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AfroCentric INTEGRATED ANNUAL REPORT 2016
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Our Leadership
CLIENT SERVICE
Our clients require operational efficiency and exceptional
service. Cost-efficiency alone will not retain clients. We
worked to integrate our businesses and instil a culture of
client focus, putting the customer at the heart of the value
proposition. We reviewed and adapted the structure within
the Group, removing redundancies to help us get closer to
the customer. Through a process of continuous engagement,
we work to determine the best individualised client solution
and don’t impose a ‘one size fits all’ philosophy.
DIVERSIFYING OUR REVENUE SOURCES
AfroCentric is primed for growth, but the prevailing economic
conditions make it difficult for us to grow organically through
increasing membership in current client schemes. Therefore,
we are actively seeking new medical scheme clients. We
are also scanning the environment for opportunities to
diversify our revenue sources, particularly in the non-health
administration and health risk management market.
We are in a position to leverage the Sanlam investment,
which gives us access to short-term insurance products,
a loyalty programme, an extensive distribution network,
and a recognised consumer brand. This partnership will
enhance our product suite and marketing capacity, creating
cross-selling opportunities; and the Reality customer loyalty
scheme will boost customer retention. In the long term, we
aim to derive 30% of income from non-health administration
and health risk management related sources, and we are
certain that our partnership with Sanlam will contribute to
growth in new markets.
We are pleased that Medscheme Mauritius is now part of the
AfroCentric Health Solutions (previously Medscheme Africa)
stable. We are currently in discussions with partners in East
and West Africa to expand our footprint in those regions.
We are not aggressively targeting international expansion;
however, we remain receptive to opportunities outside of the
South African market.
OPPORTUNITIES FOR GROWTH
In addition to the prospects presented via diversification,
opportunities exist in the current healthcare market. It is
unfortunate that rising costs make medical schemes on a
smaller scale unviable on their own, especially if they are
failing to attract younger members. These conditions make
medical scheme mergers more likely; and we are positioned
to capitalise on scheme consolidation. Our target for the
next financial year is an increase of 120 000 lives under
administration.
Some of these new members may arise from our relationship
with government. We administer two government medical
schemes, GEMS and Polmed. We also deliver chronic
medication to 180 000 patients in pilot NHI districts through
our subsidiary, Pharmacy Direct. We are negotiating with
government around a number of tenders and consider
government to be a key client and partner to our business.
As mentioned previously, we actively seek ways to support
the government’s efforts to introduce NHI. The White Paper
signals changes to the healthcare market for all participants,
in the private and public sectors. The NHI is scheduled to
be phased in over a 14-year period, so its impact will not be
felt immediately. In the meantime, we look forward to the
outcome of the health market inquiry and hope it will address
some of the imbalances in the market.
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.
CONCLUSION
We continue to strive to deliver value to shareholders and
we are aware of the erosion of profits caused by fraud, waste
and abuse in the industry. While it is the medical schemes
and not the health administrators who are directly impacted
by fraud, inevitably a reduction in medical scheme revenues
has a domino effect for the Group. Therefore, fraud detection
and containment is in the interests of clients as part of our
commitment to exceptional customer service. It is also an
important part of our strategy to enhance shareholder value.
We invested heavily in a fraud detection system and most
of our clients seized the opportunity to deploy it for their
schemes, thus contributing to improved sustainability for the
client and the health administrator.
AfroCentric is proud to declare that their investment for the
exclusive licencing of the Insurance Fraud Manager (“IFM”)
predictive analytics software is demonstrating material
savings for their client medical schemes. IFM is licenced
through FICO, the world’s leading software provider of
credit scoring analytics. By continuously scoring healthcare
claims and providers using advanced analytics, AfroCentric
is able to proactively monitor and detect irregular claiming
behaviours much sooner than conventional retrospective
methods.
The impact of this game-changing initiative positions
AfroCentric well to becoming the supplier of choice for the
management of fraud, waste and abuse.
APPRECIATION
I express my appreciation to all the AfroCentric employees
who embraced change and worked tirelessly to implement
it, in particular all those who were involved in the Polmed
tender and business integration. I thank all the management
teams and employees of the AfroCentric Group for a job well
done in a difficult trading environment. I also congratulate
those colleagues who were winners of ‘Passion’ awards,
our employee recognition programme. Thank you for your
continued excellence and diligence in what we deliver to our
clients.
We will continue to strive to make healthcare affordable
and sustainable and we face the future with our appetite for
growth undiminished.
Antoine Van Buuren
Group Chief Executive Officer