LENMED AIR 2019.pdf

Risks and opportunities in our operating environment COUNTRY RISK INDUSTRY REGULATION POTENTIAL DISRUPTION OF BUSINESS MODEL South Africa and Mozambique have been hampered by questionable governmental actions, but Mozambique is showing signs of renewed growth. Aspects of the healthcare industry being examined by the Department of Health (DoH) may negatively impact private hospitals in South Africa. These include: + The Competition Commission’s inquiry into healthcare, delays in obtaining of licences for hospitals, beds and training facilities + The proposed National Health Insurance (NHI) and Office for Health Standards Compliance Certificate of Need Radical disruption through fast changing medical practises, technologies and models. CONSEQUENTIAL EFFECTS A Southern African economic decline will hamper Lenmed’s expansion policy. Tighter industry regulations within the healthcare landscape restrict expansion opportunities and erode in stakeholder returns. Waves of change could bypass and marginalise Lenmed. RISK RESPONSE/MITIGATION + Constant monitoring of the situation + More circumspect on growth opportunities + Raise our internal investment hurdle rate and only invest in high-potential projects within our risk parameters + Strategy on negotiating through the National Health Network (NHN), with our Deputy CEO elected as chairman of the NHN + Hospital efficiency drive to reduce costs per admission + Ongoing monitoring includes submissions required by the DoH + Have senior Lenmed leaders on industry bodies + Migrate the Lenmed IT backbone to the SAP platform + Engage expert consultants to create specific functions OPPORTUNITY ARISING Seek expansion opportunities arising beyond Southern African borders. Continuous engagements, both formal and informal, to address the DoH. + Have senior Lenmed leaders on industry bodies + Migrate the Lenmed IT backbone to the SAP platform + Engage expert consultants to create specific functions LINKS TO MATERIAL MATTERS + Economy + Increasing competition + The growing complexity of healthcare regulation + Relationships with medical schemes 28 CREATING VALUE IN A SUSTAINABLE MANNER THROUGH OUR STRATEGY