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State plan 'may boost hospitals'

Johannesburg - The ongoing debate on government's proposed national health insurance (NHI) makes it difficult to speculate on its possible effect on private health service providers.

However, groups like Medi-Clinic and Netcare would probably benefit as more people will have access to private healthcare, said an analyst.

"I think government realises its dependence on private sector services in the local market," said Frost & Sullivan's Lizelle Wentzel, adding that the implementation of an NHI may lead to more public-private partnerships.

Wentzel's comments are in response to the release of Medi-Clinic's results for the year to end-March on Tuesday. The group posted revenue growth of 71%.

Commenting on how he thinks the proposed NHI would affect Medi-Clinic, CEO Louis Alberts said it's hard to speculate, as implementation won't be easy and could take years. "Medi-Clinic is preparing itself to actively participate and add value to the whole debate;" Alberts said.

Dubai drag on expenses

Wentzel applauded Medi-Clinic's figures for the year. She said: "In times of global crisis, having your revenues increasing with 71% is pretty good performance. The group showed strong results from all its regions, positive revenue growth and cash flows."

Medi-Clinic runs hospitals and clinics in South Africa, Namibia, Switzerland and the United Arab Emirates.

Swiss firm Hirslander's revenue increased 41% to R8 737m, contributing 53.4% of the group's total revenue. In southern Africa, revenue rose 12% to R6 792m, 41.5% of total group revenue.

Alberts said the opening of a hospital in Dubai dragged the company down, as it had risk employing staff whether there were patients lined up or not. He said start-up expenses cost the company the equivalent of 15.7c in headline earnings per share.

Other risks

Alberts said Medi-Clinic had not seen any drop in patient rates due to retrenchments, as people with medical insurance are not usually first in the firing line. In SA the number of patients increased by 2.5% and there was an 8.6% increase in the average income per bed-day.

Wentzel identified possible risks for Medi-Clinic as high investment costs and slow investment returns, with the global crisis slowing economic activity. "However, this would be short-term and not a great challenge for the company," she said.

Healthcare thrives on the sick and needy. There are enough of those to continuously drive growth and profit as people cannot skimp on healthcare services, said Wentzel.

Medi-Clinic plans to build a 140-bed Cape Gate Medi-Clinic in the Western Cape by March 2010. It also wants to expand facilities in SA and Switzerland by increasing the number of beds for patients.

"This is the easiest way of expansion in trying times," said Alberts. "The cost of adding on beds is much cheaper than building new facilities from scratch.

"We are also looking at what is in the market. If the opportunity is right, we might expand in Switzerland."

- Fin24.com

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