PRESENTATION FORMAT

TIME FOR CHANGE

THE SAMCC NETWORK

THE NETCARE NETWORK

PHASED STRATEGY

LEGAL CONSIDERATIONS

WHY PARTICIPATE

THE BIG PRIZE!!
SOME UNHEALTHY FACTS OF LIFE
1. PUBLIC SECTOR UNDER PRESSURE [BUDGETARY
CONSTRAINTS, BED CLOSURE, TECHNO LAG, DUBIOUS
MANAGEMENT, PATCHY QUALITY, POOR PERCEPTION, CORRECT
THE LEGACY OF THE PAST- WANT TO HELP]
2. CURRENT DELIVERY MODEL NOT SUSTAINABLE
[SPIRALING INFLATION, NO ACCOUNTABILITY, NO INCENTIVE FOR
EFFICIENCY OR QUALITY OUTCOMES]
3. PROVIDERS ARE UNHAPPY [LOUSY FEES, INCREASED
ADMIN & COSTS, SLOW PAYMENT, NOT THE VILLAINS OF THE
SYSTEM]
4. PATIENTS ARE CONFUSED [PAY MORE FOR LESS BENEFITS,
RULES ARE TOO COMPLEX, DIFFICULT ACCESS TO TO PUBLIC
SECTOR- WANT A BETTER DEAL]
SOME UNHEALTHY FACTS OF LIFE
5. QUESTIONABLE VALUE ADD OF ADMINISTRATORS
[STATIC INSURED POPULATION, INCREASED NON HC
EXPENDITURE, MORE INTERFERENCE & HASSLE, MINIMAL
EFFECT ON INCREASES]
6. CORPORATE PRESSURE [RISING COSTS, SOCIAL
RESPONSIBILITY, PENDING LEGISLATION, NO SOLUTION FOR
LOW INCOME EARNERS]
7. ORGANISED LABOUR [EQUITY IN THE WORK PLACE, HIV,
ACCESS TO PUBLIC SECTOR, AVERSE TO NURSE BASED
SYSTEMS, WANT A SOLUTION]
8. STATUS OF SOUTH AFRICAN HEALTHCARE [WHO
REPORT RATING 172, EMIGRATION, THREAT TO THE PVT.
HEALTHCARE, LONGER WAITING LISTS]
HISTORY OF SAMCC

SOUTH AFRICAN MANAGED CARE CO-OPERATIVE
(SAMCC) FOUNDED IN 1994

COMPRISES 9 REGIONS WITH 50 IPA’S REPRESENTING
3200 GP’S

HAS AN EXECUTIVE BOARD OF 12 DIRECTORS

LOCAL DOC. CHAIRMEN IN ALL AREAS

STRONG COASTAL REPRESENTATION

MEDICROSS DRS (400) HAVE JOINED SAMCC

2000 DISPENSING: 1600 BLACK DRS.
VISION

TO ACT IN THE BEST INTERESTS OF THE MEMBERS

TO BE THE 1° CARE NETWORK OF CHOICE IN S.A.

TO OFFER ACCESSIBLE, AFFORDABLE, QUALITY
HEALTHCARE TO ALL SOUTH AFRICANS

TO DEVELOP CAPITATED PRODUCTS FOR THE
EXISTING AND NEW MARKET

TO ENSURE THAT PVT. GP PRACTICE REMAINS
VIABLE

ENSURE TOTAL CLINICAL INDEPENDENCE ON ALL
PROFESSIONAL ISSUES
FUNCTION

ACCREDITATION OF PROVIDERS

SET STANDARDS OF HEALTHCARE DELIVERY

MEDICINES FORMULARY MANAGEMENT

ETHICAL STANDARDS

CONTINUING MEDICAL EDUCATION

CLINICAL GUIDELINES

PEER REVIEW
DOCTOR’S DREAM LIST
1.
PAID BETTER
2.
PAID QUICKER
3.
ACCESS TO MORE PATIENTS
4.
LESS ADMIN. HASSLE
5.
TOTAL CLINICAL INDEPENDENCE
6.
SECURITY OF BIG BROTHER
7.
GREATER SAY IN FUTURE
8.
RETIREMENT ASSET
STRATEGY
 DEVELOP AN INTEGRATED HEALTHCARE
DELIVERY MODEL AROUND THE CORE
HOSPITAL BUSINESS TO:
1.
DELIVER BEST PATIENT CARE
2.
ATTRACT NEW INSURED LIVES
3. CHANGE THE RE-IMBURSIVE METHOD
4. OFFER A FULL RANGE OF SERVICES
5. ALIGN THE INTERESTS OF ALL PARTIES
GP’S
DOCTORS
CUSTOMER
CUSTOMER
INTIMACY
(NET PARTNER)
SPECIALISTS
PATIENT
BEST
PRODUCT
CARE
PRODUCT
(GOLDCARE)
VALUE CHAIN
OPERATIONAL
EFFICIENCY
HOSPITAL NETWORK
PATHOLOGY RADIOLOGY
RETAIL
PHARMACY
SUPPLY CHAIN
SAMCC / MEDICROSS 1° CARE
EMS
NETCARE 911
DIALYSIS
NRC
TRANSPLANT
UNIT
FOREIGN
REFERRALS
AIDS
HIVCARE
INFECTIOUS
DISEASES
SAA T. CLINICS
MATERNITY
NICHE
MINING
PPP
3D STORKS
CLINICS
HOUSES
NETCARE AT A GLANCE

