Life Healthcare diversifying to counter global regulatory pressures

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Private hospital group Life Healthcare is pressing ahead with its strategy of diversifying out of its traditional hospital base, in a bid to counter global trends of increasing regulatory constraints and pricing pressures, says CEO Shrey Viranna in a Business Day report. Big funders, be they governments or private insurers, are also pushing for more patients to be treated as cheaper day-cases or on an out-patient basis, putting further pressure on hospital margins. “Regulatory pressures are a reality in every country,” Viranna is quoted in the report as saying.

Life Healthcare began investing in non-acute services several years ago, ranging from rehabilitation to diagnostics, and these “general services” are now the fastest growing part of the South African business, said Viranna. The group was treating more day-cases in its existing hospital facilities, rather than launching new stand-alone day hospitals, as it was more cost effective, he said.

Given the lack of growth in South Africa’s medical schemes market, which has stagnated at around 8.9m beneficiaries, Life Healthcare is exploring opportunities to provide more services to patients who pay out of their own pockets, said Viranna. For example, the group recently launched the MyLife Clinic at Campus Square in Auckland Park, which offers patients a consultation and basic medication for R300, with a guaranteed turnaround time of no more than half an hour. If the pilot project proves to be a good business, Life Healthcare will roll it out across South Africa, he said.

Viranna said in the report that Life Healthcare was exploring several prospective acquisitions both in South Africa and offshore, but declined to be drawn on the companies it was eyeing. “It all depends where there is a good return on investment,” he said.

The group was also exploring the scope for public-private partnerships with the government, which was more amenable to the idea than it had previously been. There has been only a handful of public-private partnership in healthcare to date, but the health department recently partnered with private sector pharmacies to distribute chronic medicines.

The report says Life Healthcare operates 66 healthcare facilities in South Africa. It has invested R2.2bn in the Polish hospital group Scanmed, and owns the UK-based diagnostic group Alliance Medical.

Business Day report

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