Jacques du Plessis Managing Director – Hospitals

South African review - Hospital operating review

Our business

Netcare’s Hospital division owns and manages 54 private hospitals across South Africa (SA). Four of these hospitals are Public Private Partnerships (PPPs), with two PPP hospitals opening during the year in Port Alfred and Grahamstown in the Eastern Cape.

The Hospital division comprises a mix of full-service, high-tech hospitals and same-day surgical units. The division has 8 766 registered beds representing approximately 29% of the private healthcare market and some 7% of total registered beds in SA, including state facilities.

The division’s service offering is tailored towards providing specialised care, which is reflected in 16% of our total beds being intensive care (ICU) and high care (HC). The division has 22 catheterisation laboratories, three electrophysiology (EP) laboratories, 40 accident and emergency units, 35 hospitals offering maternity services, 47 retail and 52 institutional pharmacies, seven transplant units, 35 specialised rape crisis centres and four breast milk reserve centres.

The year in review

The Hospital division posted excellent results, recording a 4,9% increase in patient days with an average weekday occupancy of 72%. Our two new hospitals, Blaauwberg and Alberlito, increased occupancy to over 60%. Length of stay has increased by 1.2% while a balance between surgical and medical admissions has been maintained.

Lifestyle diseases, longevity and the positive impact of medical technology continue to drive growth in healthcare spending. It is evident that the demand for private healthcare remains strong, fuelled by an increase in the medically insured population.

Total admissions increased by 4.3%. In particular, deliveries in our maternity units increased and more cases were completed in our catherisation laboratories. Retail scripts dispensed from our hospital pharmacies increased by 5.8%. Over the year we also grew our Netcare retail pharmacies in Woolworths stores to three.

Netcare has 85% of its business under fee for service (FFS) contracts and 15% under alternative reimbursement models (ARM). We continue to develop protocols and guidelines to ensure quality outcomes at the lowest possible cost. On average, generic medication comprises 63% (2008: 56%) of substitutable medicines dispensed in our hospitals, and this increased to 67% at year-end. The use of generics helps us maintain quality healthcare at lower cost. Standardisation of surgical products also continued to yield good results.

A significant cost driver remains the shortage of skilled nursing and pharmacy staff, a risk we mitigate by operating our own training colleges. During 2009, we had more than 3 300 learners at our five campuses, studying various basic, post-basic and short nursing programmes. 1 295 nurses graduated during the year. We also trained 44 interns and more than 60 pharmacist assistants, at basic and post-basic level. In addition, 334 of our management staff completed Management Development Programmes. Surgical Technology and Clinical Engineering Technical Assistant learners were also trained. We aim to take in over 3 500 learners during the 2010 financial year.

Working capital was well managed with debtors’ days at record levels. Stock was kept at minimum levels throughout the year. The centralisation of the creditors function also contributed to the improved working capital management.

We continued to invest in our existing infrastructure to meet increasing demand. During the period under review 137 beds and facilities were added at the following hospitals:

• Akasia Hospital – 16 ICU beds and a 30-bed medical ward;
• Sunninghill Hospital – a six-bed trauma ICU which is still under construction;
• Port Alfred Hospital – a five-bed ICU and 26 general ward beds;
• Settlers Hospital – eight ICU beds and 24 general ward beds;
• Kuils River Hospital – 10 HC beds, which required forfeiting seven general ward beds;
• Pelonomi Hospital – six ICU beds and 13 general ward beds;
• Blaauwberg Hospital – equipped two new theatres;
• Linksfield Hospital – a catherisation laboratory;
• Greenacres Hospital – a trauma unit and a major upgrade in the ICU, HC and pharmacy;
• Kingsway Hospital – an oncology and a day ward; and
• N1 City Hospital – a neuro interventional theatre with MRI and CT scan capabilities.

Construction on the new 125-bed private hospital in Waterfall, Midrand, together with our empowerment partners, commenced in September 2009.

An additional R282 million was spent on new and replacement medical equipment, including a new EP lab at Milpark Hospital, and R99 million was spent on plant and equipment. Our ability to avoid utility interruptions was strengthened further with emergency generator plants upgraded to dual redundancy at The Bay, Umhlanga and Greenacres hospitals. We also significantly increased water storage capacity in the division to cope with extended water interruptions.

At Netcare we are passionate about people and value our staff’s perceptions about their work environment. Our annual independent staff survey showed that 74,1% of staff are proud to work for Netcare, further evident in lower staff turnover and absenteeism, and in Netcare being awarded fifth place in the Large Companies category of the 2009 Deloitte Best Company to Work For Survey.

We are also passionate about ensuring that each patient is satisfied with their experience at a Netcare facility. As a result, we have introduced a new patient satisfaction scorecard in our hospitals and emergency units, with more than 25 000 questionnaires completed by our patients on a monthly basis. All aspects of our service are rated, from admission to nursing care. Our most recent patient satisfaction score was at 88%.

Netcare’s Caregiver of the Month programme culminates in our Night of the Stars award ceremony, where staff members that have shown exceptional care to their patients are honoured. The event highlights the commitment of Netcare’s staff to our core values. This year the three regional winners each received a Mazda 2 car.