CORE BUSINESS – FULL SERVICE ACUTE CARE
HOSPITALS SUPPORTED BY 2500 SPECIALISTS (67%)

LISTED ON JSE - INDI 25 - FINDI 25 - ALSI 40

MARKET CAP = R5.8 B

SYSTEM TURNOVER > R6 B

OPERATING PROFIT > R1 B

AFTER TAX PROFITS > R500 M

SEE MORE THAN 20 M PATIENTS ANNUALLY

EMPLOYEES = 18 800 (TOP 50 COMPANIES TO WORK FOR)
PHASE I STRATEGY OF NETPARTNER

FORM INVESTMENT COMPANY (SPV) – NETPARTNER
INVESTMENTS LTD

RAISE CAPITAL VIA PRIVATE PLACEMENT

MAKE SELECTED HC INVESTMENTS

ESTABLISH A MANAGED CARE NETWORK CO.

INITIALLY OFFER 1° CARE CAPITATED PRODUCTS

DEVELOP NEW PRODUCTS WITH EXISTING MEDICAL
AIDS
PROPOSED CAPITAL RAISING - NPI

PRIVATE PLACEMENT TO ALL GP’S (SAMCC),
SPECIALISTS, DENTISTS & NTC
AUTHORISED SHARE CAPITAL
1000M SHARES OF 1 CENT EACH
ISSUED SHARE CAPITAL
300M SHARES OF 1 CENT EACH
SHARE PREMIUM
300M SHARES OF 99 CENTS EACH
LOAN FACILITY
R100M

TOTAL POTENTIAL - R400 MILLION
SUBSCRIPTION FOR SHARES

MIN. SUBSCRIPTION R10 000 NO MAXIMUM

MUST BE IN THE INDIVIDUAL DRS NAME

AUTOMATIC ELIGIBILITY TO NETWORK AND RCS CARD

NTC WILL SUBSCRIBE FOR MIN. 30% AND MAX. OF
49%

SALE OF SHARES – 10% IMMEDIATE THEN 15% P.A.
THEREAFTER

FINANCE UP TO R50 000 HAS BEEN ARRANGED

TRADED VIA OTC UNTIL LISTING
INDICATIVE FUNDING
(R’000)
10
20
50
100
FIXED MONTHLY PAYMENT (R)
- DOCTOR FUNDED (15.5%)
246
492
1230
2460
- NO RESIDUAL
229
458
1145
2290
- 50% RESIDUAL
169
338
845
1690
ARRANGED FINANCE (12.5%)
 FUNDED OVER 60 MONTHS AT FIXED RATE
 R170 P.M. PER R10 000
SELECTED HC. INVESTMENTS

MOU SIGNED 27/05/2003 – 2 INVESTMENTS
NETCARE:

100 M SHARES AT 90% OF 30 DAY WEIGHTED AVE.

100 M NTC SHARES @ R2.74

PAID IN CASH FROM NETPARTNER

CONSENSUS DIV. 2004F 17 CENTS (R17M)
MEDICROSS:

20% SHARES & LOAN ACCOUNT (R85M)

COST OF R50 M
R274M
PROPOSED STRUCTURE – PHASE I
INVESTMENT FOCUS / NETWORK CREATION
SAMCC
SPEC.
DRS
>51
DENT.
NTC
>30
NETPARTNER INVESTMENTS LTD
100%
SELECTED
INVESTMENTS
20% MEDICROSS
7%
NETCARE
MANAGED CARE
NETWORK CO.
OBJECTIVE OF NETWORK CO
TO CREATE A COMPLIANT, NATIONAL NETWORK OF
HEALTHCARE PROVIDERS WHOSE INTERESTS ARE ALL
ALIGNED, WHICH OFFERS A FULL RANGE OF SERVICES
ON A RISK SHARING BASIS WITH THE OBJECTIVE OF
BECOMING THE LOWEST COST PRODUCER OF
QUALITY HEALTHCARE AND ATTRACTING NEW
INSURED LIVES.
THE NETWORK

