Quin­ton Zunga, CEO: RH Boph­elo

Destiny Man - - CONTENTS -

RH Boph­elo is SA’s first black-owned and man­aged health­care list­ing. What mes­sage does this send?

That there can be so­lu­tions out­side of the nor­mal in­cum­bents. The gov­ern­ment’s at a se­ri­ous cross­roads in achiev­ing good health­care for all. It lacks part­ners pre­pared to have much more pro­gres­sive en­gage­ments with it, so now there’s a bunch of fights and ev­ery­one’s un­happy. For us, it’s about trans­for­ma­tion and sup­port­ing a much big­ger pic­ture.

What num­bers are you sit­ting on?

Our un­listed port­fo­lio is R2,8 bil­lion and we want to grow that to R40 bil­lion. We’re not show­ing off yet, but we’ll get to that fig­ure: there are too many prob­lems [in the ex­ist­ing struc­ture] for us not to.

Where does RH Boph­elo fit into the RH Man­agers pri­vate eq­uity firm struc­ture?

RH Man­agers was formed in 2013 and RH Boph­elo, which listed in July 2017, is a newer listed fund, a per­ma­nent cap­i­tal ve­hi­cle. At the mo­ment, we’re build­ing new in­fra­struc­ture and con­sol­i­dat­ing ex­ist­ing in­fra­struc­ture un­der one um­brella. Be­cause we’re cap­i­tal-hun­gry, we’re look­ing at in­vestors with dif­fer­ent risk ap­petites, so we’re of­fer­ing dif­fer­ent ve­hi­cles: our group struc­ture’s set up for that. Our Euro­pean in­vestors, for ex­am­ple, will be mak­ing use of an un­listed ve­hi­cle called RH Africa.

Does that im­ply rolling out the model to the rest of Africa?

Yes – we’ve al­ready started do­ing so. We’ve lined up about eight Euro­pean in­vestors for the RH Africa fund and we’re tak­ing the learn­ings to the rest of the con­ti­nent, start­ing in East and South­ern Africa, in Tan­za­nia, An­gola, Zam­bia, Botswana, Mozam­bique, Swazi­land and Rwanda.

Why the health­care sec­tor?

Be­cause there are so many things that aren’t work­ing on the con­ti­nent and no­body’s happy. In SA, the wealthy think they’re be­ing ripped off and over­charged, while for the poor, the sec­tor’s just over­crowded and of­fers very poor de­liv­ery. So it’s an in­dus­try where op­por­tu­nity is sig­nif­i­cant.

Your fund is chal­leng­ing pri­vate health­care providers Medi­clinic, Net­care and Life Health­care. Do you see your­self vy­ing for their 20% of the pop­u­la­tion, or do you hope to open up the mar­ket?

We’re look­ing to take an­other 20% from what the gov­ern­ment’s cov­er­ing – ie, the top end of the less af­ford­able range. Es­sen­tially, we’re say­ing the pri­vate sec­tor should cover about 40-50%.

Since Na­tional Health In­surance (NHI) has re­ceived the green light, spark­ing con­cerns of pri­vate health­care be­ing un­der at­tack, is it chal­leng­ing to raise money?

It’s def­i­nitely chal­leng­ing in that you have to ex­plain your­self, but if you [aim to be] an ac­cess point for the af­ford­abil­ity plat­form, then you def­i­nitely want NHI, be­cause that means ev­ery­one will have health­care in­surance. I think the crit­i­cism comes from two fronts: firstly, that the med­i­cal in­sur­ers will lose out – so they def­i­nitely aren’t go­ing to say any­thing nice about us – and se­condly, that the in­cum­bent hos­pi­tals are pretty fine, just cov­er­ing the 14-20%, and NHI will re­duce their mar­gins.

Can we trans­form health­care with­out trans­form­ing the med­i­cal aid in­dus­try?

Yes. I don’t think med­i­cal aids are re­ally opin­ion­ated about who de­liv­ers the ser­vice. They just want to get the ser­vice for the cheap­est price. The in­surance sec­tor it­self needs to be trans­formed be­cause it has too much power. It con­trols both what you pay as a pa­tient and what it pays to the hos­pi­tals or prac­ti­tion­ers.

You’ve taken a dif­fer­ent stance from the dom­i­nant big three in that you’re col­lab­o­rat­ing with gov­ern­ment. What does that en­tail?

