Life ‘scans’ horizon for growth

HOSPITAL group Life Healthcare is mulling its options on where to invest some of the proceeds from the sale of its stake in Max Health. One potential area for investment is diagnostic imaging.

Like many companies in the health-care industry, Life Healthcare has borne the brunt of an increasingly challenging environment marked by regulations that are becoming more stringent. Such changes led to the hospital group selling its 49.7percent stake in India-based Max Health to Radiant Life Care, a healthcare facility operator also in India, for about R3.9-billion in December last year.

Last week, Life Healthcare group CEO Shrey Viranna, said he anticipated between R2.9-billion and R3-billion of the proceeds would be used to pay debt linked to Max Health. The balance may go towards growth opportunities. One of these opportunities would be in SA,where the group is looking to build its radiology business. This would be in addition to its operations in western Europe, where it already owns interests in a diagnostic imaging business through its 93.78 percent stake in Alliance Medical Group, which it bought for R13.9-billion in 2016. The group also owns Scanmed, a private healthcare and medicalservices provider in Poland, which it acquired for R2.2-billion in 2016.

Viranna said radiology in SA is something that the South African team, in conjunction with their international colleagues, are looking at. Life Healthcare also plans to provide healthcare services to people who are employed but uninsured and need access to quality care outside of acute hospital care. This will help to counter the stagnant growth in insured lives, which has remained at about 8.8-million since 2014. As part of its plan to tap into the employed uninsured market, LifeHealthcare has piloted MyLife, a primary health clinic in Auckland Park, Johannesburg,where patients get to see a nurse in 30 minutes, for R300, which also covers medication.

Alec Abraham, a senior equity analyst at Sasfin Wealth, said hospital groups are experiencing pressures such as limited funds, a growing ageing population and an increasing burden of disease at a time when schemes are becoming more aggressive about case management. These pressures mean that Life Healthcare and SA’s other big private hospital groups - Netcare and Mediclinic - have to diversify beyond acute care into related services in order to grow. Abraham said Life Healthcare is managing to do what founder and former CEO of Netcare Jackie Shevel set out to achieve by including pathology and radiology services under the hospital group in SA. Shevel, however, failed to clear regulatory hurdles. Viranna said there is also a lot of conversation about regulation around radiology in SA but is comfortable that a model that allows the group to work with the radiologists within the current regulatory environment will be found.