We continued to support our network of expert doctors who have selected a Netcare facility as their treatment centre of choice. This year we welcomed 131 new physicians, of which 68% are from surgical disciplines. In living our value of participation all specialists with privileges are requested to complete an extensive independent questionnaire, and this year our services were rated 75.3% satisfactory.

Netcare continues to maintain the highest standards of patient care and safety. A further six hospitals received international ISO 9001:2000 accreditation through the United Kingdom-based CHKS Healthcare Accreditation and Quality Unit. This brings the total number of accredited hospitals to 16.

Each hospital has an established Physician Advisory Board comprising specialists from each discipline. They are responsible for ensuring that doctors adhere to the Professional Code of Conduct and uphold the high standards of clinical governance that Netcare subscribes to.

We have made significant strides in managing our environmental impact. Various solar powered technologies have been implemented at our facilities. We are also tracking and managing utility consumption in terms of volume, based on carbon footprint parameters and revenue. Our focus on environmental reporting was recognised by the UK-based Carbon Disclosure Project (CDP) with a ranking of 14th place on the South African CDP Carbon Leadership Index.

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Prospects

A number of hospitals continue to experience pressure on available capacity, specifically in the KwaZulu-Natal region. As a result, applications to expand capacity have been submitted to the relevant Provincial Departments of Health.

Approval has been received for the following facilities:

• 31 beds at Linmed – five paediatric, 11 adult surgical and 15 day ward beds;
• Seven beds at Sunninghill – all HC beds;
• 35 beds at Kingsway – 23 medical and 12 surgical beds;
• 12 beds at Kuils River – five paediatric, three maternity and four HC beds;
• 12 beds at N1 City – four paediatric and eight ICU beds;
• 14 beds at Parklands – all general ward beds;
• Six beds at St Anne’s – all HC beds;
• 20 beds at The Bay – all medical beds;
• Ten beds at Linkwood – all maternity beds; and
• 57 beds at Mulbarton – eight neo-natal, 20 maternity and 29 adult beds.

The SAP Enterprise Resource Planning pilot at Sunninghill Hospital is nearing completion and we plan to roll out SAP to more hospitals during 2010. The SAP software platform provides centralised functionality and standardisation resulting in efficiencies.

SA hospitals Hospital Location beds Gauteng   5 289 Akasia Hospital Pretoria 162 Bell Street Hospital Krugersdorp 50 Bougainville Hospital Pretoria 60 Bronkhorstspruit Hospital Bronkhorstspruit 43 Clinton Hospital Alberton 165 Constantia Day Clinic1 Roodepoort 24 Femina Hospital Pretoria 134 Garden City Hospital Johannesburg 363 Jakaranda Hospital Pretoria 130 Krugersdorp Hospital Krugersdorp 310 Linksfield Hospital Johannesburg 283 Linkwood Hospital2 Johannesburg 33 Linmed Hospital Benoni 172 Milpark Hospital Johannesburg 342 Montana Private Hospital Pretoria 162 Moot Hospital Pretoria 92 Mulbarton Hospital Alberton 155 N17 Hospital Springs 170 Netcare Rehabilitation Hospital Johannesburg 110 Olivedale Hospital2 Johannesburg 265 Optiklin Eye Hospital Benoni 14 Optimed Clinic3 Alberton 12 Park Lane Hospital Johannesburg 204 Pretoria East Hospital Pretoria 358 Protea Day Hospital Krugersdorp 10 Rand Hospital Johannesburg 151 Rosebank Hospital Johannesburg 135 Sunninghill Hospital Johannesburg 258 Sunward Park Hospital Boksburg 214 Union Hospital Alberton 222 Unitas Hospital Centurion 469 Wierda Park Hospital4 Centurion 17 North West 163 Ferncrest Hospital2 Rustenburg 163 Free State 362 Kroon Hospital Kroonstad 80 Pelonomi Private Hospital3,5 Bloemfontein 87 Universitas Private Hospital3,5 Bloemfontein 127 Vaalpark Hospital Sasolburg 68 KwaZulu-Natal 1 618 Alberlito Hospital Ballito 119 Kingsway Hospital Amanzimtoti 145 Kokstad Private Hospital3,5 Kokstad 36 Margate Hospital Margate 85 Parklands Hospital Durban 193 St Anne’s Hospital Pietermaritzburg 200 St Augustine’s Hospital Durban 418 The Bay Hospital Richards Bay 198 Umhlanga Hospital Umhlanga 224 Eastern Cape 487 Cuyler Hospital Uitenhage 124 Greenacres Hospital Port Elizabeth 300 Port Alfred Hospital3,5 Port Alfred 31 Settlers Hospital3,5 Grahamstown 32 Western Cape 847 Blaauwberg Hospital Blaauwberg 100 Christiaan Barnard Memorial Hospital Cape Town 244 Kuils River Hospital Kuils River 154 N1 City Hospital2 Cape Town 225 UCT Private Academic Hospital Cape Town 124 Total 8 766 1 Interest in joint venture. 2 Leased property. 3 Investment in associate. 4 Hospital closed. 5 Managed hospital.

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