Private hospital group Life Healthcare expects to take a profit hit from delays to elective surgeries, saying that the COVID-19 pandemic has already cost it R240m in foregone revenue during its half year to end-March. Business Day reports that the group also faces higher costs due to virus-containment efforts, saying it is holding on to its dividends in expectation the effect of the pandemic will worsen in its second half.
Private hospital groups in South Africa had already been under pressure before COVID-19, due to a lack of growth in medical aid members, and due to pricing power moving to a few large medical aids, according to Aeon Investment Managers chief investment officer Asief Mohamed. COVID-19 had not only reduced the number of elective surgeries, but lockdown measures and the banning of liquor sales had reduced the number of trauma admissions for all hospitals, he said.
“The return on invested capital for hospitals has been poor before COVID-19,” said Mohamed. “It is unlikely that the prospects will improve unless economic growth picks up on a sustainable basis,” he said.
Life Healthcare said in the report that it has frozen non-essential appointments, is re-deploying staff, and has taken measures to try to offset the sharp decline in occupancies.
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