Health for Africa

Finweek English Edition - - Business Strategy - BRUCE WHIT­FIELD

“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.

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