Business model

Our business model drives our value creation process, leveraging the six capitals to direct our inputs and activities towards sustainable and positive outputs and outcomes for our stakeholders.

Capitals we use to create value for our stakeholders

FINANCIAL CAPITAL

Our pool of funds – comprising equity capital from shareholders, short and long-term loans from capital providers, together with profits generated from business activities and funds reinvested in our Group – allows us to operate a sustainable business.

MANUFACTURED CAPITAL

Our ability to procure, deliver and provide quality services to our patients depend on state-of-the-art facilities, maintained infrastructure (including information technology (IT)), and appropriate medical equipment.

INTELLECTUAL CAPITAL

Our intangibles, comprising service offerings, governance and quality standards, provide the Group’s competitive advantage and sets us apart from our competitors.

HUMAN CAPITAL

Our employees leverage their skills, experience and knowledge to implement our strategy. They deliver the products and services our patients need, thereby creating value for stakeholders in the short, medium and long term.

SOCIAL AND RELATIONSHIP CAPITAL

We cultivate long-term relationships with patients, employees, doctors, suppliers, business partners, governments and other key stakeholders. We do this by leveraging our reputation and brand.

NATURAL CAPITAL

Renewable and non-renewable natural resources are used in the delivery of quality services to our patients.

Our key activities

We are an international service provider, providing healthcare according to three general tiers of healthcare, which are underpinned by our strategy.

Primary care, the broadest scope of healthcare, where we act as the first point of consultation for all patients in the healthcare systems, including patients who want to maintain optimal health, as well as those patients with all manner of acute and chronic physical, mental and social health issues.

Secondary, or acute, care, which comprises the necessary treatment by healthcare professionals for a brief but serious illness, injury or other health condition. It includes skilled attendance during childbirth, intensive care and medical imaging services.

Tertiary care, which consists of specialised consultative healthcare, usually for inpatients and those patients referred from a primary or secondary health care professional. This includes cancer management, neurosurgery, cardiac surgery, and other complex medical and surgical interventions.

Growth

Efficiency

Quality

Sustainability

Our strategy is explained herein. How we performed against our strategy is detailed herein. Our 2025 Group strategy is detailed herein.

Our outputs

We deliver high-quality, cost-effective care to our patients by offering the following services:

Southern Africa

Acute hospital business

Hospitals – including ICUs, high-care units, operating theatres, emergency units, maternity units, cardiac units and paediatric units

Complementary services

Acute rehabilitation, mental health, renal dialysis and oncology

Life Esidimeni

Long-term chronic mental healthcare, frail care rehabilitation, step-down care, correctional services, primary healthcare and substance abuse recovery programmes

Life Employee Health Solutions

On-site occupational and primary healthcare services and employee wellness programmes

Alliance Medical

Diagnostic imaging services, with a focus on MRI, CT, PET-CT, radiopharmacy and product development

Scanmed

Broad-spectrum healthcare, including medical consultations, primary healthcare, diagnostics, medical transportation, inpatient hospitalisation, analytical tests and home visits

Outcomes

Patient experience and clinical outcomes

Increased revenue, normalised EBITDA and dividends

Existing infrastructure repurposed, integrated and optimised

Efficiencies embedded throughout the business

Qualified, experienced and motivated employees

Contributing to a healthier society through partnerships

Unavoidable impact on the environment because of our activities

For more information in our Group structure and services.

Managing trade-offs that influence our value creation

Balancing short-term performance with long-term sustainability

This year, we made the decision to upgrade and refurbish our cyclotrons, which are used to manufacture the radiopharmaceuticals critical for PET-CT procedures. This led to a shortage in supply in 2019 which, in turn, negatively impacted the number of procedures we could perform. However, we believe that this short-term investment will be beneficial for Life Healthcare in the long term through improved production capacity, allowing us to keep up with increased demand.

Related strategic pillars:

Balancing our diverse portfolio

We must continually balance our goal of maintaining a diverse portfolio with actual business performance. While the divestment of an operation has a negative impact in the short term, it also allows us to recycle capital to be invested in better opportunities. In 2018, we made the decision to divest our stake in Max Healthcare due to business underperformance. Despite India being a promising economy with good growth rates, our decision was further informed by continuous regulatory changes. The sale was concluded during the 2019 financial year, and we believe that our decision is in line with our growth strategy and financial targets.

During 2019, we also made the decision to explore strategic options to potentially exit our Poland-based operations.

Related strategic pillars:

Investing in future growth opportunities

While we strive to deliver strong financial returns, despite the tough environment, we understand that we must balance short-term results with long-term growth. To this end, we made the decision to pursue a variety of growth initiatives, including investigating entrance to the imaging market in South Africa, investing in new outpatient models, and investing in Life Molecular Imaging's product development business during the 2020 financial year.

While these initiatives require a sizeable upfront investment, we believe that in the long term our decision will allow us to deliver on our strategy to offer an integrated healthcare model in southern Africa, and a leading diagnostic imaging service internationally.

Related strategic pillars: