Netcare to restructure in UK as profit drops

PRIVATE healthcare operator Netcare will restructure its operations in Britain, after the South African group reported a drop in annual profit due in part to belt-tightening by the UK’s National Health Service.

Netcare, South Africa’s second-largest private hospital company, has been in the UK market for a decade through a controlling stake in BMI Healthcare and in September made an all-share offer to buy out minority shareholders.

“With unfettered management control we can drive the business in the same way as in South Africa, we can drive the same efficiencies,” Netcare chief executive Richard Friedland said yesterday.

Netcare planned to implement new information technology systems across BMI and aimed to link it to Netcare’s other operations to share services and save on costs.

“Back-office work could move from the UK to South Africa,” Friedman said.

The group reported a 7% drop in profit for the financial year ended September, flagging the effect of changes to non-urgent medical treatment by the National Health Service, which outsources some services to private healthcare providers and private medical insurers in the UK.

The changes prompted the patient to shoulder more of the cost, reducing demand.

“We will cut our cloth accordingly,” Friedland said.

Netcare’s UK revenues fell 1% in the financial year to £887-million (R16.8-billion) as its more lucrative in-patient cases declined.

In South Africa, the length of patient stays declined year on year, weighing on revenue, but picked up in the last three months of the financial year and continued to do so in the first two months of the year, the company said.

Diluted headline earnings a share declined to 108.6c to end-September, from 117.1c the previous year. Netcare shares were down 2.5% at R22.43 yesterday.