International investors are eyeing African healthcare, says KPMG's Anuschka Coovadia
While money is increasingly flowing into Africa for private healthcare initiatives and South Africa is embarking on the rollout of the National Health Insurance (NHI) system, there is a high demand for multi-skilled finance leaders to deal with that inflow. “We need a whole generation of multi-skilled, passionate people with an interest in healthcare,” says Dr Anuschka Coovadia, head of Healthcare Africa for KPMG.
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Coovadia is a bit of a wonder woman, with newspaper articles lauding the way she combines the roles of doctor, economist, mother and mentor. A medical doctor with training and capabilities in economics and actuarial science, she joined KPMG in 2012 after a career at Novartis, Momentum and Metropolitan. We spoke to her about the latest trends in healthcare, the rollout of the NHI and the increasing role of private equity and M&A. "Every day a new international investor is knocking on the door," she says.
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What does KPMG do in the healthcare space?
"At KPMG we provide advisory services to governments, NGOs, the private healthcare sector, patient groups and doctor groups. We help them with a very broad range of different challenges, like organisational issues, financial management and market dynamics. We aim to optimise functions so the clients can leverage their core skills and grow their operations in their own markets and in other markets. Through our network we can unlock mergers and acquisitions but, for example, also assist companies that are not sustainable anymore to find a way forward. In the end, our goal is to build better healthcare services in South Africa and in the continent, and help optimise policies."
How big is your department?
"We have a very large department of about 200 specialists, including 20 actuaries, economists, policy experts, tax specialists, technology advisors and a lot of researchers. We also do a lot of cross-functional work, for example, working with the KPMG internal auditing team. We have ten local practices in South Africa and are active in a number of other African countries, covering southern, eastern and western Africa. We also get support from a strong global healthcare practice, headed up by Dr Mark Britnell, who leads a team of 15 global experts."
Do you operate mostly inside or outside South Africa?
"In volume the split between South Africa and the rest of Africa is about 30/70 and in revenue about 50/50. The South African projects tend to be bigger and more complicated, involving multiple stakeholders."
What are the most important trends in healthcare?
"Global investors are increasingly interested in healthcare assets in South Africa and across the continent. They look at the market and identify targets like pathology, radiology, pharmacy or private hospitals. We bring the parties together and support that. We do a lot of work with private equity firms. For example, if there is interest in a hospital in Nairobi, investors need to know if it is safe, if the hospital lets people die unnecessarily and if the finances are stable. We send a mixed KPMG team of clinical and actuarial people to do those assessments."
"On the other side of the spectrum we work with the South African Department of Health around HIV. For example, the department wants to know why 15 to 20 percent of patients are defaulting on their ARV medication. This has a significant economic and healthcare impacts, so we need to qualify that and find reasons."
"Another important trend is that a lot of healthcare operators are moving away from being a solo operation and starting to form multidisciplinary groups."
What has been your proudest achievement since joining KPMG in 2012?
"Last year I had the privilege to speak at an investor's forum at the World Economic Forum in Davos as an advocate for healthcare investment in Africa. I spoke to global investors about the role improved governance is playing. For me it was a pivotal moment in my career. I also managed to build up a network of holders of capital, which has been very useful with my clients ever since. In the same year we organised a health conference in South Africa for 150 international guests, with Obama's health advisor and the UK counterpart of our Minister of Health in attendance."
What are your expectations for the rollout of the NHI?
"There has been talk about the NHI in South Africa since World War II and it is at the root of the constitution. It is a political and social imperative. Healthcare is an economic and social issue, it cannot be seen in isolation. The challenge is how to finance it and bridge the gap between two different health economies. The fact that the first five years will be focussed on upgrading the public healthcare sector is very good. Decent healthcare needs to be available near the homes of all people, with an increased focus on prevention and education."
"The next five years will be about contracting with the private sector. We are involved in the drafting of a roadmap for insurers. Although getting competitors together is difficult, it is in the interests of the country. There is a high degree of anxiety about where to find the R225 billion to fund the rollout, especially in the current depressed economic climate."
What will the NHI mean for South Africa?
"The NHI will be transformational for the country. The setting up of the fund will be highly technical, but once you have a source of funding, markets tend to develop quickly. There are challenges, because we have a severe lack of highly skilled financial management and professional services people - that is a massive career opportunity. We have to understand how to finance a system that costs seven to eight percent of our GDP. In the private sector I am expecting a flurry of mergers and acquisitions."
"Currently there are approximately 80 medical insurers covering 16 percent of the population and a similar amount of money is paid by government for the other 84 percent. Healthcare insurers are wondering what it means if they can only provide complementary cover, but globally there are good experiences with this approach."
What will it mean for KPMG?
"KPMG's core capability is highly relevant, for example around supply chain management, ensuring stock and preventing leakages, but also around financial management, change management, systems implementation and health IT. We have a unique mix of professional services working from an ethical mindset."
Why should ambitious finance professionals consider a healthcare career?
"I would strongly advise young individuals who understand healthcare to consider the role they can play in the coming years during the NHI rollout. We need a whole generation of multi-skilled, passionate people with an interest in healthcare. The NHS in the UK is the fourth largest organisation in the world; it creates employment and contributes to economic productivity. There is career longevity in healthcare and you are relevant and part of the economy."
"I work a lot with girls in the rural areas and the best and brightest are still going into healthcare. The allure of fast technological development is helping to draw them back to what used to be a career of choice. Think of the advances in genomics, robotic surgery and radiology - it is fascinating and will make a difference in the world. The great thing about healthcare is that you can be passionate about the country and also choose a lucrative path. Healthcare gives that dual benefit. It is a resilient sector, will never go away, will grow - there are always needs to be met - and you can explore the rest of the continent while at it."
What trends are you seeing in 2016?
"There will be a strong focus on reengineering the core structure of the public healthcare sector, and there will be a lot of debate around the role of the private sector in the NHI. That will be interesting to follow."
"Health IT and innovation is flourishing and developing at a rapid pace, as is investment in healthcare research across the country. The focus on the consumer is ever-increasing, with the patient taking control and becoming empowered."
"There is lots of M&A going on. Healthcare businesses are typically small, because they often started as private, family-owned businesses. The amount of capital flowing into the sector in Africa is unprecedented. Nobody is wondering if they should enter Africa, but where and how. Every day a new international investor is knocking on the door."