Notwithstanding the strong demand for private healthcare, Netcare's SA operations are operating in an extremely challenging environment, the hospital group said on Monday.

This environment was due to "increased regulatory and cost pressures," it said.

The company was releasing its group Interim results for the six months ended 31 March, 2008.

Besides the critical shortage of skills, "the issue of substantially improving access and affordability of healthcare in SA remains the key priority," Netcare said.

Netcare was fully supportive of the ANC's Social Transformation Agenda, which included improving the provision of housing, education and healthcare.

To this end, "Netcare is actively engaged in developing innovative solutions, to address affordable and accessible healthcare delivery mechanisms to at least all employed South Africans."

Netcare believed that "a National Health Insurance framework and a review of public sector delivery models" would greatly enhance the capability of "both public and private sectors to extend healthcare on a universal basis."

Netcare, the largest private hospital network in SA and the UK said that group financial highlights included an 11 percent increase in basic earnings per share, an 11 percent increase in profit before taxation, and eight percent rise in interim reduction of capital per share to 14 cents per share, a 16 percent increase in group revenue, 12 percent organic growth as well as a 15 percent increase in United Kingdom core operating profit.

In SA, the group said that in January this year, it fundamentally changed its billing methodology within its hospital division and contained annual average tariff increases for wards and theatres to significantly below consumer price inflation resulting in an average price increase per admission of 6.2 percent — 3.5 percent below inflation.

This situation, the group said, would "necessitate an urgent review for the subsequent period.

In SA patient day growth of 4.7 percent was experienced in Netcare's existing hospitals and together with its acquired hospitals patient day growth was 13.6 percent.

"The average length of stay in our hospitals remained flat and the average occupancy increased," it said.

Maseru hospital

Netcare has been selected by the Lesotho government as preferred bidder on a project to build a 390-bed hospital in Maseru, refurbish three primary care clinics and provide clinical services.

Netcare added that "significant progress" had been made in building its primary care network in SA, expanding it by 22.6 percent to 3565 participating doctors.

The South African operations delivered strong revenue growth of 17.1 percent t to R4.907-million.

Operating profit from continuing operations was up 3.4 percent to R636-million.

The margin was negatively impacted "by non-recurring costs of R10-million relating to restructuring and the losses arising from power cuts, the increased contribution from primary care (at lower margin), the under recovery on the sub-inflation tariff increase, increased labour cost due to skill shortages and other cost pressures.

AFP