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Mediclinic takes a pragmatic position on NHI, says CEO

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South Africa’s biggest private hospital group, Mediclinic International, is taking a pragmatic view on the government’s plans for universal health coverage, saying it poses no immediate threat to the business.

According to a Business Day report, this view stands in contrast to research commissioned by the Hospital Association of SA (Hasa) earlier this year on the potential effect of National Health Insurance (NHI), predicting there could be extensive job losses if the government introduced price regulation and cut hospital tariffs. The first piece of enabling legislation for the policy, the NHI Bill, is before parliament.

“The Bill will take quite a few years to implement. It is too early to say in the long term how it will work, but in the short term we believe it will not really impact our business. We don’t see it even in the medium term as a huge threat,” CEO Ronnie van der Merwe is quoted in the report as saying.

Mediclinic supports the principles of universal health coverage and hopes to collaborate with the government to provide services under the NHI, said van der Merwe as the company released its results for the six months to 30 September.

Analysts had a muted reaction to the results, says a Moneyweb report. UBS analyst Kane Slutzkin noted that Mediclinic is faced with regulation hurdles in all its operating regions:
South Africa – the Competition Commission and proposed National Health Insurance (NHI); Switzerland – potential lower subsidies from the state; and UAE – potential implementation of a diagnostic-related group system.

The report says Mediclinic’s Swiss hospital group, Hirslanden, seems to have finally adapted to the regulatory changes related to out-patient tariff reductions and out-migration of care. Mediclinic is currently investigating further expansion in Switzerland via a collaboration with Medbase, the largest primary healthcare specialist in the country.

Although NHI has been touted in some circles as a threat to private healthcare providers, van der Merwe said he does not see it as a threat currently. “There are different scenarios and the most important takeaway here is that we are working constructively with the health authorities to find solutions for the challenges that face our healthcare system,” he said.

Meanwhile, the performance of Netcare’s recently acquired mental health business shows just how much strain South Africans are under, says a Moneyweb report. The first full year of integration with Akeso Clinics, the group of 12 dedicated mental healthcare facilities acquired by Netcare last year, saw the hospital provider’s overall revenue climb 4.2% to R21.6bn in the year to 30 September.

CEO Dr Richard Friedland said it was a particularly difficult and challenging year, not only for the group but for the country as a whole. “We are seeing a strong demand for mental health care at our Akeso clinics. We need to find a better way to deal with societal problems caused by ever-increasing stress levels as well as substance and alcohol abuse,” he says.

Earlier this year, Steph Erasmus, healthcare and chemicals analyst at Avior, pointed out that of the three healthcare providers (Mediclinic, Netcare and Life Healthcare), the Netcare balance sheet looked (pardon the pun) the healthiest. Netcare’s chief financial officer, Kevin Gibson, attributed the healthy balance sheet too tight management of the cost base and healthy gearing levels.

Business Day report

Moneyweb report

Moneyweb report

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