“We are determined to meet and exceed the expectations of our patients in every market we operate.”
During a challenging year, what have been the key highlights for you?
Having been with the Group for some 30 years, it is fair to say that this past year was one of the most challenging. Despite the difficult trading environment, a key highlight was the Swiss, Southern African and Dubai businesses all performing relatively well. We continue to see growing demand for quality healthcare services, which is why we place such an emphasis on our Patients First strategy and continue to invest in our facilities and people. This will assist us to maintain our leading position in all our international markets. The key challenge globally is to keep healthcare affordable and to demonstrate cost-efficient service delivery.
Whilst the Middle East platform performed below expectations during the year, largely resulting from issues with the Al Noor business in Abu Dhabi, there were several highlights in the region. In September 2016, we opened the new comprehensive cancer unit, based in the North Wing of the Mediclinic City Hospital, which has performed very well. When I look at the new services not previously offered by Mediclinic Middle East, the number of lives we are changing through our new radiotherapy and PET scan services each month is encouraging.
In April 2017, the unit treated the first cancer patient with a revolutionary form of radiotherapy called stereotactic body radiotherapy. This was delivered using Mediclinic’s True Beam Varian linear accelerator, the only one of its kind in the UAE. In Al Ain, the Mediclinic Al Jowhara Hospital had its first full month of trading in January 2017 and is ramping up. It is well positioned to serve the higher end of the market in the region.
I believe the rebranding of the Al Noor business to Mediclinic is an important milestone and underlines our commitment to deliver exceptional levels of private healthcare service in the region. Rebranding and marketing work commenced and will continue through the year ahead. I am pleased that the co-payment that was introduced in Abu Dhabi in July 2016 was waived with immediate effect on 26 April 2017 following our ongoing dialogue with the relevant stakeholders in the region.
Why do you believe regulatory matters played such a prominent role this year?
Access to healthcare is a basic human right. It is therefore understandable that governments will have an interest in their particular healthcare system to ensure that it is efficient, accessible and fair to its citizens. Healthcare delivery models vary widely between countries with different degrees of participation by the private healthcare sector. However, the cost of delivering healthcare around the world is increasing. The reality is that this is largely driven by increased consumption from an ageing and growing disease-burdened population, and new technology.
We have a joint responsibility, working with governments, funders and patients, to offer affordable and cost-efficient services to ensure the long-term sustainability of healthcare provision in the countries in which we operate. The private sector can make a meaningful, cost‑efficient contribution towards healthcare delivery. We believe that governments and the private healthcare sector should constructively co-operate to find a dual system of care delivery which is in the best interest of the broader community.
In Switzerland, as the Federal Government and cantons reviewed their budgets and expenditure on healthcare, we saw several regulatory announcements during the year. Firstly, the Canton of Zurich in mid-2016 proposed a levy based on the proportion of privately insured patients treated in listed hospitals. The Hirslanden management team committed significant time and resources to engaging with the relevant public authorities to raise concerns regarding the process, fairness and the impact of the proposed levy specifically on Klinik Hirslanden. I am pleased to report that in March 2017 the Cantonal Parliament voted not to approve the proposed levy. Secondly, there have been ongoing national outpatient tariff (TARMED) negotiations between healthcare providers and funders. The Swiss Federal Government released proposed adjustments to TARMED, as a transitional solution while negotiations continue to find agreement on a revised tariff structure. And finally, the Zurich Cantonal Parliament approved an amendment to the cantonal hospital law, providing a legal basis to create a list of interventions that in future should generally be treated as outpatient rather than inpatient services. Continued dialogue and engagement with the relevant public authorities remains key to ensuring that private healthcare plays a meaningful role in the broader healthcare delivery system.
In South Africa, the cost of private healthcare is being examined by the Competition Commission through the Health Market Inquiry (“HMI”). Towards the end of 2016, the HMI published a timetable reflecting the proposed events for 2017. We will continue to engage with the HMI as we progress towards the publication of the final reports which they have indicated will be by the end of 2017.
