External environment
Our ability to engage in integrated thinking and make informed strategic decisions relies on a clear understanding of our external environment. Key factors shaping this landscape include economic conditions, market trends, workforce dynamics, regulatory developments, technological advancements, and socio-environmental influences. Together, these elements are pivotal in driving our operations and delivering value to our stakeholders.
Economic conditions
The South African economy continues to face significant challenges, with slow economic growth, persistent unemployment, and elevated inflation remaining key concerns. While inflation has begun to moderate, with average annual consumer price inflation recorded at 4.4% in 2024 – 1.6 percentage points lower than the 6.0% average in 20231 – its lingering impact on consumer spending power and the affordability of healthcare services remains evident. These economic pressures underscore the importance of our commitment to providing cost-effective, innovative healthcare solutions that ensure accessibility and value for members.
Material matters
- Business continuity and business model adaptation
- Economic, transformation, political, and societal risk
- Member satisfaction for clients
Strategic levers
- Building a winning health offering
- Driving clinical innovation
1 Stats SA, Consumer Price Index December 2024.
Market dynamics
The healthcare sector in South Africa is grappling with various challenges, such as slow growth, escalating medical inflation, and an increasing prevalence of fraudulent activities. In the past 20 years, the industry has seen considerable consolidation, leading to an 80% reduction in medical schemes and a drop in administrators from 37 to 62. Notably, year-on-year industry growth saw GEMS grow by 107 146 members while the rest of the industry experienced a decline of 12 940 members. This growth has contributed to the stability and slight increase in AfroCentric’s overall membership under administration, despite challenging economic conditions.
The private healthcare sector, where AfroCentric predominantly operates, serves a smaller population segment due to high costs, limiting access for many South Africans. However, the growing demand for affordable solutions, coupled with initiatives like the NHI Act of 2024 and the Low-Cost Benefit Option (LCBO) framework prioritised by the Council for Medical Schemes (CMS), presents an opportunity to improve access to healthcare. AfroCentric is well-positioned to address these needs by leveraging our scale, expertise, and innovative solutions to expand affordable, high-quality healthcare options, aligning with our intent to transform the healthcare landscape and improve stakeholder wellbeing.
Material matters
- Access to healthcare and medicine
- Business continuity and business model adaptation
- Member satisfaction for clients
Strategic levers
- Building a winning health offering
- Driving clinical innovation
- Investing in data, digital, and technology
2 CMS Industry Report 2023.
Workforce dynamics
The workforce landscape is rapidly evolving, driven by technological advancements and shifting employee expectations. According to the 2024 Work Trend Index, three out of four knowledge workers use AI to save time, boost creativity, and focus on key tasks.
The South African healthcare sector faces a critical talent gap due to the emigration of skilled professionals (brain drain) and the growing challenge of attracting and retaining talent for crucial roles. This shortage is compounded by changing career expectations, with 46% of employees globally considering career changes, underscoring the competitive and dynamic talent market.
Material matters
- Employee wellbeing, acquisition, talent management and retention
- Digital transformation and resilience
- Cyber security and information security
Strategic levers
- Evolving our culture and operating model
- Investing in data, digital, and technology
- Driving clinical innovation
Healthcare trends in focus
Expanding access through virtual healthcare
Digital health is rapidly expanding, with virtual healthcare emerging as a pivotal trend. The widespread use of smartphones among South Africans presents an opportunity to leverage mobile health applications and telemedicine platforms to improve access to care, especially in underserved areas. These advancements empower patients to take a proactive role in their health management and provide healthcare professionals with essential data for informed decision-making.
Companies across our integrated healthcare business that address this trend
Material matters
- Access to health care and medicine
- Cyber security and information security
- Digital transformation and resilience
- Member satisfaction for clients
Strategic levers
- Driving clinical innovation
- Investing in data, digital and technology
Focusing on preventative care for better health outcomes
Preventative healthcare is gaining prominence, focusing on improving lifestyle behaviours to combat non-communicable diseases (NCDs) such as cardiovascular diseases, diabetes, cancers, and respiratory diseases. Addressing risk factors like poor nutrition, physical inactivity, smoking, and alcohol misuse is crucial, as these conditions account for a significant portion of healthcare expenditure and mortality in South Africa. Emphasising mental wellbeing, diet, and exercise, supported by digital tools, enhances the effectiveness of preventative care strategies.
Companies across our integrated healthcare business that address this trend
Material matters
- Access to healthcare and medicine
- Member satisfaction for clients
Strategic levers
- Driving clinical innovation
- Building a winning health offering
Generative AI transforming healthcare innovation
The integration of generative AI is driving innovation in the healthcare industry, holding promise in addressing resource constraints and health risk management challenges. Integrating AI into healthcare solutions can significantly impact decision-making support and enrich predictive analytics for preventative and curative healthcare. AfroCentric is well-positioned to capitalise on these trends by integrating advanced technologies into its service offerings, enhancing efficiency, and improving patient outcomes.
Companies across our integrated healthcare business that address this trend
Material matters
- Access to healthcare and medicine
- Digital transformation and resilience
- Member satisfaction for clients
Strategic levers
- Investing in data, digital, and technology
- Driving clinical innovation
Transforming healthcare through value-based models
As healthcare costs rise and population health declines, value-based care is emerging as a transformative model, compensating services based on quality rather than quantity. By holding healthcare professionals accountable for outcomes, this approach drives more effective, patient-centred care. Its success, however, hinges on addressing social and environmental health factors and building systems that empower providers. To support this shift, the industry is prioritising data integration, clear health objectives, and innovative reimbursement models.
AfroCentric is actively embracing value-based care to enhance healthcare delivery in South Africa.
Companies across our integrated healthcare business that address this trend
Material matters
- Access to healthcare and medicine
- Digital transformation and resilience
- Member satisfaction for clients
Strategic levers
- Building a winning health offering
- Driving clinical innovation
- Evolving our culture and operating model
- Investing in data, digital, and technology