Netcare benefit impacted by the cost of securing protective equipment

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Through Dineo Faku May 25, 2021

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JOHANNESBURG – NETCARE, South Africa’s largest healthcare provider, said yesterday its interim operating profit fell 48.8% to Rand 915 million in the six-month period ended March 2021 , after incurring higher costs of personal protective equipment (PPE).

The group said rising costs, coupled with the large fixed component of wage costs versus a declining revenue base, weighed on operating profit.

Netcare previously told the market that Covid-19 costs amounted to Rand 316 million in the first half of 2021.

“The majority of these costs relate to PPE, where strict border controls and significant global demand during the first wave of the pandemic resulted in substantial price increases for several critical inventory items,” Netcare said.

Netcare said acute care hospital days reflected a 24.4% increase from the second half of 2020, but fell 13.7% from the first half due to the temporary suspension of elective surgeries at from mid-December 2020, associated with an increase in Covid-19 admissions.

It also recorded a spike in mental health service occupancy rates which improved to 60.6% in the first half of 2021, compared to 41% in the second half of 2020.

“Despite the start of the second wave, the relaxation of containment measures in the second half of 2020 allowed the resumption of group therapy sessions, resulting in an increase in admissions,” the group said.

Mental health patient days improved 46.9% from the second half of 2020, but remained 12.6% lower than in the first half of 2020. Netcare said mental health patient days were 6.4% lower in April 2021 compared to March 2021 and had jumped 169.1% compared to April 2020, with an average occupancy rate of 69.6% for the month of April 2021 and a trend current occupancy at 73.7% in May 2021.

Netcare has announced plans to spend 1.2 billion rand on investment projects in its fiscal year 2021, including 400 million rand for the new Netcare Alberton hospital, 70 million rand to upgrade Wi-Fi connectivity Fi and firewall systems at his hospital, and R30 million for the new 36-bed Akeso facility. in Richards Bay is slated to open towards the end of fiscal 2021.

The group also said that an estimated 40 million rand will be invested in 2021 in the new 72-bed Akeso facility in Gqeberha.

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