Ba­si­cally, idea gen­er­a­tion and giv­ing gov­ern­ment more in­sight into dif­fer­ent mod­els, be­cause right now ev­ery­one’s fix­ated on one way of do­ing things – and

that’s never a good thing. But there are al­ways ways of mak­ing it work. It’s a mam­moth ini­tia­tive, but the the­ory makes sense.

RH Boph­elo’s BEE sta­tus will give you ac­cess to con­ces­sions and hospi­tal li­cences. What does that mean in prac­tice?

These li­cences are is­sued by the prov­inces and there’s a very big push not to give them to the big three, be­cause they have too much al­ready. Iron­i­cally, they’re giv­ing li­cences to new play­ers who also do noth­ing, be­cause they don’t have the tech­ni­cal ex­per­tise or the cap­i­tal. Our struc­ture was formed to in­ter­me­di­ate this prob­lem. We need to put money in and we need to put tech­ni­cal ex­per­tise into play.

You also want to cre­ate a home for black doc­tors, who are of­ten shut out by the old guard. Tell us about that.

Black doc­tors are strug­gling to get into main­stream hos­pi­tals. Hos­pi­tals are al­most like clubs: when you’re in, then you have an in­side view and can con­trol who else comes in – and this isn’t some­thing that can be reg­u­lated. Ba­si­cally, you have to cosy up to the in­cum­bents; to the old club. In ad­di­tion, doc­tors aren’t al­lowed to be em­ployed by hos­pi­tals, so ba­si­cally they be­come en­trepreneurs from day one. That’s not ev­ery­one’s cup of tea.

Do you find the black com­mu­nity sup­port­ing black busi­ness?

No, no, no. Black peo­ple are also scep­ti­cal of black busi­ness. It’s as if every­body’s fo­cused on the old and trusted, so you have to work dou­bly hard to con­vince your black coun­ter­parts to sup­port you. The black econ­omy isn’t yet driv­ing in the same di­rec­tion, which is why we don’t have a black-owned su­per­mar­ket or a black bank. No­body can con­sol­i­date black power into one eco­nomic pow­er­house and just de­liver a ser­vice. [It re­quires] a cul­ture change.

How do you start to gal­vanise sup­port?

There are def­i­nitely trail­blaz­ers, but I don’t hear enough con­sumers say­ing: “I want to go into this com­pany be­cause it’s black-owned.” There’s a big push for cor­po­rates to pro­cure black, but grass­roots re­tail black sup­port isn’t there. They ac­tu­ally as­so­ciate non-black-owned or­gan­i­sa­tions with bet­ter qual­ity or ser­vice, so that’s a self-in­flicted sit­u­a­tion. Some black busi­nesses have in­deed let peo­ple down, so we need black-owned cen­tres of ex­cel­lence. The likes of MTN have done well and we should have built on that in the med­i­cal, bank­ing, FMCG and other sec­tors.

What are your goals for the next five to 10 years?

Per­son­ally, to use my skills set not just in busi­ness, but in chang­ing so­ci­ety. On a busi­ness level, I want to cre­ate a big com­pany with a slightly dif­fer­ent ap­proach – less of a profit-out­come re­la­tion­ship. That’s very dif­fi­cult to do be­cause once you have share­hold­ers, they want the most, but we’ll try.

Do you sub­scribe to the in­clu­sive econ­omy, shared-value view of busi­ness?

It’s the most sus­tain­able plat­form. If you get more peo­ple in­volved and cre­ate more jobs, then it cre­ates a bet­ter so­ci­ety.

What are your views on up­skilling the con­ti­nent for the Fourth In­dus­trial Revo­lu­tion?

To build some­thing, you need to look at the ba­sics – and that’s where South African ed­u­ca­tion has failed spec­tac­u­larly. Every­body for­got that you need to read, write and com­pre­hend be­fore you start putting things into the strato­sphere. If you don’t have those ba­sics, then you’re com­pletely ex­cluded from the econ­omy and you have a tough time ahead of you. The Fourth In­dus­trial Revo­lu­tion’s go­ing to be on a very in­tel­lec­tual level and we have to pre­pare the next gen­er­a­tion not to get dis­tracted or be­come blink­ered.

Are you mar­ried?

Yes – and we have three sons: a 16-year-old and 10-year-old twins. My wife used to work in bank­ing, at FNB, but she’s just com­pleted her PhD.

What do you do in your down­time?

I chill over week­ends: we go to church and eat too much!


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