EXISTING OFFERING OF SAMCC, NTC,
MEDICROSS & COMMUNITY

1º CARE NETWORK OF 3600 GP’S

2500 SUPPORTING SPECIALISTS

1200 DENTAL PRACTITIONERS

64 HOSPITALS & DAY CLINICS (7600 BEDS)

88 RETAIL PHARMACY OUTLETS & 2500
DISPENSING DRS
THE NETWORK

62 RADIOLOGY PRACTICES / OUTLETS

236 LABORATORIES, DEPOTS VIA AMPATH

EMS VIA NTC 911

OTHER SPECIALISED FACILITIES (28 DIALYSIS
UNITS, 7 RADIOTHERAPY UNITS, 6 TRANSPLANT CENTRES)

OTHER APPROVED PROVIDERS WILL BE ADDED TO
THE NETWORK
MEDICROSS CAPITATED PRODUCT

SUCCESSFULLY IMPLEMENTED 1997 WITH 400 DRS.

COVERS 40 000 LIVES THRU 9 MED. AIDS (DISCOVERY,
LIBERTY ETC)

GP MARGIN 30% > FFS MODEL

SINGLE DIGIT ANNUAL ESCALATION

TESTED IT SYSTEMS WITH CAPACITY

NEGOTIATING FOR ADDITIONAL 300 000 LIVES

SAMCC ALSO HAS A TESTED MODEL
HISTORY OF NETCARE MAS

STARTED 1998

10,000 PRINCIPAL MEMBERS

MANAGED CARE BY CLINICAL PARTNERS (NTC)

SINGLE DIGIT CONTRIBUTION INCR. X 3 YRS

RESERVES > THAN 30%

DRS PAID ABOVE TARIFF
POTENTIAL NEW LIVES

NTC MAS – EXTENDED TO ASSOCIATES

NTC DIRECT – NEW MAS

HOSPITAL INSURANCE PLAN

NTC HEALTH CREDIT CARD (RCS)

MINING INDUSTRY

PUBLIC SERVICE (480 000 EMPLOYEES)

JV WITH VARIOUS MEDICAL AID SOCIETIES

OFFER LOW INCOME PRODUCTS
NTC HEALTH CREDIT CARD
STRATEGY OF NETPARTNER

DEVELOP AN ADMINISTRATIVE CAPABILITY

ESTABLISH A CLINICAL TRIALS COMPANY

EXPLORE A PROCUREMENT / IMPORT ENTITY

DEVELOP NEW BUSINESS OPPORTUNITIES

MAKE FURTHER INVESTMENTS
PHASE III

LIST ON THE ALTX OR MAIN BOARD OF JSE
FUTURE STRATEGY
NETPARTNER INVESTMENTS
PHASE II
PHASE I
INVESTMENT
PORTFOLIO
MANAGED CARE
NETWORK
20% MEDICROSS
7%
NETCARE
ADMIN.
FUNCTION
JV
CLINICAL
TRIALS
PROCUREMENT
IMPORTS
NEW
BUSINESS
MEDSCHEME
MEDIHELP
PROMETHEUS IT
ETERNITY
FIN. SERVICES
NTC DIRECT
OTHER
DRS BANK JV
NETDOC UK
HIVCARE
TRAVEL DOC
SUGGESTED BOARD STRUCTURE
 INVEST CO: (14)
SAMCC DRS X 4
MEDICROSS X 3
SPECIALISTS X 2
DENTAL X 1
INDEPENDENT NON EXECUTIVES X 4
 NETWORK CO: (6)
SAMCC 50%
ES; JD; PD
 MEDICROSS:
SAMCC X 1
 MANAGEMENT CONTRACT WITH NTC / MEDICROSS
LEGAL CONSIDERATIONS
CODE OF ETHICS (HPCSA)

FAVORABLE OPINION FROM PROF. SAS STRAUSS
(SC) – NO CONTRAVENTION OF ETHICAL CODE

INDEPENDENT FAIR & REASONABLE ON SALE OF
ASSETS (NEDBANK CORP.)

FULLY COMPLIANT WITH JSE RULES (MERRILL
LYNCH)
 INVESTMENTS ARE ALL LISTED (NTC, MEDICROSS) +
FUTURE LISTING
LEGAL CONSIDERATIONS
COMPETITION BOARD

OPINION FROM 3 SENIOR SILKS & WEBBER WENTZEL
& NTC LEGAL DEPT.

