CHAIRPERSON'S REPORT
We have demonstrated resilience in
an ever-changing sector as well as
the ability to continually provide
innovative solutions to improve the
healthcare sector which, in turn,
improves the quality of
members’ lives.
THE YEAR UNDER REVIEW: RESILIENCE IS KEY TO ECONOMIC STABILITY
A company’s resilience is more than its capacity to respond to and recover from challenges. It includes the ability to predict, prevent and manage a myriad of risks that could affect different critical sustainability components and ultimately threaten its economic stability.
Within a highly competitive and ever-changing environment, AfroCentric has demonstrated resilience and the ability to continually provide innovative solutions to improve the healthcare sector which, in turn, improves the quality of members’ lives.
I credit this milestone to our unique ability to provide new and cost-effective products to the industry, our dedicated team of employees and our loyal customers who have made it all possible.
We have maintained a positive financial growth trajectory and have diversified our revenue sources. We continue pursuing opportunities for growth. The amalgamation of Bonitas and LMS Medical Fund (“Liberty”) added more lives under our care, prolonging both our track record as a medical scheme administrator and our number one market position in managed care.
We successfully promoted more efficient and effective patient care; and treatment management from the Document Based Care (“DBC”) back and neck rehabilitation programme, initiated in 2016, produced positive outcomes. I am confident that the Integrated Chronic Care Model (“ICCM”) which was implemented on 1 May 2017 and includes the capitation and alternative reimbursement models, will further aid our efforts to enhance cost containment.
In December 2015, Sanlam Life Insurance Limited (“Sanlam”) subscribed a 28.7% equity stake in ACT Healthcare Assets Proprietary Limited (“AHA”). Consequently, Sanlam and AfroCentric formed a sub-committee in October 2016 to review how both parties can best leverage this strategic alliance.
Regrettably, our long association with Swazimed ended during the year. The contract had run since the scheme’s inception 30 years ago, and I am grateful for the relationship we developed with them. We wish them well in their venture to be a self-administrating medical scheme. AfroCentric will remain within the Swaziland market to look for new opportunities.
AfroCentric realises that competing in today’s global economy is complex. We not only need advanced technical and vocational skills, but also a flexible workforce that can adjust to rapid shifts in demand. That is why investing in skills is so vital to a country’s economic growth and competitiveness.
In 2017, we awarded bursaries to four medical students studying towards a Bachelor of Medicine and Surgery at two Tshwane universities. This programme shall be enrolled annually to support the empowerment of qualifying students.
RESPONDING TO OUR OPERATING ENVIRONMENT
NATIONAL HEALTH INSURANCE
Universal access to prevention, treatment, care and support for illness, and respect for human rights are common purposes which we share with the Department of Health. To this end, AfroCentric embraces new opportunities and remains well positioned to support the government in the implementation of the National Health Insurance (“NHI”) system and keeping with world trends by contributing towards universal access to healthcare in Africa, as per the priorities outlined by the newly appointed Director-General of the World Health Organization (“WHO”), Tedros Adhanom. We participated in pilot programmes and will continue playing a key role in its second phase of implementation.
The government has progressed towards the next phase in the implementation of the NHI. We welcome and support the proposed introduction of an NHI fund during 2017/2018. The Group is also looking forward to the final NHI White Paper which the National Treasury, the Department of Health and other stakeholders are finalising.
The second phase focuses on improving efficiencies, quality, and controlling costs. This will start to offer improved psychiatric care, services for the elderly and disabled and, through our school health programmes, provide maternal health services, hearing aids and spectacles.
Our retail arm – Pharmacy Direct; medicines wholesaler – Curasana; and drug importer – Activo Health, have partnered with the government to deliver enhanced services with greater efficiency and effectiveness.
HEALTH MARKET INQUIRY
The outcome of the health market inquiry is important to AfroCentric, as we remain committed to working with medical schemes and making private healthcare more affordable for all scheme members, and young people in particular.
HEALTHCARE SECTOR CONSOLIDATION
We are focused on consolidating the healthcare value chain’s services and products so that a larger portion of each healthcare Rand goes toward patient care and improving the effectiveness of the system.
The Group views this consolidation as a key element in combating healthcare inflation, providing better access to healthcare, and to delivering exceptional client service. We are determined to pursue partnerships, acquisitions and mergers in order to drive toward value chain optimisation.
IT SYSTEM AND FRAUD, WASTAGE AND ABUSE
Fraud is a pervasive and boundless problem, regardless of the industry, the size of a company and even a country. The healthcare sector is among the most seriously affected.
The Nexus IT system provides a stable platform for our technological capabilities to be more efficient and consistent. It is supported by our investment in the exclusive licensing of the Insurance Fraud Manager (“IFM”) predictive analytics software which counters fraud, waste and abuse, which in turn provides cost savings for our clients.
CORPORATE GOVERNANCE
Corporate governance plays an increasingly important role in the oversight of companies. We restructured our Board to offer a more pragmatic model for the Company with seamless integration in our committees and sub-committees. The Board now functions completely at a Group level, with subsidiary boards operating as Executive Committee boards. The internal Audit and Risk Committee has been instrumental in providing a consolidated Group risk register.
In response to the Group’s IT requirements, the Board has appointed a Non-executive Director to oversee technology and the implementation of an IT system for the entire Group.
The Board and Executive Committee’s astute oversight and strategic direction led AfroCentric to its positive financial performance. The Executive Committee has been focused on educating all Group subsidiaries on the products and services of each of our operating businesses, which helped us synergise the healthcare value chain. Further to this, we developed an executive manifesto to drive the execution of our strategy. AfroCentric’s Executive Committee is committed to realistically lowering healthcare costs, enhancing our leadership accountability and driving the Group’s growth opportunities.
I am confident in the dedication and skills of our governing body.
PROMOTE TRANSFORMATION
If we are going to prosper and develop, we need to move into the space of greater value addition and inclusive production.
Our main operating subsidiary, AfroCentric Health (Pty) Ltd (“AHL”), has held a Level 2 B-BBEE rating for five consecutive years. AfroCentric leverages transformation through the diversity of our workforce, various skills development initiatives, developing vendors and suppliers through our Enterprise and Supplier Development and Socioeconomic Development programmes – where we actively focus on practitioners and beneficiaries in the healthcare space. This helps us acquire new contracts and retain our current clients.
We are planning to respond positively to the Gender Policy as per the Johannesburg Stock Exchange (“JSE”) requirement in becoming biased towards the appointment of female directors to address gender imbalances.
OUTLOOK
AfroCentric is committed to optimising the healthcare sector and raising the value of each healthcare Rand through consolidation. We support the government in its mission to revitalise the South African healthcare sector. We regard Public Private Partnerships (“PPPs”) as a synergistic arrangement which will augment the public health system and ensure that the private sector also contributes to public health goals.
Our new leadership manifesto will guide the Group as we invest in more healthcare-related businesses which demonstrate the potential to grow and diversify our revenue sources, while contributing to the sustainable health and welfare of South Africa.
ACKNOWLEDGEMENTS
I wish to thank my fellow Directors, shareholders, management team, dedicated employees, clients, partners, service providers and stakeholders for their untiring commitment and enthusiasm to this company.
Looking at the next 12 months, we have a considerable pipeline of exciting activities ahead of us.
Dr Anna Mokgokong
Chairperson