Our stakeholders

Quality of relationship
Robust relationship characterised by transparency, trust, and mutual understanding
Good quality, value-enhancing relationship
Solid relationship but requires some enhancement to add value
Relationship established, but significant effort needed to enhance its quality
No existing relationship

 

STAKEHOLDER MATTERS IN FOCUS

We seek to maintain high levels of corporate transparency. This builds and maintains trust with our stakeholders, growing social capital that enables value creation and preservation while protecting against value erosion. Below is a summary of matters that arose as areas of heightened stakeholder interest during the year.

NHI

AfroCentric supports the principles that underpin the movement towards universal health coverage in South Africa through an integrated health system that offers quality, affordable, and accessible healthcare. However, since the NHI Bill was first introduced in 2019, no material changes have been made to the Bill despite critical comments, consultations, and engagements with the medical profession, private healthcare industry, medical aid schemes, and other stakeholders, as well as potential legal challenges.

AfroCentric believes the NHI is a critical vehicle in the journey towards universal health coverage, however, the NHI Bill, in its current format, which President Cyril Ramaphosa signed into law on 15 May 2024 is not aligned with the principles enshrined in the country’s Constitution and does not reflect the healthcare industry’s comments and concerns.

We believe the NHI will only succeed if a collaborative and integrated approach is used. Utilising our diverse set of skills and expertise, AfroCentric will continue to proactively pursue and advocate for a fair, transparent, and collaborative transition through partners like BHF and BUSA to facilitate a phased implementation of a health system tailored to South Africa's needs.

Our updated strategy following the Sanlam acquisition

The acquisition of a controlling stake in AfroCentric by Sanlam was concluded last year, granting AfroCentric access to Sanlam's extensive distribution network and integrating AfroCentric’s products into Sanlam’s ecosystem. Our updated strategy is designed to steer the Company through the internal and external factors that potentially pose a threat to our business, and set us on a course for sustainable and profitable growth into the future. We will do this by developing a cohesive value proposition that leverages our unique, diverse healthcare assets in a more integrated approach. We will also continue to accelerate the collaboration with Sanlam in delivering a winning health offering through their dominant distribution channels. Our track record of unlocking significant value in Clinical Managed Care will remain a critical asset. A vital success factor will be the transformation of traditional care delivery programmes to prioritise value-based care. We will continue to focus on key partnerships with our schemes, intermediaries, and service providers to grow our networks and deliver a compelling, data- and digitally enabled proposition.

As we embark on this strategy refresh, it is essential to recognise that our new direction will be a multi-year journey. This transformation will require a fundamental shift in our culture, one that prioritises empowering our people and fostering an environment of collaboration, innovation and continuous learning. This culture evolution will be the foundation upon which our refreshed strategy will be built by ensuring that every aspect of our organisation is aligned and working towards a common purpose. It will require patience, dedication and a willingness to embrace change, but the payoff will be a more resilient, agile and successful Group that unlocks the full potential of our people and drives sustainable growth.

Call for regulatory reform on LCBOs

Increasing access to healthcare is a crucial focus for the Group, aligning with our mission to improve stakeholders' quality of life. We support the introduction of LCBOs in health schemes to help new members access affordable private healthcare, addressing the market need for cost-effective, high-quality healthcare options. This also allows us to collaborate with schemes to integrate LCBOs into the medical schemes environment.

The CMS continued to prioritise the LCBO framework into 2024, aiming to enhance healthcare access for lower-income families through affordable private coverage. The CMS is actively finalising guidelines with stakeholders, with a draft expected soon. The recent extension allowing insurers to sell primary healthcare policies for another year highlights the commitment to making LCBOs a reality while awaiting the framework's final approval by the Minister of Health.

The CMS has been developing the LCBO framework since 2016, with delays causing industry contention. The exemption extension maintains access to primary healthcare for lowincome consumers during the finalisation process.

Neil Harvey and Associates (NHA)

After navigating a 17-year-long arbitration process, our subsidiary Medscheme has welcomed the arbitrator’s decision to dismiss all the claims brought against it by software developer NHA as baseless. The arbitrator also awarded costs in Medscheme’s favour.

NHA’s claims arose out of a Confidentiality Agreement and Software Licence Agreement concluded with Medscheme in 2003 and 2004, respectively.

NHA launched proceedings against Medscheme and others in 2007, claiming damages for multiple causes of action, including fraudulent misrepresentation, unlawful competition, and emulation of software functionality. The total quantum of the claims was initially approximately R80 million, but over the years, the claims grew vastly in quantum and scope and at one stage exceeded R350 million.

NHA appealed the decision, and stakeholders will be updated when the appeal is heard.

Section 59 Inquiry

In early 2019, several healthcare providers and the National Health Care Professionals Association accused medical aid schemes of unfair treatment. As a result, CMS investigated these allegations regarding its regulatory mandate.

Our fiduciary duty is safeguarding members’ funds and access to affordable, quality healthcare. Notably, the practices that we investigate and quantify a loss assessment constitute less than 2% of the total medical practices paid by Medscheme. We always pursue forensic processes that are fair, transparent and within the law. Following the release of the Section 59 Investigation Panel Interim Report, we submitted a formal response to the findings. There were further public virtual hearings in June 2023. On 31 January 2024, we provided a further submission. On 3 June 2024, the CMS notified that the final report is close to completion and will be released and published as soon as possible. We continue to work with the panel to ensure its outcome does not negatively impact the healthcare industry and our reputation.

Capital and working capital management

The Group continues to follow a prudent approach to capital management, and working capital management has likewise been an area of heightened focus for the year.

Please see our CFO review for details on these topics.