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Private healthcare’s ‘super’ profits

People often accuse journalists of profiting from the misfortune of others. So do private hospitals, except they do much better.

According to Business Day, the Hospital Association of South Africa, which represents the private hospital industry, is stepping up its campaign to convince the government not to regulate private hospital fees. It is arguing that private hospitals don’t make “super profits”, as the minister of health believes.

Journalists unfortunately have a tendency to take lobby groups such as Hasa at face value. Do private hospitals make super profits or not? The amount of profit they make is a matter of fact, and a quick look at the books of our two largest private hospital groups is revealing.

In fiscal 2007, Netcare’s revenue soared by two-thirds to R18,6-billion, while net profit doubled to R1,1-billion. Earnings per share climbed 50%. This excellent performance, the company boasts, was driven by strong revenue growth in South Africa, though its operations in the UK also contributed.

Over at rival Medi-Clinic, the picture looks no less healthy. In its latest six-month reporting period, sales jumped by 24% to R3,2-billion, while net profit was up 18% to R322-million.

Super profits? I suppose it depends on what you’d regard as “super”. But if my salary was increased by two-thirds, I’d say “super” would be one of the words crossing my mind.

You may believe that healthcare is a commodity like toothpaste, and that healthcare providers should therefore be entitled to squeeze as much profit out of it as they can. Or you may believe, like I do, that the private healthcare industry is a shameful reflection of our society’s values. But let’s at least be honest: the private hospital industry is highly profitable, and you can’t argue otherwise. So, next time Hasa claims its members are just scraping by, perhaps journalists should give us the figures to put things in perspective.