Discovery’s sustainable business framework

Discovery operates in some of the most complex industries in areas of absolute need where consumers traditionally mistrust products and services. We face challenges that not only impact the sustainability of our business, but a larger economic system. These challenges, along with our scale and reach, also present opportunities to structurally change the industries in which we operate, for the benefit of consumers and our communities.

We have the opportunity to help grow and nurture South Africa’s healthcare system, extend access to care, put consumers in charge of their financial protection and encourage a healthy lifestyle in our communities. In each case, we believe our approach to a successful business also benefits our stakeholders – this is because our business strategy is built around our responsibility towards all our stakeholders.

Discovery’s key impacts, risks and opportunities

Our key impacts

 

Customers	For our customers we provide products and services in areas of critical need. Healthcare and financial protection are not only key areas for individuals, but also for the sustainable development of communities.
Industry	In our respective industries, we play a leadership role in driving change and shaping the future of these industries and systems. In healthcare, we impact the lives of more than two million people and their healthcare professionals.
Community	15 years into democracy, South Africa still has one of the most unequal societies in terms of quality of life, per capita income and access to services such as healthcare. Although we operate in the private healthcare industry, we see it as our responsibility to help build healthcare infrastructure in communities who need it.
Contribution to economic development in South Africa	Our responsibility as a large corporate in the South African economy is to contribute to the government’s goal of achieving a more balanced society. Our contribution to economic development in South Africa helps to transform our society and include more South Africans from previously disadvantaged communities in the economy. Our partnerships with suppliers and support for SMEs, as well as attracting and retaining black talent in our employee pool, are important elements of our economic contribution.
Employees	We impact the lives of over 5 000 employees who work for Discovery. Our employees are central to our success as we rely on their talent, drive and innovative ideas to ensure our company’s success.

Our key challenges

 

Access to healthcare	Access to healthcare remains a challenge, not only in South Africa, but also globally. Our challenge as a private healthcare funder is to give our members access to the latest medical technology and treatments, and to also grow the number of South Africans who can access private healthcare.
Containing costs of healthcare	Medical inflation increases each year at a rate higher than consumer price inflation. Our challenge is to balance the needs of members to be able to access private healthcare while at the same time keeping contributions affordable and sustainable.
Capacity-building in our healthcare industry	South Africa’s healthcare sector is severely under-resourced, especially in the public sector with shortages in all areas of speciality, as well as in Academic Medicine. The skills shortage impacts the sustainability of our business, industry and healthcare sector and is therefore a challenge for Discovery.

Our key achievements

 

Solid risk management	The Discovery Health Medical Scheme’s credit and risk management rating was upgraded to an AA+ by international credit rating agency, Global Credit Rating. This is the highest credit rating in the industry. During a period characterised by economic uncertainty, Discovery Health added almost R1 billion to members’ reserves. The scheme also succeeded in growing its membership at the same time, the only scheme in the industry that has been able to successfully grow membership and its solvency ratio at the same time.
Sustainable products and services	Discovery Health continues to deliver sustainable products and services with a solid financial performance and risk management. The scale of Discovery Health’s network arrangements has expanded, significantly reducing the amount of co-payments members have at GPs and specialists. Discovery Health’s GP Network now covers nearly 80% of members and payment arrangements with specialists grew to 85%. Benefits per member have grown at 10% every year.
Innovation that impacts customers and society	Discovery Vitality forms the foundation of Discovery’s product integration capability. It enables Discovery to give consumers more value and is a unique point of differentiation for us. An example of how Vitality provides integration benefits is the Discovery Life Cover Integrator that enables policyholders to buy additional life cover of either 20% or 40% more at a premium saving of 50%. The level of Integrated Cover may fluctuate yearly depending on a member’s engagement in Vitality. This is significant when viewed against the backdrop of ASISA’s estimate that South Africans are underinsured by as much as R10 trillion. During the year under review, Discovery Vitality also launched the HealthyFood™ benefit that saves consumers up to 25% on 6 000 HealthyFood™ products at Pick n Pay. At the time of writing the report, 125 000 Vitality members have activated the benefit and are buying healthier food options. This benefit provides further opportunities for product integration across Discovery’s product range.
Capacity-building in the healthcare industry	The Discovery Foundation has made its third set of awards during the past year, bringing to R37 million its investment in healthcare education for the public sector.
Industry awards	During 2008 Discovery was ranked among the best performing companies on the JSE SRI index. Discovery was also ranked 16th in the 2009 Financial Mail/Empowerdex Top Empowerment Companies. During the past year, Discovery Health and Discovery Life were voted the top medical aid and life assurance brands in the business-to-business categories of the annual Sunday Times Top Brands survey. Discovery was also voted as the industry winner in the 2009 Ask Afrika Trust Barometer, an annual corporate reputation benchmark survey.

Our key priorities for the next year

 

Our customers	Our priority is to continue delivering sustainable products to our customers that will have a positive impact on their lives. For example, we have set specific goals to reduce the gaps in cover for members of Discovery Health while Discovery Invest and Life will continue to use the integration opportunities of Discovery Vitality to give customers more value and protection, especially during recessionary times.
Industry	As one of the industry leaders, Discovery Health will continue to engage with other stakeholders on the future of healthcare in South Africa. In terms of capacity-building, the Discovery Foundation and Discovery Fund will continue to develop and build healthcare resources in the public healthcare sector.
Employees	Our employees are central to our future success. It remains one of our priorities to foster a culture of innovation, performance and inspiring leadership.