Life Health­care goes holis­tic

SA hos­pi­tal group moves into com­ple­men­tary ser­vices across mul­ti­ple ter­ri­to­ries to po­si­tion for in­dus­try changes

Financial Mail - - SPECIAL REPORT -

Life Health­care's tran­si­tion from a pri­mary hos­pi­tal group into a di­ver­si­fied in­ter­na­tional health­care provider is gain­ing new mo­men­tum un­der group CEO Shrey Vi­ranna.

The sale of a 49.7% stake in hos­pi­tal chain Max Health­care in In­dia for R4.3bn to global in­vest­ment firm Kohlberg Kravis Roberts was an­nounced this month, see­ing SA’S third-largest health firm off­load a stake it has held for the past six years.

The move is part of a con­certed ef­fort to re­fo­cus Life Health­care into growth ar­eas that in­clude com­ple­men­tary ser­vices, di­ag­nos­tics and an­a­lyt­ics.

“The view we’ve taken is that SA is our core, it’s an emerg­ing mar­ket, it's a pre­dom­i­nantly in­sured emerg­ing mar­ket. In­dia is a very dif­fer­ent model,” says Vi­ranna. The pre­dom­i­nantly cash-based and reg­u­la­tory-heavy mar­ket in In­dia held lit­tle at­trac­tion over time.

“A lot of the global trends sug­gest that an acute hos­pi­tal in its cur­rent model may not have the same growth tra­jec­tory — not to sug­gest that this is not a growth en­vi­ron­ment, but it does not have the same rate of growth as com­ple­men­tary ser­vices, di­ag­nos­tics, broader health­care ser­vices and an­a­lyt­ics.

“For our growth as­pi­ra­tions, we’ve paused and said SA needs to be ex­panded from a hos­pi­tal group into a health­care provider, an in­te­grated sys­tem. Be­yond that we should look much more at ser­vices and di­ag­nos­tics as op­posed to acute beds,” he says.

Jo­han­nes­burg-based Life Health­care has ac­quired a set of di­ag­nos­tic busi­nesses span­ning Western Europe and East­ern Europe through Poland, which Vi­ranna re­gards as a launch­pad for di­ag­nos­tics into the broader Euro­pean ju­ris­dic­tion. “You al­most end up with a dual strat­egy which is in­te­grated health­care provider in SA and di­ag­nos­tics or health ser­vices busi­ness else­where.”

Its foot­print in Poland and the UK is through Pol­ish hos­pi­tal chain Scan­med, which it ac­quired for R2.2bn, and di­ag­nos­tics group Al­liance Med­i­cal, for which it paid R13.9bn.

In SA Life Health­care boasts 65 fa­cil­i­ties which in­clude Life Entabeni Hos­pi­tal (Dur­ban), Life Four­ways Hos­pi­tal (Jo­han­nes­burg) and Life Vin­cent Pal­lotti Hos­pi­tal (Cape Town). It op­er­ates in 14 coun­tries glob­ally. The group has 2,700 spe­cial­ists and about 20,000 em­ploy­ees (in­clud­ing nurses) in


Vi­ranna says in­ter­na­tion­ally there is “deep in­vest­ment” into di­ag­nos­tics. But this is not yet the case in SA. Part of the group’s di­ver­si­fi­ca­tion strat­egy in­cludes look­ing into other out­pa­tient mod­els and pri­mary health­care mod­els.

“His­tor­i­cally we took a view which was not nec­es­sar­ily purist but rather fo­cused on be­ing a hos­pi­tal group. How­ever, in the past few years there has been a de­lib­er­ate ex­pan­sion into other as­pects that broaden from be­ing a hos­pi­tal group to be­ing an in­ter­na­tional di­ver­si­fied health­care provider: com­ple­men­tary ser­vices, men­tal health, re­nal re­ha­bil­i­ta­tion and on­col­ogy,” he says.

“When you step back from it and you ask, in a few years, what will we have, it would be a rel­a­tively com­pre­hen­sive set of ser­vices that al­lows us to say for any one of our pa­tients — and not just the pa­tient as we de­fine it to­day, as we talk about broad­en­ing ac­cess to new seg­ments of pa­tients — we can pro­vide care to you in a very holis­tic way.”

In a sense Life Health­care’s model of the fu­ture will dove­tail with the broader gov­ern­ment ob­jec­tive to pro­vide ac­cess to qual­ity health­care to all cit­i­zens, through the Na­tional Health In­sur­ance.

“We are in a very sober way quite ex­cited about the op­por­tu­ni­ties that it presents for us.”

An in­quiry into the health­care mar­ket by the Com­pe­ti­tion Com­mis­sion, which will also in­form the na­tional ob­jec­tives, has found that the health­care is con­cen­trated in the hands of a few play­ers.

Vi­ranna says Life Health­care is not op­posed to the emer­gence of new en­trants into the mar­ket. “If any­thing, I think it’s good for the in­dus­try. I re­ally do be­lieve that. Even if you take a trans­for­ma­tion view. As long as it’s done in a way that al­lows for good, sus­tain­able eco­nom­ics for those com­pa­nies, for those new hos­pi­tal groups. There isn’t a pro­tec­tion­ist or a fear­based per­spec­tive for us.

“We take a view that says if you think about first and fore­most what is right for the coun­try, this is clearly a good thing. If you sec­on­dar­ily take a view around grow­ing as a pri­vate hos­pi­tal group, we think these two are com­pletely aligned. These aren’t com­pet­ing ob­jec­tives — ac­tu­ally, this will be the ba­sis of our growth.”

What it means: The group is mov­ing be­yond hos­pi­tal ser­vices to be­come a com­plete health­care provider

Shrey Vi­ranna: SA health­care needs to be ex­panded into an in­te­grated sys­tem

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