Tonny Mafu: Business Report
THE number of South Africans with access to private hospitals could double from the current 7 million, according to Network Healthcare Holdings (Netcare). The figure would be boosted by the growing number of high-income earners and as low-income medical aid schemes entered the market and the government introduced initiatives to extend access to health to more people. Netcare chief executive Richard Friedland said private hospitals earned 85 percent of revenue from clients who were covered medical aid members.
He added that the Government Employees' Medical Scheme (Gems), a programme meant to provide medical insurance for government employees at affordable rates, was very attractive to the private hospital industry. A report by Citigroup estimated that the medical aid membership base would grow 13 percent over two years as a result of Gems. This is expected to be the major driver for the private healthcare providers. Gems was estimated to have 75 000 members at the end of last year. It was expected to reach 200 000 by the middle of this year.
The Citigroup report said it was likely that the government would legislate for larger industrial companies to follow up on Gems, which could add about 450 000 members through state-owned institutions such as the SA Revenue Service, transport group Transnet and power utility Eskom.
The advent of low-income medical schemes (Lims) could also add to the number of people accessing private healthcare providers. While the current minimum monthly premium on conventional medical aid schemes is estimated at between R700 and R1 000, the introduction of Lims would drive this down to about R220. Sandra Nyathela, an analyst at Metropolitan, said that if the Lims were modelled on Gems, millions of people could access private healthcare.
Friedland expected the proportion of spending on private healthcare to grow. He said studies in the US had shown that as people earned more, they spent more on private healthcare providers. In South Africa, private hospitals would be late beneficiaries of recent economic growth, Friedland said. Statistics by the Bureau for Economic Research at Stellenbosch University have shown that the emerging "black diamonds" market had spending power of R130 billion. This was growing at 50 percent a year. But Nyathela said emerging consumers might not spend more on healthcare, as they might rank healthcare spend low on their list of priorities.