Picture: ISTOCK
Picture: ISTOCK

Day-hospital group Advanced Health’s share price leapt 16.92% after it said on Monday that 45% more patients were admitted at its hospitals in November than in the previous November.

The share price was 76c higher at close of trade.

The group, which has 10 private day hospitals, said there was significant interest in day-hospital services with further plans by the industry to support the growth and development of such facilities in 2018. Advanced Health said medical aid
schemes favoured performing more same-day procedures in day hospitals.

According to the Day Hospital Association of SA more than 60% of surgical procedures could be conducted in these facilities. They were also “less traumatic” than acute hospitals and patients were less likely
to be exposed to hospital-acquired infections.

Fewer than 20% of operations were performed in these facilities. In the five months to November, Advanced Health treated 36% more patients at its facilities. The number of patients treated in November were 17% higher than in October.

This indicated a change in fortunes for the company, which reported in August that the loss at its South African operations widened to R22.5m for the year to June, from R20.5m in the prior year.

Vunani Securities small-cap analyst Anthony Clark said the announcement was a waste of time and not worth the jump in the share price. The underlying business still did not inspire much confidence.

He would want to see a material uplift in profitability in SA, which was unlikely in the short term. It would also need to produce a clearer working capital and cash position.

“These recent dreadful results [may] have been the company at its worst, but given operational issues and dynamics, I can’t see any return to the black until [at least] the end of 2018 reporting,” he said.

“Why own a stock that is losing money and thus going nowhere? I’d gladly let it drift in apathy and buy back in at around 65c.”

However, Advanced Health chief operating officer Bibi Goss-Ross said that in 2018 vigorous action would be taken to increase interaction with funders and specialists to garner support for day hospitals coupled with intensive communication of the benefits of these facilities to funders, specialists and the end consumer would be undertaken.

“We believe there must be one day hospital in every vicinity where there’s an acute hospital to create competition and offer patients opportunities of differentiation,” Goss-Ross said.

Medical aid schemes such as Bonitas, Polmed, Gems, Medscheme, Discovery, Sizwe, Bestmed were among advocates of day-hospital usage.

The Day Hospital Association of SA represents 45 member hospitals compared with the more than 6,000 day hospitals utilised in the US.

Advanced Heath said anti-competitive strategies by its competitors and a lack of familiarity with the concept remained barriers of entry. While the need for a doctor’s referral to be admitted was also a challenge in a country where so few specialists were available.

Advanced Health chief financial officer Carel Snyman said the cost model of day hospitals lowered prices for patients as there were fewer bills to pay and it did not involve costs of large catering facilities, intensive-care units and specialised theatres, overnight beds, after-hour staff costs and emergency units.

gumedem@businesslive.co.za

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