RYK VAN NIEKERK: The Life Healthcare group is one of the three largest healthcare providers in the country. Its operations in southern Africa comprise around 66 facilities. It also has a presence in 10 European countries. Just to put the company in perspective, it has a market capitalization of around R34 billion. It is bigger than Netcare, which has a market capitalization of R23 billion, but it is smaller than Mediclinic, the largest player in the local market, which has a market capitalization of just over R50 billion.
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During the financial year to the end of September, the group’s revenue increased by 13% to R21.7 billion. Normalized earnings nearly doubled to R1.6 billion and the board declared a final dividend of 25 cents per share.
Peter Wharton-Hood joins me now. He’s the CEO. Peter, thank you very much for joining me. It has been a very strong rebound from last year’s performance, although last year was truly a disaster for the healthcare and medical industry. How do these results compare to your performance in 2019?
PETER WHARTON-HOOD: Yes, it is definitely a rebound from where we were last year, as you well pointed out. I guess what we are saying is that 2019 was a normal year before the arrival of Covid. In some of our dimensions, we are still behind that normal operating capacity, more specifically in the domain of elective surgery minutes; We managed to get back to where we were in 2020, but we are still behind where we were in 2019.
At Alliance Medical, on the other hand, our international operations are ahead of where we were in 2019. Therefore, it is a diversified organization, depending on what aspects of the business you really want to analyze. But there is still work to be done to catch up with where we were in 2019.
RYK VAN NIEKERK: Did you anticipate last year that this pandemic would financially affect you and many of your other healthcare providers to this extent?
PETER WHARTON-HOOD: It would be unfair for me to make a comment. I got into the seat only on September 1, so I was really only here for one month of the 2020 reporting year. When we looked at the lessons learned as a corporation during the course of the first wave of Covid, there were certainly substantial lessons that the corporation incorporated on how he responded more agilely to Covid.
Just to refresh the memories, in the first wave of Covid, the moment Covid hit one of the hospitals, all the theater complexes across the country were closed. In the second wave of Covid there was a much more precise response, where the actual instances of Covid were evaluated per hospital. Therefore, there was not this single mass shutdown across the entire network.
As we got smarter, our response became more in tune with how individual hospitals had been affected, and in doing so, revenues did not die off as quickly.
RYK VAN NIEKERK: We currently seem to be on hiatus. The pandemic appears to be under control. There is concern that we may see a fourth wave. How do you see it in the future, especially during this Christmas season?
PETER WHARTON-HOOD: From a financial perspective, the Life Healthcare team has actually planned a wave of Covid in the second half of December, which is not far off, and then another that will emerge at the end of the second quarter of next year.
When talking about a pause, if you look at the number of reported cases, the number of cases in the country has doubled in the last three days. So those are still small numbers, just under 600; But three or four days ago the number of new cases was 300. So yes, a bit of calm, but we have planned another wave and we are still worried.
RYK VAN NIEKERK: Have you noticed a significant difference in the way people react to the virus and in the number of people entering your facility since our vaccination program gained some momentum?
PETER WHARTON-HOOD: Absolutely dramatic. With the heartbreaking events in our organization, we lost 48 of our staff and seven of our physicians before the vaccination program took place. After vaccinations, we tragically lost three of our staff members, but all three were not vaccinated. Therefore, we have clinical evidence, and candid experience as a corporation, showing that vaccination significantly reduces the risk of Covid-19 in our facilities.
Based on that clinical evidence, as you saw in our updated report today, we have instituted a mandatory vaccination policy at the central office as of December 1, based on our experience and the clinical evidence that has been brought in.
RYK VAN NIEKERK: Why did you make it mandatory? Has there been any resistance to vaccination from staff?
PETER WHARTON-HOOD: Having lost the lives of 48 of our staff, and as a responsible employer, we want and are obligated to provide a safe work environment. We know, and it has been clinically proven, that vaccinated people are protected. They are safer. And in doing so, by providing a safe workplace, we have made it mandatory within the head office complement of approximately 700 employees. We have an 87% vaccination rate as of today, with around 50 of our staff objecting to the vaccine. We have run an extensive consultation process over many weeks, with individual commitments to our entire staff, providing factual information, and doctors available to explain the process. And we are listening to the objections.
RYK VAN NIEKERK: Finally, one of the greatest human rights tragedies in South Africa’s democratic history was the Life Esidimeni tragedy, where 144 people died when they were removed from their facilities and placed in cheaper facilities. This happened five years ago, but it still bears your name. How do you feel about that? Has there been any reaction on your part over the past five years to try to get to the bottom of what happened?
PETER WHARTON-HOOD: We have welcomed the inquiry. We have supported you from the beginning and provided all the information when requested. We need this research to reach the level of responsibility that is required and to bring closure for bereaved families. This is truly tragic and we want accountability to be established clearly and transparently, and we have supported it from the beginning.
RYK VAN NIEKERK: Peter, thank you very much for your time. That was Peter Wharton-Hood, CEO of Life Healthcare.