Private healthcare faced with emigration, shrinking insured population risks in COVID wake

Private healthcare in South Africa is facing a near term risk of a shrinking insured population and a slower than expected return of patients to hospitals despite high numbers of Covid-19 cases failing to materialise.

Jessica Spira, Sector Head for Healthcare and Hospitality at RMB, said; "In March this year, it was reasonable to assume that a global health pandemic would provide a meaningful tailwind for companies providing healthcare services.

“However, like many surprises in the Covid-19 pandemic, this was not the case for the hospital sector in South Africa. Hospitals had been working towards a model of a sustained high intensity of the crisis, but the country’s peak was shorter than expected. As a result, both private and public hospitals coped well in terms of capacity strain.”

She added that hospitals also treated fewer non-Covid-19 patients as many stayed away fearing infection at hospitals. And the incidence of seasonal infectious diseases also dropped, stymied through social distancing and greater hygiene awareness. Elective surgical procedures were deferred in anticipation of a deluge of Covid-19 cases, and hospital capacity was deliberately constrained by the need to separate hospitals into Covid and non-Covid wards.

But even as private hospitals slowly return to normal, they face headwinds as the full impact of the economic slump is yet to be felt.

“Currently private hospitals are running at about 60% occupancy but some of this represents a backlog of deferred procedures not carried out during the lockdown period,” Spira noted.

“But the insured population in South Africa is under pressure".

“Even before the pandemic, people were ‘buying down’ their healthcare plans and opting for cheaper and less comprehensive options - or dropping their healthcare altogether. Now with even greater economic uncertainty and high numbers of job losses, private healthcare affordability will be a challenge for consumers.

“We’ve also seen a steady trend in people emigrating and we expect this to tick up in the coming year.”

Drawing on experiences from around the world, there is general consensus that while second wave is highly probable, it's unlikely to be as severe as the last. Hospital capacity, both in the public and private sector, should be able to deal with it successfully as in the first wave.

“We expect that as South Africans become more comfortable returning to hospitals, particularity for delayed elective procedures that cannot be put off any longer, the private healthcare sector should receive a boost over the coming months.

“But total recovery may take longer than expected in SA and may only return to pre-pandemic levels in 2022 or later.

“And it is not certain what a full recovery will even look like. The Covid-19 pandemic put the spotlight on the healthcare sector and showed where inefficiencies exist – especially in the public sector. However, the private hospital sector is structurally sound for the long term, provided consumers continue to see medical insurance as a necessity.”

ENDS