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AfroCentric INTEGRATED ANNUAL REPORT 2016
26
CHIEF EXECUTIVE OFFICER’S REPORT
The objective of the
health market inquiry is
to make healthcare more
affordable, which is exactly
what we are trying to achieve
for our clients. Everything we do
is aligned to this objective.
Antoine Van Buuren
INTRODUCTION
The Group underwent a period of internal consolidation over the past year. We integrated the WAD
acquisition in 2015 into the business. We also cemented the relationship with Sanlam, gaining a
deeper understanding of the value creation we can derive from the partnership. We invested
in growing the business, and that investment impacted our financial performance in the short
term. Growth was subdued to an extent but we are now starting to see our efforts provide a
return.
These are testing times for our medical scheme clients. The slow-down in the economy
means that young people cannot afford private medical cover, which impacts on the
capacity for medical schemes to grow.
In the current economic climate, our growth will come from expanding the client
and customer base rather than organically, and through diversification of revenue
streams. A recent example of this expansion was the successful tender for the
Polmed scheme.
For various reasons – the weak rand, scarcity of skills, and fewer young and
healthy entrants to schemes diluting the risk pool – healthcare inflation is
outstripping general consumer inflation, which is approximately 6.5%. We
want to see more value delivered to the customer for every healthcare
Rand spent, and are committed to driving that value and reducing
costs to make healthcare sustainable.
Our acquisition of Pharmacy Direct and Curasana is another way
we are lowering healthcare costs. This provides our medical
scheme clients with more economical solutions to customers’
needs, and creates value for shareholders by allowing
AfroCentric to access more of the healthcare Rand.
COST CONSCIOUSNESS
One of the ways we seek to achieve this is through
greater cost efficiencies in the business. We actively
pursued a strategy of process optimisation and
moved from a ‘best of breed’ ideology to one of
‘fit for purpose’. We fostered a culture of cost
consciousness across the business – helping to
bring down healthcare costs for clients and
their beneficiaries.
Our strategic commitment to cost
consciousness is supported by the
R150 million investment in our
enhanced IT platform – Fusion.
Once we are at the end of the
development phase, Fusion will
be a more stable platform.
Our current Nexus IT system
has the ability to generate
income in the form of
licence and service
agreements.