What is the Social Challenge?

Mental illness is a global burden, affecting individuals, families, and communities. In South Africa, one in five people experience mental health conditions, with high rates of substance abuse, anxiety disorders, mood disorders, and stress. Only 25% of individuals with mental disorders in South Africa receive treatment due to a shortage of beds, practitioners, stigma, and lack of awareness. South Africa has a low number of mental health beds compared to international standards, with only 28 private beds and 11 public beds per 100,000 people.

Our Response:

After concluding the investment in October 2022, Summit worked with LifePath Health on IT aspects and supplier changes. We also reviewed core systems for better accommodation of LifePath Health's growing needs. The investment creates an opportunity for LifePath Health to establish satellite mental health clinics alongside the Fund's hospitals, addressing the lack of services in rural and peri-urban areas. This expansion will bring psychiatrists to local communities, improving access to specialized care. The investment enables LifePath Health to enhance hospital management capacity and software systems, and achieve cost savings through economies of scale. Summit provides value by deploying information systems and implementing governance and ESG frameworks.

Who Are the Stakeholders?

In the context of mental health, the primary stakeholders are individuals in need of treatment, while secondary stakeholders include families and local communities. However, concerning substance abuse, the state becomes a significant stakeholder alongside patients and their families. South Africa's Central Drug Authority reports that alcohol abuse accounts for 12% of the country's annual GDP and is the fifth leading cause of years of life lost, with a disproportionate impact on socioeconomic groups (Theron et al., 2022).

What is the Scale of the Impact?

LifePath Health aims to become the leading private provider of mental healthcare and hospitalization in South Africa. Its mission is measured by factors such as income, total beds, reputation, nationwide footprint, innovation in tariff and treatment models, as well as therapeutic efficiency through outcome measurement tools. Currently, LifePath Health is tied as the second largest provider of mental health services based on the number of healthcare hospitals. Opening additional targeted facilities will enable LIFEPATH HEALTH to increase its scale. To accomplish this, LifePath Health plans to commission four more facilities while ensuring an adequate number of psychologists and psychiatrists to meet the demand for services.

Job Creation:

LifePath Health plans to open a minimum of four new facilities, including LifePath Health Pietermaritzburg, which will result in the creation of approximately 200 permanent jobs by 2026.

Community Upliftment:

The projected number of patient days for 2023 at LIFEPATH HEALTH is 80,328, with 7,761 patients being treated. With the addition of three new facilities resulting from the investment, LifePath Health will add 122 beds and increase its capacity to 122,789 patient days by 2028, accommodating 11,864 patients assuming a 75% occupancy rate. This expansion will allow it to treat an additional 5,713 patients annually.

LifePath Health is a member of the National Hospital Network (NHN), which serves low-income and underserved markets. NHN hospitals negotiate tariffs suitable for these markets, and their affordability attracts large medical schemes, ensuring accessible healthcare for the community.

Transformation, Diversity & Inclusion:

Through the Fund's investment, LifePath Health has attained 51% black ownership. Additionally, it has a workforce comprising over 225 employees, with 78% being black and 85% being women. The Fund's emphasis on transformation, diversity & inclusion outcomes will ensure the maintenance of these levels of diversity and inclusion within LifePath Health.

What if LifePath Health Group Did Not Exist?

The absence of LifePath Health’s mental health and rehabilitation services, along with similar providers, would exacerbate the already dire situation in South Africa. By establishing smaller facilities in township and peri-urban areas, LifePath Health aims to extend essential healthcare services to communities that would otherwise lack access to such services.

What is the Risk?

Summit's ESG due diligence on LifePath Health found that the company already has aspects of a formal ESMS in place, including centralized procedures and policies. The risk register requires enhancements to consider additional environmental and social aspects. LifePath Health has effective incident management processes and a positive working environment. The ESG Value Add Action Plan includes measures to improve human capital, resource efficiency, and community-related initiatives. LifePath Health has strategies for energy efficiency, such as using energy-saving heating systems and LED lighting. Efforts are underway to engage stakeholders, enhance security measures, and address noise pollution concerns.