‘Fix staff crisis before NHI’

• Life Healthcare CEO says SA is short of 20,000 nurses and 13,000 doctors

SA’s second-biggest hospital group by market value, Life Healthcare, has urged the government to fix SA’s desperate shortage of healthcare professionals before it embarks on the sweeping financing reforms proposed in the National Health Insurance (NHI) Bill, which is now before parliament. SA is short of 20,000 nurses and 13,000 doctors, said Life Healthcare CEO Peter Wharton-Hood.

SA’s second-biggest hospital group by market value, Life Healthcare, has urged the government to fix SA’s desperate shortage of healthcare professionals before it embarks on the sweeping financing reforms proposed in the National Health Insurance Bill, which is now before parliament.

NHI is the government’s plan for achieving universal health coverage, which aims to ensure patients receive care that is free at the point of delivery, paid for by a central NHI Fund.

Life Healthcare CEO Peter Wharton-Hood said the company supports the philosophy of universal health coverage, but not the way the government plans to achieve it.

“The human resources problem needs to be solved, and it needs to be solved fast. Unless you have enough doctors and nurses, and capable managers, hospitals won’t function. The debate around financing is not worth having until the building blocks are in place,” he said on an investor call shortly after the company released its interim results for the six months to March 31.

SA is short of 20,000 nurses and 13,000 doctors, he said.

“There is no clear plan to close that gap. We [private hospitals] are denied the opportunity to train nurses the way we used to. Nurses are not even on the critical skills list,” he told Business Day after the call.

Life Healthcare is SA’s second-biggest private hospital group by value at R27.3bn, trailing Mediclinic International (R54.3bn) but bigger than Netcare (R21.3bn). It operates 66 healthcare facilities in Southern Africa and owns UK-based diagnostic company Alliance Medical Group (AMG) which provides imaging services in the UK, Ireland, Italy and northern Europe.

Life reported a 4.5% increase in group revenue to R13.5bn, as demand for its services rose against the background of the easing coronavirus pandemic.

Headline earnings per share (heps) fell 12.7% to 41.4c. This figure was affected by the disposal of its Polish hospital business, Scanmed, in March 2021, which added 6c the prior year’s heps, as well as an end to short-term Covid-19 contracts provided by AMG to governments in the UK and Italy.

Normalised group earnings before interest, tax, depreciation and amortisation (ebitda), a key metric that strips out one-off items, fell 1.9% to R2.37bn.

Wharton-Hood said the business has seen continued recovery in all its markets in the past six months.

In SA, hospital admission patterns have changed during the fourth and fifth, Omicrondriven, coronavirus waves, with fewer hospital admissions.

As a result, non-Covid-19 admissions for both surgical and medical cases increased, and there was an overall 2.1% increase in paid patient days, compared to 2021.

Hospital occupancy levels rose steadily in the second quarter, to reach a high of 66.5% in March and have nearly returned to prepandemic levels, Wharton-Hood said.

The SA business reported a 4.5% increase in revenue to R9.5bn and a 7.5% increase in normalised ebitda to R1.6bn.

During the period under review Life Healthcare began construction of a dual cyclotron facility in Gauteng under a joint venture with medical equipment company AXIM and bought the nonclinical imaging operations of East Coast Radiology (ECR) for R203m.

AMG benefited from strong demand from governments seeking to clear waiting lists that ballooned during the pandemic. Revenue rose 1.8% to R3.8bn, up from R3.7bn last year. Normalised ebitda fell 13.3% to R806m. AMG’s results were dented by a reduced tariff mix after its Covid-19 contracts ended, rising costs due to staff salaries and energy prices, and a 5% weakening of the euro against the pound.

Life declared a dividend of 15c per share, in line with an industrywide trend to resume distributions to shareholders as the uncertainty wrought by the pandemic recedes.

“It is a representation of our continued optimism in the company for the way ahead,” Wharton-Hood said.

The company scrapped dividends two years ago, and reinstituted them last November.

Life Healthcare’s share price gained the most in 12 weeks, up 2.28% to R18.82.

‘UNLESS YOU HAVE ENOUGH DOCTORS AND NURSES, AND CAPABLE MANAGERS, HOSPITALS WON’T FUNCTION’