broadening its doctor network system.
The country's top three healthcare groups, Netcare, Afrox Healthcare and Mediclinic account for about 85% of SA's private healthcare, which Flemming said limited growth opportunities and forced companies to seek new areas of investment.
Afrox Healthcare, a subsidiary of African Oxygen (Afrox), released its interim results two weeks ago.
In terms of the commitment to growth, Flemming said the group had been short-listed as a preferential candidate for 11 diagnostic treatment centres being established by the UK National Health System (NHS). It was also exploring opportunities in the United Arab Emirates.
The development in the UK follows agreements already in place with NHS, which allow for international patient referrals between SA and the UK.
The £10m diagnostic treatment centres would be developed on a build, operate and transfer principle for the NHS, with the successful bidder holding a fiveyear contract for the facility. In terms of the contract, the NHS would pay the successful bidder for a minimum number of medical procedures annually, while securing to buy-back the buildings after the contract period.
This "relatively risk-free" investment offered Afrox Healthcare significant opportunities to grow its international market, while also exposing SA doctors to opportunities in UK hospitals.
Considering SA, Flemming said the issue of delivering affordable healthcare remained essential and the proposed new government medical aid scheme opened opportunities for another 10-million previously-uninsured people to enter the private healthcare sector.
Although the government encouraged its employees to attend state hospitals, in reality the private healthcare sector was more equipped to handle the volume growth. However, there were substantial opportunities for public private partnerships, as the government concentrated its spending on primary healthcare.
The private healthcare industry spent R40bn annually on seven-million patients, while the state spent R50bn on 40-million individuals. This highlighted the levels of under-utilisation among private healthcare facilities.
"The private healthcare industry has the social responsibility to manage the health of SA's employed population," he said.
Management was also seeking ways of boosting its black economic empowerment, but was not currently considering selling off a strategic stake.
Flemming admitted the group was "playing catch-up" with rival Netcare in the emergency room sector. He said the group had taken a strategic decision against owning infrastructure like ambulances, when Netcare established its 911 facility. This had pushed Netcare ahead in accessing emergency room cases.
He also believed there were significant opportunities for rallying support among doctors for a central medical centre similar to the Medicross centre facilities.
Flemming recognised the growing shortage of trained nursing and professional staff and said the group was developing incentive programmes that allowed staff to work internationally to earn hard currency, but also encouraged them to return to SA after the contract period.
Afrox Healthcare was establishing sponsorship links with medical institutions and registrars to access the stream of new doctors entering the healthcare system. The group has consequently reduced its staff turnover from 18% to 10%.
Afrox Healthcare achieved a 27% increase in operating profit to R250m in the six months to March, benefiting from strong organic growth, operating efficiencies and synergy benefits realised from the acquisitions made last year.
Revenue grew 18% to R2,15bn with Flemming crediting 11% of the growth to higher prices.
May 12 2003 06:10:12:000AM Nicola Jenvey Business Day 1st Edition
Monday
12 May 2003
