External environment
Trends impacting the healthcare context in South Africa
ACCESS AND AFFORDABILITY
Understanding the global trend
As unemployment levels mount due to weakening economic conditions, quality healthcare has become increasingly inaccessible. According to the World Health Organization, approximately half of the global population lacks access to essential healthcare services, and hundreds of millions are pushed into extreme poverty annually due to health-related expenses. Regrettably, COVID-19 has only served to exacerbate the issue of unequal access to health and healthcare1. Against this backdrop, the private sector can play a pivotal role in broadening access to healthcare by developing innovative and relatively affordable business models.
Understanding the trend in our context
Section 27 of the South African Constitution provides that everyone has the right to access healthcare services, yet access is unequal. The public sector is state-funded and caters to the majority of the population. The private sector is primarily funded through individual contributions to medical aid schemes or health insurance. The public sector is underfunded, while most South Africans cannot afford the rising cost of private care. The Competition Commission's Health Market Inquiry identified many issues that increase healthcare costs and impact the market forces within the private healthcare sector.
The NHI Bill has come about to address universal access to healthcare in our country. To support this aim, the bill paves the way for establishing an NHI Fund, which will purchase services from accredited public and private healthcare providers.
Responding strategically
COVID-19 has presented a hard-hitting case study for the desperate need to create access to quality healthcare for the most vulnerable in our society. AfroCentric exists to enhance the quality of life of our stakeholders, achieving this aim through targeted actions to transform healthcare delivery.
We are pursuing the diversification of our involvement in the health sector, thereby placing the Group in a strategic position to work with government on the NHI processes as implementation progresses. Several subsidiary entities are already working closely with government in delivering innovative and sustainable services, such as the provision of chronic medicine to government clinic patients across four provinces.
Our involvement in the COVID-19 vaccination roll out has also demonstrated our capability to support government's ambitions, serving as a true test for the power of collaboration and the possibility that the two systems could coexist and result in reduced costs and improved quality of care for those who need it most.
Related risks
- NHI: Uncertainty surrounding implementation
- Membership: Inability to attract/retain members for our clients
- Loss of clients: Reduction in client base as a result of economic situation
Related material matters
- Business continuity and business model adaptation
- Access to healthcare and medicine
- Economic, transformation and political and societal risk
- Member satisfaction for clients
- Impact of the COVID-19 pandemic
Link to strategic levers
1 https://intelligence.weforum.org/
TECHNOLOGY AND CYBERSECURITY
Understanding the global trend
COVID-19 has accelerated digital innovation and the uptake of telemedicine. Furthermore, healthcare companies are turning to digital to meet consumers' evolving needs, improve patient engagement and experience, and drive loyalty. Data has a significant role in improving healthcare outcomes as aggregating and sharing data can improve diagnoses, lead to new discoveries, and strengthen scientific results. However, the complex regulatory requirements of data privacy and other laws tend to complicate data collection and sharing.
The growing use of technology in all areas of life and business is likely to further increase the risk of cybercrime and therefore the need for cybersecurity and information security strategies, which require ongoing optimisation, investment and skills development to ensure business preparedness and continuity.
Understanding the trend in our context
In the National Digital Health Strategy for South Africans (2019-2024), the government recognises the importance of digitisation and digitalisation in improving access to quality healthcare. The government's efforts to create a framework for the provision of healthcare using digital technologies is pleasing. Yet, continued collaboration in the healthcare sector to promote innovation is required to achieve government's aims.
The increasing connectivity and mobility, as well as the growing mobile phone penetration on the continent, offer opportunities to penetrate new markets and reach new members through online automated products and services and significantly broaden access to healthcare and personalise virtual care.
Cybersecurity was rated as the top business risk in South Africa for 20221 and is considered one of our business's core risks and priorities.
Responding strategically
AfroCentric is leveraging technology to innovate a new integrated model of sustainable healthcare that measurably improves access to quality care to achieve our vision and remain competitive.
In terms of aggregating and sharing data, AfroCentric Group, through our subsidiary Medscheme, collaborated with the biggest healthcare groups and medical scheme administrators in the country to form the CareConnect Health Information Exchange to facilitate the authorised exchange of information between hospitals, clinicians and medical aids to ensure that patients receive the best possible care faster and more cost-efficiently. All this happens while protecting client confidentiality.
We are utilising telemedicine to support greater access to care at lower costs.
