Chairman’s review
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Key to Netcare’s success has been its ability to be innovative and agile in responding to healthcare needs. We recognise it cannot be business as usual; we are already exploring new avenues for healthcare delivery. |
| Jerry Vilakazi |
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Netcare recorded robust results for the year ending 30 September 2009. In the face of recessionary pressure in both the Group’s markets, this performance reflected continued demand for healthcare and its defensive nature.
However, the harsh economic conditions certainly had an impact on healthcare dynamics, with a shift in patient profiles and patterns of expenditure. In the United Kingdom (UK), for example, we saw an increase in National Health Scheme (NHS) patients and a decline in the self-pay market. In this context, the Group’s results demonstrate a sound operational basis and an ability to be proactive and remain flexible in challenging times.
Besides the economic turbulence, this is a seminal time for healthcare in general. Many countries across the world are tackling healthcare reform. In the USA, healthcare reform was a cornerstone of Barack Obama’s election campaign. In China, a long-awaited plan to provide fair and affordable healthcare for all 1.3 billion of its citizens was unveiled earlier in 2009. In Germany, the healthcare debate continues, attracting strong interest and opinions from a wide range of stakeholders. With reform also taking place in the UK and South Africa (SA), it is evident that healthcare globally is at a crossroads.
Notwithstanding these shifts, the Group remains focused on creating value for shareholders, delivering attractive returns and good corporate citizenship through efficient use of our assets, human capital and intellectual property. With our focus on delivering innovative healthcare solutions and broadening access to affordable quality healthcare, Netcare stands ready to serve both our patients and our shareholders as we move towards a new horizon in healthcare.
National Health Insurance for SA
SA’s public healthcare services are under severe pressure. In 2005, statistics showed that 64.2% of the population used public healthcare services, 20.9% used private primary healthcare on a self-pay basis in addition to public hospitals, and 14.9% used private primary care and private hospitals through voluntary medical schemes. This indicates that the majority of our population does not have access to quality healthcare, hampering our ability to reach our full potential as a nation. It is clear the current model is unsustainable.
Recognising this, the South African government has prioritised National Health Insurance (NHI) as a pillar of healthcare reform. This complex undertaking is supported by a ten-point action programme and the appointment of the NHI Ministerial Advisory Committee. The committee is made up of sector experts with diverse backgrounds, and is tasked with advising the Minister on policy development, legislation and implementation of the NHI. We applaud the establishment of the committee and its broad representation, and will support its work in whatever way we can.
Key to Netcare’s success has been its ability to be innovative and agile in responding to healthcare needs. We recognise it cannot be business as usual; we are already exploring new avenues for healthcare delivery, to help ensure the successful implementation of the NHI.
Avenues of access in SA healthcare
We have developed our primary care offering, which services patients who previously did not have access to quality primary care. Prime Cure has given us the expertise and experience to play a broader role in national initiatives aimed at meeting the health-related Millennium Development Goals through preventive primary care.
We have shown that Public Private Partnership (PPP) models can be highly effective in dealing with healthcare challenges. We have moved beyond the traditional build-operate-and-transfer model to providing clinical services that assist the state to deliver on its mandate. PPPs offer short-term gains by expeditiously addressing inadequate healthcare delivery, while also providing sustainable access to quality healthcare over the longer term. The experience we have gained in the UK as a service provider to the NHS and in our groundbreaking PPP in Lesotho puts us in a strong position to partner effectively with the South African government. Growing this partnership will require bold steps from both parties, and for us will mean moving into new market areas. We are prepared to be bold to make real progress in our sector.
Many of the challenges in the sector relate to poor management of often limited resources. The government’s ten-point action programme focuses on revitalising infrastructure, overhauling the healthcare system and improving management and human resources planning and development. Netcare’s experience and resources in training and development stands us in good stead to make a meaningful contribution in developing capacity in management and operations, and realising efficiencies in public healthcare. Similarly, we can help to build and manage healthcare infrastructure. We will also consider opportunities to leverage off our experience, resources and willingness to partner the public sector, not only in SA but across Africa.
Our commitment to building an equitable healthcare sector in SA has to be seen in the context of the national transformation agenda. It is pleasing to note the steady progress Netcare has made in the normalisation of our business and broader South African society. This was again confirmed in our broad-based black economic empowerment score, verified by Empowerdex, which rose from 75.39 (out of 100) in 2008 to 77.98 in 2009.
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Improving performance in the UK
GHG has continued to strengthen its position as the leading private healthcare provider in the UK by broadening its geographical coverage through various acquisitions. It is noteworthy that close on 90% of the UK population now lives less than an hour away from one of our facilities. In the last year, the real benefits of this national coverage and scale were evident in the performance of our UK business.
The Netcare Group’s brand DNA of quality and transparency is evident in the UK, with more consultants choosing to work in BMI hospitals than any other independent provider. Furthermore, no less than 12 BMI hospitals were listed in the Nursing Times Top 100. GHG’s initiative to publish Quality Accounts, a year before they become mandatory, indicates reviewthe excellent patient satisfaction levels, clinical outcomes and rigorous management of infection control that has been achieved in all its facilities.
Looking forward
In SA, a positive development in the changing healthcare landscape has been government’s willingness to work more closely with the private sector. We welcome the new spirit of cooperation, shared responsibility and accountability. We commend government’s determination to find viable solutions to South Africa’s healthcare challenges, no matter how complex they may be.
More broadly, it is clear that only through harnessing our best efforts – finding common purpose, applying best practice, pooling our resources and optimising existing capacity – will we create a healthcare sector that meets the needs of all South Africans. Together we have the perspective, the skills and the experience to make access to quality healthcare in an equitable and integrated national health system a reality for all.
Our partners in GHG have formally notified Netcare of their intent to exercise their option to exit the business through a possible initial public offering and listing on the London Stock Exchange. We are confident this will be a positive development for Netcare. We will work closely with our partners to explore and facilitate this course of action according to the conditions set out in the partnership agreement.
Appreciation
My great appreciation goes to all our employees in SA and the UK for their incredible work and delivery of a robust set of results. Despite the difficult and uncertain economic environment, they have done the Group and its shareholders proud. I am personally humbled to be a part of this organisation.
On behalf of the Board, my thanks to Richard Friedland and his management team for their inspiring leadership. Vaughan Firman, the Chief Financial Officer has done outstanding work since assuming the role. I extend thanks to Sir Peter Gershon, the Chairman of GHG, for his stewardship of the GHG Board over the last year, and to the UK management team for their sterling work.
Ingrid Davis, the Group Pharmacy and Procurement Director will be leaving Netcare in December 2009 after 15 years of dedication, commitment and unwavering service. Ingrid has been instrumental in setting up and developing the Group’s pharmacy business. Our thanks go to Ingrid for her service and commitment to Netcare. Joel Wolpert retired as Group Company Secretary on 1 December 2009 and the Board expresses its appreciation for his contribution to the Group over the last 16 years.
To all our stakeholders, I extend my appreciation and that of the Board. Our determination and ability to explore new healthcare avenues in SA and the UK would not be possible without your ongoing support.
Jerry Vilakazi
Chairman
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