As I mentioned previously, from 1 July 2016, the Abu Dhabi authorities introduced a 20% co-payment for Emiratis who are members of the Thiqa insurance option, when they make use of private healthcare providers. This had a material impact on our Abu Dhabi business, affecting the volume of Thiqa patients visiting our facilities. We are focused on growing our patient numbers from the Thiqa and enhanced insurance market. This strategy is supported by the new business and operational practices, the ongoing upgrade and investment programmes across our facilities, and the rebranding of the business to Mediclinic. The waiving of the co-payment in Abu Dhabi from late April 2017 will help to support our anticipated gradual improvement in Middle East performance as we move through the coming financial year.
What are the benefits of Mediclinic being a global healthcare provider?
We have built a diversified portfolio of operating platforms in Switzerland, Southern Africa, and the Middle East and in the UK we have our 29.9% investment in Spire Healthcare. Combined with our strong market position in our operating regions, Mediclinic benefits from a pool of skilled, knowledgeable and experienced employees.
Group initiatives to simplify, standardise and centralise key business support processes are ongoing. Using our international scale, we are beginning to deliver meaningful synergies and cost savings. During the year, our central procurement function and ICT department made excellent progress in some key contract negotiations that will benefit the future profitability of the Group.
Although clinical models differ from country to country, the basic principles are similar, and it is useful to compare and share clinical experience and learnings among our operating platforms. The breadth of intellectual property across the Group is vast. We strive to nurture the combined knowledge, skills and experience from our diverse group of people to improve the Group’s clinical performance and growth opportunities.
It is vital that we share best practice at an international level, as this will ensure we continue to deliver high-quality, cost-efficient services to our patients. The comprehensive cancer centre in Dubai is an example of how we tapped into the clinical experience and knowledge of the Hirslanden team in Switzerland to assist with the design, building and opening of our first comprehensive cancer centre in the Middle East. Having access to such valuable sources of knowledge and skills lowers the risk of venturing into new complex clinical service lines.
What are your priorities and opportunities for the year ahead and beyond?
Our Group focus on Patients First will continue to be our top priority. We are determined to meet and exceed the expectations of our patients in every market in which we operate. To assist us in identifying areas for improvement, we implemented a standardised international Patient Experience Index (“PEI”) measurement system, provided by Press Ganey. The PEI system is well embedded in our Southern Africa and Dubai businesses, and is being rolled out in the Hirslanden and Abu Dhabi businesses, the results of which are referenced to in the Sustainable Development Highlights. We continue to focus on providing superior clinical performance in a safe clinical environment while moving towards a better integrated healthcare delivery model.
As I have mentioned, the acquisition of the Al Noor business in Abu Dhabi has proved to be challenging. While significant progress has been made, we continue to focus on resolving these matters and stabilising performance; this will remain a priority. Our confidence in the long-term growth opportunities of the Middle East region remains strong, and we expect performance to improve gradually as we progress through the year ahead. A key focus is to establish the Mediclinic brand as a trusted and preferred provider of clinical services to the Abu Dhabi community.
Another priority is the continued improvement in operational efficiencies, using our combined international intellectual property. We will continue to focus on finding ways to simplify our business and to standardise processes and structures. This will allow us to use our scale to unlock further synergies in areas such as procurement, information and communications technology, clinical services, human resources and marketing.
Finally, we will look to grow the Group at existing platform levels by attracting more patients, adding further capacity to existing facilities, adding new service lines, and identifying bolt-on acquisition opportunities. In addition, we will evaluate potential new opportunities for further valued added growth. In the Middle East, the building of the Mediclinic Parkview Hospital in Dubai with some 170 beds has commenced. We approved the development of a comprehensive cancer unit at the Mediclinic Airport Road Hospital in Abu Dhabi, where work is expected to start soon.
I would like to thank all the doctors, nurses, support staff and management for their dedication and commitment to the Group and what we stand for. I am confident that the year ahead will be successful.
Chief Executive Officer