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Netcare revenue up 11.5%; issues final dividend

‘Would you believe that this idea of Covid spreading on surfaces has been proven to be incorrect?’: Dr Richard Friedland – CEO, Netcare.

FIFI PETERS: Well, dividends are a thing of the present again at Netcare. This after the private hospital group reinstated its interim dividend of 34 cents in the six months to September – that as the group swung to a profit in the period from a loss previously, despite the fact that we did see the deadly Delta variant which brought some of its stiffest lockdowns, and also some of the toughest restrictions that we have seen since 2020 when the pandemic first broke out.

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We have Netcare CEO Dr Richard Friedland joining the market update for more. Richard, it is good to catch up with you again, sir. [The fact] that you are paying a dividend – can this be read as signalling that the worst threat from a Covid-19 perspective is behind you?

RICHARD FRIEDLAND: Well, we certainly hope it’s behind us. But Covid has humbled us all, making sure that we don’t prognosticate too far in advance. The textbook hasn’t been written on Covid and so we’re cautiously optimistic.

The reason we paid a dividend is we are hugely cash-generative. We were able to retire debt and reduce our debt levels. Our debt-to-Ebitda is now sitting at previous levels of 1.7; our working capital was particularly good and our dividend policy has always been to return anywhere between 50% and 70% of earnings to shareholders. In this instance we returned 50%.

FIFI PETERS: Revenues are also up quite strongly – 13% in the period. What services were you able to conduct this time around that you weren’t able to do at the onset of the pandemic because of most of your beds being allocated to treating Covid-19 patients?

RICHARD FRIEDLAND: Correct, Fifi. At the beginning of the pandemic and wave one, 80% of our beds were allocated and dedicated towards Covid; some 62% in the second wave, and just about 50% in the third wave.

So we have seen a pleasing return of elective surgery and non-Covid activity – and long may that last. But again, it all depends on the various scenarios around Covid into the new year.

FIFI PETERS: What’s equipment looking like? I remember in the beginning there was a shortage of PPE and ventilators. How is supply looking presently?

RICHARD FRIEDLAND: Well, interestingly enough, Fifi, we’ve certainly got enough supplies and would you believe that this idea of Covid spreading on surfaces or from fomite spread has been proven to be incorrect? We can probably argue the billion spent on PPE was probably not necessary. The most important thing to prevent Covid is wearing a mask and potentially a visor in hospital. All of these space suits were probably less effective – we know that only in hindsight. And then obviously the vaccine is the most effective. So the whole way we’re treating Covid and approaching it has changed over the last 18 months.

FIFI PETERS: Just on the vaccine, talk to us about the situation in your hospitals in terms of the vaccinations that you’re administering. But let’s talk about booster shots now – how Netcare is preparing for that.

RICHARD FRIEDLAND: Well firstly, over 85% of our staff are vaccinated and we want to ramp that up even more. Clearly for those who are not wanting to have a vaccine we’ve got to really understand what that’s about and engage with them, and we’re currently doing that. I think boosters of the Covid vaccine will become the norm as we try and move from a pandemic state of disaster and these terrible waves into an endemic state where, very much like the flu virus, you get it every year and, if you want to be vaccinated, there’s a vaccine available. So I think that boosters are here to stay, but that’s a positive thing.

FIFI PETERS: Another challenge during the pandemic, Richard, was obviously the shortage of staff and those that were in hospitals, the fact that they were so stretched because of the lack of capacity. What’s the situation around staffing looking like now?

RICHARD FRIEDLAND: Well, Fifi, you raise a very important point. I think there’s generally a skill shortage in our country and it’s exacerbated in the healthcare environment because our government has changed the curriculum around training, and have not accredited private facilities. We are now training a third of the number of nurses we did three to five years ago. We were training 3 500 nurses; we are [now] training just over 1 000. So there’s an endemic shortage of nurses. I would argue that the vaccine has helped enormously in that people aren’t getting sick any more and having to quarantine, so that’s helping us.

FIFI PETERS: But the fourth wave? I was reading an article before the show began – I think we’re looking at 800 or so cases registered in the past 24 hours, and it’s indicative that the fourth wave is here. How is Netcare prepared for this?

RICHARD FRIEDLAND: Well, we’ve learned a lot of lessons and we are prepared. I would argue that all of the cases we’re seeing in our hospitals at the moment are from patients who are not vaccinated. So if you get a vaccine, it’s not going to prevent you getting Covid, but it’s certainly going to prevent you getting the severe form, which requires hospitalisation – and potentially causes death.

So all of our cases currently in our ICUs and high care are those of patients who have not been vaccinated. I think that’s the key message here. People, we all need to get out there and make sure we are vaccinated and get out boosters.

FIFI PETERS: I think no better mouth to come from than that of a doctor, sir. But we’ll leave it there. That was Netcare CEO Dr Richard Friedland unpacking the numbers and just emphasising the importance of getting your jab.

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