Our material matters

COVID-19 continues to impact economies and societies world-wide and, given our international footprint, our operations were at the frontline in combatting the effects of the pandemic. We continue to prioritise the safety and health of our nurses, clinicians, employees and patients. Our response has been informed by best practice local and international guidelines and procedures to safeguard the Group’s sustainability.

COVID-19 has introduced additional operational costs for all of our operations, including the costs of PPE, absenteeism (due to sickness or isolation). We have introduced a mandatory vaccination policy across the Group, starting with our corporate head office and then rolling out to our clinical facilities during 2022.

• Availability of nursing and key human resources
• Introduction of new laws and regulations
• Best practice guidelines and protocols
• Availability of personal protective equipment for frontline workers
• Capacity within our hospitals and clinics and the impact this has on elective cases
• Rate of infection, timing of the COVID-19 peak and recurring outbreaks
• Economic impact and government support
• Unpredictability of COVID-19 waves
• Fear and anxiety

COVID-19 continues to impact economies and societies world-wide and, given our international footprint, our operations were at the frontline in combatting the effects of the pandemic. We continue to prioritise the safety and health of our nurses, clinicians, employees and patients. Our response has been informed by best practice local and international guidelines and procedures to safeguard the Group’s sustainability.

• High rate of unemployment in South Africa, especially among the youth
• Inadequate police and other law enforcement capabilities

The shortages in critical skills lead to an increase in salary costs 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 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. Healthcare funder decisions affect our revenue and market share. Private healthcare funders reimburse c.95.0% (2020: 95.1%) of our hospital division's revenue in southern Africa. Internationally, a large proportion of revenue is derived from public funders, ranging between 40% to 90% in the different geographies in which we operate.

The increased cost of care remains a reality across the regions in which we operate. Providing efficient and affordable care options 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.

Healthcare funders

• Prevalence of designated service provider network agreements
  • Significant exposure to medical schemes in South Africa
  • In 2021 73.2% of our acute hospital revenue comes from schemes administered by Discovery Health Medical Scheme, the Government Employees Medical Scheme (GEMS) and Medscheme (2020: 74.0%)
• Increased bargaining power of funders due to consolidation
• Viability of agreements with public funders internationally
• Affordability of private healthcare in southern Africa, and increasing wealth inequality

Cost of 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 salary 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 (including the impact of Brexit)
• Limited training and skills development initiatives, sponsorships and bursaries
• Leveraging skills and transfer of knowledge from our international operations to grow our imaging presence in southern Africa

Maintaining and improving the quality of care is 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 region 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 form a primary source of revenue in our international operations.

• Regulatory challenges for brownfield and greenfield expansion in southern Africa
• Regulatory reforms that impact on our revenue and profitability – or on our ability to attract and retain employees
• Changes in healthcare tariffs
• Reductions or delays in payments from governments
• National Health Insurance (NHI) implementation plans and timeline in South Africa

The healthcare industry is highly regulated and, while this is often necessary, it does impact 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, conduct of operations, 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 South Africa and GDPR data privacy regulations internationally
• The impact of Brexit on our UK and European operations particularly in terms of cross border employee recruitment and procurement

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 disclosure of confidential 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