Health for Africa
“WE COULD BE BIGGER than Discovery in two years,” says Dr Peter Botha, CEO of Liberty Health – who then revises his view to the official company line of 1,5m customers over five years. “That’s our official target.” Clearly, Botha has bigger ambitions than the more conservative internal marker suggests.
African markets are firmly in his sights. There’s the Standard Bank tie-up, which will be useful, but Botha’s confident the technology platform and back office processing capacity Liberty acquired earlier this year will see the business expand beyond this continent.
Rather than running a traditional Discovery/Fedhealth-style medical aid, Botha has developed a healthcare management business centred on the technology platform bought this year from Cape-based medical IT firm Neil Harvey & Associates. It also bought V-Med, a firm that provides back office services crucial to enable what he refers to as the unit’s “plug and play” IT-based system. So far Liberty has invested R200m in setting up the operation.
The idea is that a single back office can support multiple clients across different jurisdictions, cheaply and efficiently. Ideal clients include Government departments, private companies and even medical schemes and private health insurers. “You don’t want to impose South African costs on those markets,” says Botha. “We sell to a risk pool that deals with its own members.”
Many of the environments in which Liberty either is beginning to work or already operates have existing healthcare subsidies. For example, in Nigeria there’s compulsory healthcare cover through its National Health Insurance Fund (NHIF), where employees stump up 7% of their salaries and the employer a further 7%. Regulatory environments are also less restrictive than they are in SA, where Liberty does have its own branded medical scheme. However, it’s a defensive strategy designed to service its own clients rather than an attempt at this stage to grab market share from the incumbents.
African countries have more of an insurance-based approach to healthcare, which means it’s possible to manage the risk and take profit from it rather than simply make profit from administration. Nigeria offers the opportunity that, if Liberty can penetrate a growing market using the system, it should be able to extract substantial risk profits.