Efficiency – Southern Africa

CLINICAL EFFICIENCY

Global healthcare systems are under pressure to contain the cost of healthcare delivery. We believe Life Healthcare can play a pivotal role within this context, and we remain committed to providing affordable healthcare to our communities.

We remain focused on driving clinical efficiencies throughout the Group as part of our commitment. This year, the COVID-19 pandemic necessitated rapidly introducing new ways of working. This was particularly relevant to our pharmacies, and we had to revisit how we operated to ensure the sustainable supply of pharmaceutical services to our hospitals. For example, we divided our pharmacy employees into two teams who worked separate shifts as part of our response. As a result, we reduced our reliance on locum staff and, consequently, improved cost efficiencies.

We focused on the appropriate utilisation of pharmaceutical products as it related to COVID-19 patients, but our overall focus on DOMINO – our internal programme aimed at driving clinical excellence and efficiency across our operations – was a challenge. Furthermore, the changing operating environment meant that new opportunities were not taken or immediately relevant to our business.

BUSINESS OPTIMISATION

Following the success of our DOMINO programme last year, in 2020 we integrated the programme throughout the business to further drive efficiencies. Initiatives within procurement and cost of sales achieved excellent results during H1. However, the sustainability of these initiatives – and the associated savings – were affected in H2 mainly due to capacity constraints as our employees and doctors focused on managing the pandemic. We are well positioned to recommence our planned initiatives with renewed focus, and will continue to engage funders and clinicians to improve efficiency and reduce the cost of delivery.

Our nursing excellence efficiency drive accomplished exceptional results during a very challenging year. We continue to collaborate and co-create a new clinical practice environment that supports our nurses and achieves the highest level of patient care in the safest and most optimal way.

Focus within business optimisation has been broadened to include support functions, and we are looking at ways to optimally allocate resources while modernising processes. Our approach to the non-clinical areas is also an important part of ensuring we manage costs and drive efficiencies in the business, thereby contributing to our focus on sustainability and providing excellent, cost effective care for our patients.

PROCUREMENT

Procurement is central to ensuring we source cost-effective products and services, and simultaneously deliver on our quality and clinical outcomes to drive efficiencies throughout the Group.

The unexpected advent of COVID-19 unfortunately disrupted our strategic sourcing plan for the year. In response, the sourcing team pivoted and refocused its efforts on procuring essential PPE from both local and international sources to guarantee our healthcare professionals, employees and patients’ safety. The cost of products was negatively impacted by the pandemic, volatile exchange rates and a struggling economy. Despite these challenges, Life Healthcare contained net basket price increases within CPI levels. Our strategic relationships with vendors assisted in mitigating the impact.

We remain committed to improving our preferential procurement levels. Pleasingly, we saw a 12% increase in preferential procurement spend on level 1 to 3 vendors in 2020. We collaborated with key vendors during the year to drive strategies and initiatives to improve their B-BBEE levels, and directed procurement spend to these vendors. Furthermore, we prioritised sourcing PPE from black-owned vendors.

Level (%)	2020		2019	2018
Level 1 to 3 B-BBEE spend	50		38	31
Level 4 to 6 B-BBEE spend	15		20	20
Level 7 and 8 spend	13		14	17
Non-B-BBEE spend	18		24	28
Exempt	4		4	4

INFORMATION TECHNOLOGY

In 2020, we built on our outcomes from the previous year to deliver reliable operational performance and bolster our risk management and risk treatment. During the first half of the financial year, we tracked well on delivery of strategic projects and governance maturity to restore a robust service culture. Our efforts focused on governance, risk, business continuity, compliance, supplier management, incident management and cyber-security improvements. As we entered the second half of the financial year, we experienced turbulence owing to the global COVID-19 pandemic and its associated challenges. This directed our attention on enabling our workforce to be able to operate safely, which included connectivity and security enhancements as well as business operations innovations to maintain reliable patient engagement. The pandemic continues to impact planning and delivery for the IT functions across the Group with greater attention given to business continuity and quality client services.

A serious cyber-security incident in the southern Africa business, further added to the difficult operating environment. The Group digital strategy was finalised and approved by the Board in February 2020. This has provided direction to the detailed plans for technology, cyber-security and business solutions. An immediate focus is on operational excellence and standardisation of governance and cyber-posture. Given the dramatic business landscape changes in 2020, the group business strategy is in the process of review.

Cyber-incident

This year, we fell victim to an attack targeting some of our IT systems, a disappointing act by criminals during a time when we are all working tirelessly and collectively to fight the COVID-19 pandemic. We acted immediately on becoming aware of the incident – which affected admissions systems, business processing systems and email servers – and took proactive steps to contain the attack. As a precautionary measure, the affected systems were taken offline for investigation and, where necessary, remediation. Furthermore, we appointed external cyber-security experts and forensic teams to supplement our internal resources.

Our first priority was to do the right thing for our patients while maintaining a high degree of freedom to manoeuvre through the crisis. Patients are our foremost priority in line with our purpose of making life better. Importantly, our patient care systems were not affected, and we continued to provide quality healthcare across all our hospitals and clinics.

We have an experienced and committed team of IT security experts who actively and vigilantly ensure our systems are as secure as possible. Unfortunately, criminals continue to develop newer and more sophisticated ways of attacking systems. We have learnt some valuable lessons from this incident, and will continue to increase our security measures and behavioural protocols.

IT focus in 2021

Going forward, the Group will continue its IT strategic projects and governance maturity to develop and improve local competencies and effectiveness. Our focus areas for 2020 will be on governance, risk, business continuity, compliance, supplier management, incident management and cyber-security improvements.

Through the Group IT steering committee, we aim to restore our overall system stability, strengthen programme management capability and embed our newly developed digital strategy throughout the business. Furthermore, we aim to establish a Group-wide enterprise architecture capability to standardise and rationalise systems. We will further introduce a new system to classify, categorise, monitor, track and manage service events and incidents. This will increase oversight over vendors and suppliers and allow us to review service level metrics and measurements to identify improvements or efficiencies.

Our focus for 2021 is primarily on standardising capabilities and performance across the Group, while executing our strategic initiatives to embed and retain value for our business and our customers. We will sustain efforts to protect our systems, networks, and data from digital attacks by enhancing a sustainable, reliable and mature group-wide cyber-security capability that has an immediate focus on southern Africa. We will continue to optimise governance, structures and resource planning and implement a standardised IT risk optimisation strategy in partnership with Group Risk. The stability and modernisation of our systems and networks remains a high priority for the year, together with the enhancement of our strategic project delivery to measure and optimise value realisation for the current digital project.