Mediclinic set to roll out more day clinics

Private clinic and hospital group Mediclinic International intends to build six more day clinics in the next two years, CEO Ronnie van der Merwe said on Thursday. The group said day clinics are a new growth area.

“The broader economic environment in Southern Africa at the moment is rather weak. We have not seen much change in the medical aid population. From our perspective, our focus is very much towards the day case clinics,” Van der Merwe said.

The company currently has eight day case clinics in Southern Africa.

Van der Merwe said the difficult macroeconomic environment in Southern Africa “impacted patient volumes”. The group reported a 2% growth in revenue to £2.9bn (R53.15bn) for the year to March.

Van Der Merwe said the company’s priority was to seek growth in its existing markets.

“We have good footprint in three different continents. Our teams on the ground know their territories quite well. We are careful and very disciplined in terms of capital allocation. We are not just going to jump (into a market). We will want to know very well if we are welcome as private enterprise players in those markets,” he said.

Van der Merwe said the roll-out of electronic health records system was a key priority for the company in the Middle East. He said the company would soon make a decision regarding its investment plan on the initiative. “These investments directly assist in enhancing patient care and patient engagement.” 

The electronic health records system is a collection of patient electronically stored health information in a digital format.

In the year to end-March, Mediclinic made another annual loss after writing down the value of its investments in UK-based Spire Healthcare Group and Switzerland’s Hirslanden by a combined £405m.

Hirslanden, which is Switzerland’s largest private hospital group, has come under pressure from regulatory changes which have led to a shift from in-patient stays to outpatient visits.

In the UK, Mediclinic has been grappling with lower revenues from state patients funded by the National Health Service. Mediclinic reported a non-cash impairment charge on its investment in Spire, one of the UK’s largest private hospital companies, of £164m and a £241m impairment linked to Hirslanden.

Van der Merwe said Mediclinic’s focus was to adapt that business to the new regulatory environment that has affected private hospitals in Switzerland. “We now have more clarity of the impact of outmigration on Hirslanden as we move forward into the new year,” he said.

RMB Morgan Stanley equity analyst Roy Campbell said in a note to clients that Mediclinic’s adjusted earnings were in line with estimates.

“While not completely unexpected, given the tough regulatory and operating environment in Switzerland, the only new news is the additional second-half £143m impairments in Hirslanden,” Campbell said. 

“While the quantum of the impairment is new, and the resulting unadjusted reported loss for the period is new, the market should be anticipating the result.”

Mediclinic shares were down 0.42% on Thursday to R59.49.

Additional reporting by Nick Hedley

njobenis@businesslive.co.za