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Life Healthcare reports strong profit growth

CEO Peter Wharton-Hood reflects on the group’s management of the Covid pandemic, its handling of vaccinations and vaccine resistance, lessons, further wave expectations, and accountability for the Life Esidimeni tragedy.

RYK VAN NIEKERK: The Life Healthcare group is one of the three largest healthcare providers in the country. Its Southern African operations comprise around 66 facilities. It also has a presence in 10 European countries. Just to put the company into perspective, it has a market capitalisation of around R34 billion. It is larger than Netcare, which has a market cap of R23 billion, but is smaller than Mediclinic, the biggest player in the local market, which has a market cap of just north of R50 billion.

During the financial year to the end of September, the group’s revenues rose by 13% to R21.7 billion. Normalised earnings nearly doubled to R1.6 billion and the board declared a final dividend of 25c/share.

Peter Wharton-Hood joins me now. He’s the chief executive. Peter, thank you so much for joining me. It’s been a very strong rebound from last year’s performance, although last year was really a bit of a disaster for the medical and the healthcare industry. How do these results compare with your 2019 performance?

PETER WHARTON-HOOD: Yes, it is definitely a rebound from where we were last year, as you correctly pointed out. I guess what we’re saying is 2019 was a normal year before the advent of Covid. Across certain of our dimensions we are still behind that normal operating capacity. More specifically in the elective-surgery theatre-minutes domain, we’ve managed to get back to where we were in 2020, but we’re still behind where we were in 2019.

In Alliance Medical on the other hand, our international operations are ahead of where we were in 2019. So it’s a diversified organisation, depending on which aspects of the business you want to really look at. But there’s still work to do to catch up to where we were in 2019.

RYK VAN NIEKERK: Did you anticipate last year that this pandemic would in financial terms affect you and many of the other healthcare providers to this extent?

PETER WHARTON-HOOD: It would be unfair for me to comment. I stepped into the seat only on September 1, so I was really here for only one month of the 2020 reporting year. When we look at the lessons learned as a corporation during the course of Covid wave one, there were certainly substantial lessons that the corporation incorporated into how it then on a more agile basis responded to Covid.

Just to refresh the memories, in Covid wave one the minute Covid hit one of the hospitals, all the theatre complexes across the whole country were shut.

In Covid wave two there was a much more precise response, where the actual Covid instances on a per-hospital basis were evaluated. Therefore there wasn’t this massive once-off shutdown across the entire network.

As we got smarter, our response became more in tune with the way the individual hospitals had been affected, and in so doing revenue didn’t switch off as quickly.

RYK VAN NIEKERK: Currently we seem to be in a bit of a lull. The pandemic seems to be under control. There are concerns that we may see a fourth wave. How do you see it going forward, especially over this holiday season?

PETER WHARTON-HOOD: From a financial perspective, the team at Life Healthcare has actually planned for a Covid wave in the latter half of December – that’s not too far away – and then another one arising at the back end of the second quarter of next year.

When one talks about a lull, if you look at the reported number of cases, the number of cases in the country has doubled in the past three days. So those are still small numbers, just short of 600; but three or four days ago the number of new cases was 300. So yes, a little bit of a lull, but we have planned for another wave and we remain concerned.

RYK VAN NIEKERK: Have you seen a significant difference in the way people react to the virus and the number of people admitted to your facilities since our vaccination programme actually gained some momentum?

PETER WHARTON-HOOD: Absolutely dramatic. With the heart-breaking occurrences in our organisation – we lost 48 of our staff and seven of our doctors before the vaccination programme took place. Subsequent to the vaccinations, we tragically lost three of our staff members, but all three of those were unvaccinated. So we have clinical evidence – and heartfelt experience as a corporation – showing that vaccination significantly reduces the risk from 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 in head office from December 1, based on our experience and the clinical evidence that’s been led.

RYK VAN NIEKERK: Why did you make it mandatory? Has there been some resistance towards vaccination from staff?

PETER WHARTON-HOOD: Having lost the lives of 48 of our staff, and as a responsible employer, we want to and are obliged to provide a safe working environment. We do know – and it has been clinically proven – that vaccinated people are protected. They are safer. And in so doing, in providing a safe workplace, we have made it mandatory within the head office complement of about 700 employees. We have an 87% vaccination rate as of today, with around 50 of our staff objecting to the vaccine. We have undertaken an extensive consultation process over many weeks, with one-on-one engagements with all our staff, provision of factual information, and clinicians on hand to explain the process. And we are hearing the objections.

RYK VAN NIEKERK: Just lastly, 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 your facilities and placed at cheaper facilities. This happened five years ago, but it still carries your name. How do you feel about this? Has there been any reaction from your side over the past five years to try and get to the bottom of what happened?

PETER WHARTON-HOOD: We have absolutely welcomed the inquiry. We have supported it from the outset and provided all information as and when requested. We need this inquiry to reach the level of accountability that is required and get to closure for the bereaved families. This is indeed tragic and we want accountability established in a clear and transparent way – and have supported it from the outset.

RYK VAN NIEKERK: Peter, thank you so much for your time. That was Peter Wharton-Hood, the chief executive of Life Healthcare.

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