In addition, our growing data capabilities support our strategy to eliminate inefficiencies within the healthcare industry and optimise the value chain.
Related risks
- Cybersecurity vulnerabilities: Ineffective cyber defence controls and mechanisms to protect critical infrastructure, systems and data against malicious cyber attacks
- Technologies: Inability to remain relevant in the face of new disruptive technologies
Related material matters
- Digital transformation and resilience
- Cybersecurity and information security
- Business continuity and business model adaptation
- Member satisfaction for clients
- Access to healthcare and medicine
Link to strategic levers
1 https://www.agcs.allianz.com/news-and-insights/reports/allianz-risk-barometer.html
CLIMATE CHANGE AND HEALTHCARE
Understanding the global trend
The increased frequency, intensity, and variability of natural disasters and their downstream effects challenge healthcare systems' infrastructure, supply chains, and workforce. Furthermore, no country or continent is immune to the health impacts of climate change. For example, the environmental suitability for the transmission of diseases like dengue, malaria and cholera is increasing around the world and, in 2020, up to 19% of the global land surface was affected by extreme drought in any given month – putting people in danger of food and water insecurity1.
Understanding the trend in our context
Certainly, climate change and other environmental and social matters were gaining traction before the pandemic. However, the need to focus on sustainable development – to build back better - has become a resounding call from all spheres of society, with growing calls from investors and other stakeholders.
Responding strategically
In line with AfroCentric's position as a purpose-led business, the Board, through the Social and Ethics Committee, has concentrated on enhancing our focus on ESG. Moreover, to support transparency and in line with best practice, we have developed a comprehensive ESG framework that will be rolled out to the business over a period of three years, starting with the current year.
Related risks
- Business continuity: Failure to ensure proper business continuity in the event of a disaster/crisis in the organisation
Related material matters
- Business continuity and business model adaptation
- Economic, transformation and political and societal risk
- Legal, regulatory and compliance management
- Climate change
Link to strategic levers
1 https://www.lancetcountdown.org/2021-report/
SPECIALISED SKILLS SHORTAGES
Understanding the global trend
The skills shortage in many sectors requires employers to increasingly invest in developing skills in employees and adopt a broader perspective - where the development of skills not only benefits the business in the short term but also provides long-term benefits to the industry and the country as a whole.
Understanding the trend in our context
A significant risk affecting employee acquisition and retention is the overall skills shortage present in the sector.
Responding strategically
AfroCentric was founded on the philosophy of empowerment and transformation. We are committed to empowering our people by investing in training to meet current and future business needs. The Group provides comprehensive learning and development opportunities, an employee wellness programme and other upliftment opportunities. We also invest in growing skills throughout the sector to ensure sustainable healthcare provision in the future.
Related risks
- Technologies: Inability to remain relevant in the face of new disruptive technologies
- Resource constraints/people risk: Heavy reliance on certain individuals with critical technical skills to support business demand
Related material matters
- Digital transformation and resilience
- Employee wellbeing, acquisition, talent management and retention
- Business continuity and business model adaptation
Link to strategic levers
MENTAL HEALTH
Understanding the global trend
Recent health, climate, and political crises have heightened the world's mental health challenges. Mental health issues place an under-recognised burden on the global economy, with the cumulative economic output loss associated with mental health difficulties projected to be USD16.3 trillion worldwide between 2011 and 20301.
Understanding the trend in our context
We recognise that the socioeconomic context that we operate in and the rapid change and performance-driven nature of our industry require a great deal from our people. Likewise, our clients' scheme members increasingly require integrated, holistic healthcare solutions that address both physical and socio-emotional wellbeing.
Responding strategically
AfroCentric is specifically focused on mental health and ensuring that the healthcare system is geared towards enabling access to prevention, early diagnosis and treatment. We take mental health seriously, which is why we have initiated various mental health campaigns throughout the Group, such as the Mental Health Project.
Related risks
- Membership: Inability to attract/retain members for our clients
- Loss of clients: Reduction in client base as a result of economic situation
- Resource constraints/people risk: Heavy reliance on certain individuals with critical technical skills to support business demand
Related material matters
- Access to healthcare and medicine
- Economic, transformation and political and societal risk
- Employee wellbeing, acquisition, talent management and retention
Link to strategic levers
1 Deloitte 2022 Global Healthcare Outlook report