Read the Conversation
Meeting highlights:
- Dis-Chem is a frontrunner in transforming traditional retail pharmacy models to increase access and reduce healthcare costs.
- Dis-Chem's mission, "Better Health Starts Here," is to diversify health and financial services (primary care clinics and medical insurance) to provide value and contribute to a sustainable health ecosystem in South Africa.
- Dis-Chem's footprint as the largest pharmacy chain in South Africa: 295 pharmacies, 38 Baby City stores with an integrated health clinic, 400 clinics as co-offerings of pharmacies, about to reach 400 stores, doubled growth in 2 years.
- The importance of properly interpreting data to improve patient diagnosis and outcomes.
- Dis-Chem's commitment to supporting the entire patient journey's main KPIs is focused on the consumer's lifetime value.
EF: You were recently appointed as the CEO of the largest pharmacy group in South Africa. Could you elaborate on the mission that you set for yourself?
RM: I have always viewed pharmacies as crucial in healthcare delivery in South Africa. We need to think beyond the traditional concept of a pharmacy. We now have the opportunity to deliver care beyond the confines of physical pharmacies. My mandate for the group is to increase healthcare access and reduce costs.
In South Africa, particularly in the private healthcare sector, about 10 million people are served, while the rest rely on state funding. However, the private sector is well-equipped, and pharmacies and hospital groups have the infrastructure to accommodate state patients. Expanding access to care and reducing costs is important because we are well-positioned to do so. Pharmacies and clinics serve as the entry points to healthcare delivery.
Our focus is shifting from merely expanding a retail pharmacy chain to building a healthcare ecosystem. We have evolved beyond retail pharmacy by acquiring businesses that offer health-related financial services, allowing us to manage product benefit design and track the outcomes of diagnostic testing and overall health management. This ultimately aims to reduce healthcare costs for more South Africans. This change has been significant and challenging, but it is essential for South Africa.
EF: Could you elaborate on the current footprint of Dis-chem?
RM: We operate 295 pharmacies and 38 specialized baby stores, called standalone baby stores. In these baby stores, we have integrated our wellness clinic services, specifically tailored for babies, adding a health-focused dimension to the baby clinics. Across our 295 pharmacies, we have over 400 clinics, meaning most of our pharmacies house more than one clinic, making pharmacy and clinic services core offerings.
We plan to expand in the next three years by adding approximately 140,000 square meters of space, translating to around 140 new stores. This expansion will likely include over 200 additional clinics, bringing us closer to 400 stores and about 600 clinics overall. This growth represents a significant evolution in our footprint, effectively doubling in recent years.
EF: How does this shift translate into a better tomorrow?
RM: Repositioning our brand aligns with this new direction, emphasizing that "better health starts here." While we will never lose the ethos of caring pharmacists, our focus is now on delivering broader healthcare services beyond just pharmacy, incorporating clinics and other healthcare solutions.
I am deeply committed to the pharmacy aspect of our business, with the team directly reporting to me. Pharmacy is truly the heart of our operations. The "Better Health Starts Here" branding was designed to position our group to provide broader healthcare services across South Africa beyond just pharmacy. This includes integrating pharmacy clinics and rethinking funded healthcare to create products that ensure access for everyone.
The "Better Tomorrow Starts Here" initiative represents our social responsibility efforts, aligning our business goals with sustainable development in South Africa. The connection between "Better Health Starts Here" and "Better Tomorrow" reflects our cooperative approach to contributing positively and sustainably to the country's future.
EF: What role does your acquisition of OneSpark play in achieving your mission?
RM: When considering the evolution into a healthcare ecosystem, it aligns perfectly with our mandate to lower costs and increase access. Designing healthcare-related financial products is crucial because it directly influences how people consume healthcare. For example, by paying monthly premiums, the structure of these products dictates the type of care they access.
Investing in these types of products is essential because we can tailor benefits to guide consumers within a specific healthcare environment. As we scale these efforts, we can reduce costs, ultimately passing those savings on to the consumer. Alongside our retail pharmacy, we have established a core team that maintains our brand's integrity across financial services products.
Our medical insurance product, "Just Give Medical Insurance," carries our brand, and consumers expect certain values such as service and value. The team ensures that these products remain true to our brand. We have also acquired stakes in businesses that deliver these products, like Kylo for medical insurance and Gap One for life insurance.
Life insurance, often not seen as part of healthcare, is closely related. For example, we serve 1.2 million chronic patients who frequently struggle to get affordable life insurance due to their conditions. However, we understand their risk better than the market because we manage their medication adherence. This allows us to offer them more favorable premiums, effectively merging life insurance with healthcare.
Additionally, we can continuously reassess risk. Unlike traditional life insurance, where risk assessment happens only at the start, we monitor our customers' health over time, encouraging healthier lifestyles. This dynamic approach helps us lower premiums compared to the traditional risk assessment method. This was the reason behind the OneSpark acquisition.
EF: How are you leveraging your data to improve health outcomes?
RM: Regarding data, while it is often said that "data is the new gold," I believe the real value lies in how we interpret and use that data. We have access to vast health consumption data, which is invaluable in identifying new opportunities. For example, as I mentioned earlier, with our life insurance example, we have used anonymized data to demonstrate to reinsurers that our customer base is healthier than average, allowing us to offer lower premiums and create value for consumers.
Rather than externalizing or selling data, I prefer to internalize it, using insights to create opportunities within the group. The key to leveraging data is its cleanliness and accuracy; only clean, well-organized data can extract meaningful insights and identify commercial opportunities. Once these opportunities are identified, the next step is to use the data to improve healthcare outcomes.
For example, with clean data on chronic customers, we can personalize communication to encourage consistent medication adherence, emphasizing the significant clinical benefits of staying adherent for 12 months versus just 8. Additionally, data generated from clinic visits can be used for preventative healthcare, such as screening programs, further enhancing our ability to deliver better health outcomes.
Identifying specific healthcare metrics that indicate the need for a patient to see a specialist or require advanced intervention can significantly change the patient's treatment path and ultimately improve their health outcomes.
I view data, especially health consumption data, as a key to unlocking internal opportunities, aligning with our mandate to lower healthcare costs. The goal is to provide more South Africans access to private healthcare, particularly because the state often struggles to deliver adequate services—a common issue in many developing markets. The state needs all the support it can get, and for the private sector to step in effectively, healthcare must become more affordable.
If we can leverage data to reduce medical insurance costs, private healthcare is accessible to those who could not previously afford it. This supports our mandate and leads to better health outcomes for individuals. For example, instead of a patient waiting all day at a state clinic with no guarantee of receiving all their necessary medications, they could visit a private facility, receive all their required treatments, and only wait a few minutes. This shift in access and efficiency directly contributes to improved health outcomes.
EF: As a CEO, what are your favorite KPIs to use to manage the business?
RM: We have eight strategic pillars of growth, each with its own set of specific metrics, unlike typical KPIs. For example, pillars focus on working capital, profitability, and the financial services space. However, the metric that I find most crucial in assessing whether our healthcare ecosystem strategy is successful is the lifetime value of a consumer. This measures how much of the consumer's spending we capture across healthcare and financial services. Essentially, this metric encompasses all others.
