- RH Bophelo listed three years ago and has since made key infrastructure acquisitions in areas with no private hospitals.
- The company has its sights set on the uninsured but employed market that is struggling to pay the high medical aid prices.
- RH Bophelo's annual results for the year ended 29 February 2020 show its earnings increased from R21.1 million to R69.9 million.
It may be a small rival to the likes of Netcare and Mediclinic but RH Bophelo is making big moves in a tough industry as it works to provide affordable health care and primes itself for the National Health Insurance (NHI) by the end of the decade.
"Our story is good, but it is a small good story," Quinton Zunga, the CEO of RH Bophelo, told Fin24.
The company, which listed on the JSE in 2017, has set its sights on establishing itself as a force in the healthcare industry.
At the heart of its strategy are the country's small urban areas where people do not have access to private healthcare facilities and partnerships with the government and NHI.
"We are convinced that there is need for an affordable healthcare operator to give investors a different profile because the difference with high-end healthcare is that it's got more exposure to surgical work versus the lower end," Zunga said.
As they deal with Covid-19, private hospitals are steeling themselves for the impact that will come with pent-up demand after the pandemic.
Patients have been putting non-elective surgeries, like hip replacements and cataract removals, on hold out of fear of catching the virus at a hospital.
But those operations will still need to take place and hospitals anticipate a surge, once the risk of Covid-19 abates.
Zunga said: "When a crisis like this one [Covid-19] hits, your impact is much greater for high-end hospitals than it would be for our hospitals."
In the past year, RH Bophelo has been making big moves, acquiring 60% of Wesmart Financial and Administration Solutions for R2.7 billion, through which it will provide the Docsure-Dema-sure medical aid products priced from R575.
"We definitely are moving to create an integrated affordable healthcare operator," he said.
The group is targeting the uninsured but employed market and although South Africa's unemployment rate has increased to 30.1%, Zunga added there was room for RH Bophelo in the market.
At the moment, people are either buying down in their medical aid options or cancelling them as they struggle to make ends meet during the pandemic.
He said there was a market of about three million people that RH Bophelo could tap into.
South Africa's private hospitals have been grappling with growth challenges on the back of a weak economy and stagnant growth for medical insured lives of about nine million.
RH Bophelo also acquired Krugerdorp's Bell Hospital from Netcare, Medicare Private Hospital in Rustenburg, Fauchard day clinic in Johannesburg and Vryburg Hospital as well as a stake in Phelang Bonolo Healthcare Procurement and Management.
The group's growth strategy is also meant to ready it for the NHI, which is set to be fully implemented in 2030.
"[The] NHI is a funder model and needs infrastructure. So from our perspective, it will need infrastructure which we have. In a lot of the towns, we are the only private health facility," Zunga said.
He added there were a lot of details that still needed to be ironed out on the NHI such as tariff and other operational issues, but he believed RH Bophelo was in a good position to have a partnership with the government.
On Friday RH Bophelo released its annual results for the year ended 29 February 2020, which showed that its earnings had increased from R21.1 million to R69.9 million.
Much like last year, the company did not declare dividends since it is still expanding its capital base and listed on the Rwanda Stock Exchange last year.
Although RH Bophelo has covered a lot of ground in terms of its acquisitions, it has not been untouched by Covid-19, which has slowed its R900 million rights issue.
But Zungu said it was picking up steam again.
* This article has been updated to reflect that RH Bophelo acquired a minority stake in Phelang Bonolo Healthcare Procurement and Management.