Ripple effect of jobs pressure on medical schemes

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The poor performance of medical schemes has put pressure on payments made to providers such as Life Healthcare. Business Day reports that the group’s share price has plunged 22.45% in the past six months and has been in decline for the past three weeks.

Gryphon Asset Managers analyst Casperus Treunicht said this was because pressure in formal employment was negatively affecting medical schemes, which in turn reduced payments from the insured pool to healthcare providers. “We know that Discovery and Bonitas are doing this and now we are also hearing rumours coming from the GEMS (Government Employees Medical Scheme),” he said.

According to the report, Council of Medical Schemes data show there was a 0.06% decrease in the number of beneficiaries in schemes between 2014 and 2015. In the same period, scheme expenditure on private hospitals increased 9.36%.

The report says all healthcare stocks have performed dismally in the past six months, and analysts do not foresee a turnaround for at least another year. Even though Life Healthcare made acquisitions overseas, the local operation (70%) is depressing earnings.

Business Day report

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