Understanding our trade-offs

In our current context, we have had to make swift decisions to support our stakeholders and protect our business. Given this, operating from a place of embedded purpose was deeply advantageous, enabling us to measure each decision against our long-term objectives.

We recognise that, in pursuing these objectives, trade-offs between capitals must be made. That is, in the process of improving access to quality healthcare, value is created, preserved or retracted across the six capitals. Deciding which trade-offs to pursue and which to avoid involves robust strategic decision-making processes, especially when these decisions may negatively impact certain stakeholder groups while enabling sustained value creation for others.

Below we have listed some of the trade-offs made during the year, as well as the rationale behind these decisions.

Balancing our long-term growth ambitions within a depressed operating environment

Unpacking the trade-off

While we have all been impacted by COVID-19, the full impact of the pandemic on our economy is not yet known. It is clear, however, that in the short- to medium-term the unemployment rate will rise sharply in response to the challenges faced by businesses both large and small, which will likely have an adverse impact on scheme membership.

Considering our cash position and available credit lines from a liquidity standpoint, we are well-positioned. Moreover, we believe that given we are facing a health crisis, members will strive to retain their medical aid memberships to the extent that they are able.

However, without a full picture of the pandemic's impact on membership, a prudent course of action is required. In response to this, we took steps to conserve cash, including reductions in planned capex and project spending, focusing investment on opportunities to enhance digitalisation and improve efficiencies. In this regard, our significant investments in IT infrastructure and digitalisation in prior years served us well during this time where much of our communication and business was conducted using these platforms.

We recognise that large-scale capex projects enable broader job creation, which is critical to the economy at this time. However, at present, these projects are being deferred and not terminated. Our short-term priority is to support our current staff in meeting the immediate needs of the members of our schemes during this critical time.

Outcomes

  • R7 million redirected to COVID-19 related
    expenditures

Related material matters

  • COVID-19
  • Member retention for clients
  • Technological innovation
  • IT dependency

Positive impact

  • Financial capital preserved
  • Short- to medium-term initiatives prioritised

Negative impact

  • Human capital (external)
  • Capex to support long-term ambitions deferred

Increased spend on human resources during a time of broader financial uncertainty

Unpacking the trade-off

In challenging times, it can seem prudent to aggressively cut discretionary spend on human resources, conserving cash in the short term with potentially negative long-term consequences.

Our employees are our most important stakeholder and function as our ambassadors. We recognise that transitioning our employees to a work-from-home environment, for many, created added pressure as they sought to balance work with childcare or eldercare responsibilities. At the same time, the crisis only heightened the responsibility of our staff to deliver critical healthcare services

Understanding this challenging context, we made it a priority to focus efforts and financial resources in supporting our employees. In this endeavour, we provided a once-off gratuity payment to our staff at the end of March to support them as they made the necessary plans and provisions for lockdown. We also focused significant internal resources on ensuring our employees were facilitated in delivering critical services and received the necessary information at each juncture.

Outcomes

  • R7.2 million investment in staff as part of a once-off gratuity payment
  • Increased frequency of employee communications around COVID-19

Related material matters

  • COVID-19
  • Loss of critical skills
  • Member retention for clients

Positive impact

  • Human capital preserved

Negative impact

  • Financial capital impacted