As the FM predicted last year, there were a number of empowerment deals in the health sector, driven mainly by the spectre of the health charter.
Most notable were the R1bn-plus empowerment deals of hospital groups Netcare and Medi-Clinic. The R3bn purchase of Afrox Health by black-owned Mvelaphanda was also finalised.
On an industry level, uncertainty over the development of the health charter hampered much of the real transformation that will need to take place.
The charter process was criticised by industry players for not being participatory enough - a team hand-picked by health minister Manto Tshabalala-Msimang drew up the drafts. This, combined with a nasty court battle between some hospital and pharmacy groups and the health minister over controversial medicine pricing regulations, meant relationships between government and the private health sector hit a record low.
But it looks as if 2006 will be the year of reconciliation.
Hospital group Netcare rejoined the Hospital Association of SA (Hasa) after an absence. That shows the private sector wants to present a united front against any regulatory threats.
And the health department appears to have acknowledged that the industry needs more say in the final drafting of the health charter.
During early 2006, a negotiating committee was set up. This comprises three negotiators and two observers from eight health sectors, including pharmaceutical; hospitals; logistics; health-care financing; support and technology; labour; the public; civil society; and health professionals.
In total, 40 people will represent the health industry. "There hasn't been any formal representation of the industry in the charter process until now, so this is a great opportunity," says Hasa chief executive Kurt Worrall-Clare.
One of the first tasks of the committee will be defining a "basic package of health care". The draft charter says all health-care players must provide this to consumers, whether they are able to afford it or not.
This spooked health-care companies, legally bound in terms of the National Health Act to provide emergency health care to all patients. This cost the hospital industry close to R100m last year.
Next on the to-do list will be figuring out how to solve SA's health human resources crisis. T he country is struggling to retain trained nurses and other skilled professionals such as radiologists.
It is the ownership issue, however, that will be most critical in the final draft. The second draft of the charter reduced the ownership target from 51% to 31% for local companies, but this is still higher than the department of trade & industry's (DTI) recommended 26%.
Netcare chose a "feel-good" deal in which it gave nurses and caregivers 3,75% of the total group; doctors 3%; management and staff 2%; women's groups 0,75%; and a trust encouraging healthy lifestyles and sponsoring soccer teams until 2010, 0,5% of the shareholding. Combined with Netpartner's shareholding in Netcare, this takes Netcare's empowerment shareholding to 27%. The deal, worth more than R1bn, highlighted the dearth of black partners able to finance such large deals.
Netcare rival Medi-Clinic's R1bn deal was completed, leaving no big players for smaller hospital groups to court. Medi-Clinic sold a stake to Phodiso Holdings and Circle Capital Ventures, which will acquire 11% of Medi-Clinic shares, and Mpilo Trust, an employee share trust, which will hold a further 4%.
The Ramphele Family Trust, of which Medi-Clinic director Dr Mamphela Ramphele is a beneficiary, holds a 24,7% stake in Circle Capital Holdings, which in turn holds a 64% interest in Circle Capital Ventures. The transaction will transfer 15% of Medi-Clinic to black players.
Discovery Health's empowerment deal will give 7% of the total shareholding in Discovery Holdings - worth more than R830m - to a number of black empowerment groups, including the Women's Development Bank (3%) and a newly created Discovery Foundation (2,4%) to be chaired by Dr Vincent Maphai and nonexecutive directors and staff (1,2%).
But pharmaceutical start-up Enaleni shook up our rankings. Even with its R1,2bn acquisition of Cipla Medpro, the company has maintained a 31% black empowerment ownership level.
It's a sign that empowerment doesn't limit growth. But it is easier for companies to build it into their business plans as they grow, rather than trying to transform a giant.