200 M AMERICANS ON MAN. CARE PRODUCTS

MANAGED CARE SEEN AS PRO-COMPETITIVE AS IN
THE BEST INTERESTS OF THE CONSUMER

COUNCIL FOR MED SCHEMES WILL ACCREDIT AND
ISSUE FURTHER GUIDELINES

OPTIONS & CONTRACTS MUST BE VETTED
LEGAL CONSIDERATIONS
CLINICAL INDEPENDENCE

NO COMPROMISE ON QUALITY – EVER!

ALL ETHICAL / PROFESSIONAL DECISIONS OUTSIDE
OF STRUCTURE BY PROFESSIONAL BODIES

DRS. TO ALWAYS RETAIN FULL CLINICAL
INDEPENDENCE AND ACCOUNTABILITY

MECHANISM TO PREVENT UNDER-SERVICING
STRATEGIC REASONS FOR NTC
1.
PROTECT OUR HUGE INVESTMENT (R6 B)
2.
CAN OFFER FULL RANGE OF SERVICES
3.
PROVIDES NATIONAL COMPLIANT NETWORK
4.
CAN TAKE RISK WITH GP AS GATEKEEPER
5.
CAN FORM OWN MEDICAL AID
6.
MARKET & ADVERTISE NETCARE TO DRS
7.
CHANGE TO PROVIDER DRIVEN MODEL
COMMERCIAL REASONS FOR NTC

ADDED SUPPORT FOR GROUP – MAY BE
SIGNIFICANT

INCREASE OUR MARKET SHARE

SOLIDIFY OUR PARTNERSHIP WITH DRS.

RETAIN AND ATTRACT SPECIALISTS

NEW BUSINESS OPPORTUNITIES

PROVIDE NETWORK FOR PUBLIC MAS
WHY PARTNER NETCARE?

FOUNDED, OWNED AND MANAGED BY DRS.

TRACK RECORD OF SUCCESS

INNOVATIVE, FLEXIBLE

CAN PASS ON MARGIN FOR VOLUME

ADMINISTRATIVE CAPABILITY

FINANCIAL MUSCLE

INVESTMENT > R50M
MARGIN Vs VOLUME
TURNOVER EBITDA
MILLIONS MARGIN
EBITDA
CURRENT NTC HOSPITALS
4 000
25%
1 000
ADDITIONAL VOLUMES
1 000
35%
350
5 000
27%
1 350
 PREPARED TO SHARE EXTRA R350 M VIA DRS. RISK POOL
 SIMILARLY FOR PATHOLOGY AND RADIOLOGY
 CAN INCREASE TARIFFS BY 30 – 50%
 CAN OFFER PATIENTS A LOWER COST PRODUCT
WIN – WIN – WIN
WHY SHOULD DRS. PARTICIPATE?
1.
SUSTAINABLE MODEL FOR PVT. HEALTHCARE
2.
ACCESS TO LARGER PATIENT BASE
3.
SAY IN TARIFFS WITH INCENTIVES FOR EFFICIENCY
4.
EMBRACE MANAGED CARE ON THEIR TERMS
5.
RETAIN CLINICAL INDEPENDENCE
6.
GOOD INVESTMENT / RETIREMENT ASSET
7.

POTENTIAL UPFRONT PROFIT ON NTC SHARES
R91M

UPSIDE ON MEDICROSS LOAN ACCOUNT
R35M

POTENTIAL FUTURE LISTING
DOCTOR CONTROLLED
> 51%
THE BIG PRIZE
PUBLIC SERVICES MAS
NEW MEMBERS
MONTHLY PREMIUM
ANNUALISED
480 000
800
12
4.6 BILLION
WORK TOGETHER = LOTTO $
POTENTIAL BENEFITS TO NTC - 2005
HOSPITAL DIVISION
R’M
A.
R 153M
NEW INSURED LIVES
(100 000 lives X .17 X R9 000)
B.
SHIFT EXISTING LIVES
R 92M
(100 000 x .17 x R9 000 x 60%)
C.
NEW GP SUPPORT
R 108M
(100 GP’s X 12m X 10 pat’s pm X R9 000)
D.
ATTRACT NEW SPECIALISTS
R 120M
(50 x 12m X R200 000 pm)
TOTAL
R 473M
TARGET MARGIN – 25%
R 118M
IS THERE CAPACITY?
7600 BEDS X 365 DAYS
=
2 774 000
AT 75% OCCUPANCY
=
2 080 500
CURRENT USAGE
=
1 500 000
CAPACITY
CAN SERVICE 1 MILLION NEW LIVES
580 000
OTHER NETCARE ADVANTAGES
1.
ENSURES GP SURVIVAL
2.
MEDICROSS STIGMA GONE
3.
SUPPORTS LEADERSHIP STRATEGY ++++
4.
POSITION NTC AS VALUE FOR MONEY
5.
SECURES SUSTAINABILITY
6.
HEALTH SECTOR INVESTMENT OF CHOICE