Material matters

The shortages in critical skills lead to high wage increases which, in turn, can impact the affordability of care. Furthermore, this could also affect the level of quality care provided to our patients. Employee retention is crucial for the future growth of Life Healthcare.

• Competition for specialised and scarce skills
• Increases in salaries and wages exceeding inflation
• The potential impact of industrial action in South Africa
• Talent management, succession planning, development and training

Healthcare funders have a significant influence on patients’ accessibility to healthcare. This directly impacts our revenue and market share. Healthcare funders reimburse 95.1% of our hospital division’s revenue in southern Africa (2019: 95.1%). Internationally, a large proportion of revenue is derived from public funders, ranging between 40% to 85% in the different geographies in which we operate.

• Prevalence of DSP network agreements
  • Significant exposure to medical schemes in South Africa administered by Discovery Health and the Government Employees Medical Scheme (GEMS) in South Africa, comprising approximately 52% (2019: 49%) of our southern Africa hospital division’s turnover
• Increased bargaining power of funders due to consolidation
• Viability of agreements with public funders internationally
• Affordability of private medical insurance in southern Africa, coupled with increasing wealth inequality

The increased cost of care remains a reality across the regions in which we operate. Providing efficient value-based care is crucial in enabling us to achieve our mission of improving the lives of people through the delivery of high-quality yet cost-effective care.

• Costs of resources, materials and services to maintain quality of care
• Fluctuating exchange rates
• Need to import necessities, such as surgical consumables and medical equipment
• Pressures on healthcare funders to contain costs
• Specialised and critical skills shortages and labour costs
• Alignment between employee levels and occupancies in our facilities
• Partnerships with medical professionals

The limited availability of skilled health professionals, including doctors, pharmacists, specialist and registered nurses, as well as ICU nurses, continues to be a concern globally. The skills provided by these specialists are a key driver of the Group’s future growth across southern Africa and internationally.

• Highly competitive skills market
• Immigration regulations and labour-related agreements
• Brexit
• The ability of people to work across borders
• Limited training and skills development initiatives, sponsorships and bursaries
• Leveraging skills and transfer of knowledge from our international operations to grow our presence in southern Africa

Maintaining and improving the quality of care is inextricably linked to our core values. It is also a crucial part of building strong and mutually beneficial relationships with our stakeholders, which is one of the ways in which we protect our reputation.

• Standards and practices recommended by governments and other regulators
• Group policies, including clinical quality procedures and frameworks
• Environmental, health and safety requirements
• Technological innovation
• Shortages in specialised skilled personnel

Each business division is critical to delivering on our strategy and growth ambitions. We leverage our intellectual capital across the Group to support the expansion of our footprint.

• Political and socio-economic circumstances in each area where we operate
• Demand for healthcare services
• Strength and leadership of management teams
• Competitive environment of each market
• Investment decisions made by management and the Board

The governments in the regions where we operate are among our key stakeholders who have significant influence over our business, and also form a primary source of revenue in our international operations.

• Political and socio-economic circumstances in each area where we operate
• Requirements for brownfield and greenfield expansion in southern Africa
• Regulatory reforms and the impact on our revenue and profitability
• Changes in healthcare tariffs
• Reductions or delays in payments from governments

The healthcare industry is highly regulated and, while this is often necessary, it does have a bearing on our cost of care and growth. We fully support regulators’ intentions, but the scale and pace of change in our regulatory landscape remains unprecedented, placing an unavoidable burden on the Group. We protect our reputation and licence to operate by complying with all applicable regulations.

• Regulations around licensing, operations conduct, security of medical records, occupational health and safety, quality standards and certain categories of pricing
• Maintaining the security of our medical records
• Compliance with occupational health and safety, and quality standards
• Potential impacts of the HMI, NHI and Medical Schemes Amendment Bill on our South Africa operations
• Compliance with POPIA in southern Africa and GDPR data privacy regulations internationally
• The potential impact of Brexit on our UK and European operations

Cyber-crime is increasing globally, and as a healthcare provider, we are particularly at risk. Data breaches come in the form of external and internal attacks, resulting in the disruption of services and infringement of confi dential information. With the adoption of work-from-home policies, extra vigilance and awareness are required.

• COVID-19 and working-from-home
• Globalisation and geopolitics
• Vulnerabilities in IT infrastructure
• Lack of awareness and knowledge of cyber-threats within the organisation