Belinda Anderson
Mediswitch began in the Usko stable, now Bytes Technology, and although its founders were excited about the prospects of the business, it never broke even under the old management.
But having moved aggressively, it now more than dominates its space, and recently teamed up with one of its big competitors PQ Africa’s QEDI.
The combined business is now called Digital Healthcare Software and commands a large chunk of the market.
The deal got the thumbs-up from the Competition Commission in April and Bytes Technology predicts turnover for the first full year to be between R80-million and R85-million.
“Once bedded down, the new combined operation will undoubtedly become one of South Africa’s most significant healthcare IT service providers,” said Bytes.
According to Bytes, the merger is “essential in order to establish critical mass and achieve economies of scale” for the switching business.
Dave Redshaw, CEO of Bytes Technology, says that for the first year as an integrated business an operating profit of R8,5-million would not be unreasonable as an expectation.
He says the combined operation has given the business critical mass.
In May 5,5-million transactions were processed and, with 6000 doctors using the soft- ware and 80 hospitals using the systems, the business commands about 55% to 60% of the practice management software market.
Competitors on the doctor side include the DiData/Medscheme venture Healthbridge, and, on the pharmacy side, Medicredit.
Redshaw says that Bytes’s contribution to the develop- ment spend is about R20-million to R30-million of the total of between R130-million and R140-million spent on the business since inception.
Electronic switching is the transfer of information and the processing of transactions between service providers and funders; in this case doctors and medical aids.
Netcare’s Jackie Shevel says the group is very pleased with the current performance of Mediswitch/Digital Healthcare Software and hopes to increase its stake after Fedsure sells off its minority holding.
Shevel expects this to take place within a few weeks, as Fedsure needs to sell off its assets ahead of unbundling in November.
After the merger with QEDI, Bytes owns 40% of the combined business, PQ Africa another 40%, Netcare about 12,5% and Fedsure the remaining 7,5%.