The rands and cents of operating a day hospital

With above-inflation increases in expenditure reported by medical aids for this year, and consumers constantly under pressure from rising costs, the average South African is becoming increasingly savvy about value for money across all lines of household expenditure. This is one of the reasons why the day hospital concept makes business sense. Its offering is based on viability, accessibility and quality, meeting the practical and financial needs of both end-user and medical schemes. And from an operational perspective it achieves this while keeping costs low and maintaining efficiency.

Advanced Health’s operational focus is concentrated in three areas: patients, staff and doctors, and underpinning this is a business model which offers medical practitioners a shareholding in each day hospital with Advanced retaining the majority shareholding. These facilities are supported by an expert central team to ensure effective management, staffing and shared services such as information technology, marketing and administration. Properties are developed and owned by property developers, and tenure secured through a long-term lease agreement with subsidiaries of Advanced.
Allied to this the model focuses on business and staff management and is constantly exploring how to increase efficiencies through central services such as information technology and accounting.

The concept is globally proven and day hospitals, as the name suggests, are used solely for medical procedures that do not require overnight hospital stays. Thanks to this setup, the facilities have no need for ICU units, as we will not accept high-risk patients, or kitchens, both of which require significant operating budgets. As they do not run on a 24-hour basis, day hospitals manage to operate on reduced water and electricity costs and require no night staff.

The model offers several advantages to patients, such as personalised care thanks to a smaller environment, reduced risk of contracting hospital-related infections and state-of-the-art surgeons and theatre equipment, which translates into customer-satisfaction and higher return rates.

It also holds immense potential. The concept is globally proven with only 15% of day appropriate surgeries currently performed in South African day hospitals, based on a prospective 70%, which is the global norm. These include some of the most common procedures like general surgery, dental and maxillo facial procedures, ear, nose and throat procedures, orthopaedic, pain management, ophthalmology and urology. Although adoption has been slower than expected in our market, more and more medical aids are favouring these facilities for one-day cases, as they’re generally cheaper to perform.

As this growing sector continues to disrupt the healthcare industry, and given the potential for development in the local market, in addition to the benefits day hospitals bring to consumers and the viability of the business model, the prospects for growth in South Africa are looking increasingly promising.

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