Netcare Group, which is South Africa’s biggest private provider of hospital services, has decided to exit (as some wags have noted, Nexit) from Britain, where it has been invested since 2006 in 57 hospitals through General Healthcare Group.
If nothing else, a more single-minded focus on its South African operations, where it owns 54 facilities, may well benefit both Netcare shareholders and patients.
Netcare has been struggling for five years to restructure lease agreements and reduce what it calls the unaffordable, unsustainable and onerous rentals it must pay on more than half of the hospital properties it manages.
The group cited the costly property rentals, National Health Service (NHS) cutbacks, and pressures from lenders as reasons for the foreign sale. The British operations recorded a huge loss last year and Netcare took a hit of R5.56-billion write-down as a result of impairment of its British assets, the lease agreements and goodwill.
It also saw group revenue drop by R3,5-billion largely due to currency depreciation. On the flipside in past years, the company’s results have also benefitted from currency exchange fluctuation.
Netcare reported that it had bought up General Healthcare shares held by minorities, a move likely intended to smooth the way for this week’s Nexit announcement.
The company traces its difficulties in Britain to the global financial crisis and the recession that followed, which affected demand for private healthcare insurance. An increase in patients to private hospitals through the NHS has not offset cost pressures.
Despite “significant focus on cost control”, its SA operations also struggled last year. The group benefited locally from the sale of the land and building that formerly housed the Christiaan Barnard Memorial Hospital, but its costs rose as rental charges for the new Foreshore home of the hospital kicked in for the first time. – Ray Hartle