- Discovery Health has paid out R1.4 billion for 1.77 million tests in South Africa since the start of the Covid-19 pandemic.
- This equates to just 20% of all tests conducted at private labs in South Africa.
- With a total of 8.47 million tests conducted at private laboratories over the same timeframe, the local private coronavirus testing industry may already be worth several billion.
- Globally, commercial labs and coronavirus testing companies have seen dramatic increases in profits.
- For more stories go to www.BusinessInsider.co.za.
Discovery Health has paid out more than R1.4 billion for Covid-19 antigen and polymerase chain reaction (PCR) tests since March 2020 - which amounts to roughly one-fifth of all private laboratory tests conducted in South Africa since the start of the pandemic.
Dr Noluthando Nematswerani, the head of Discovery’s Centre For Clinical Excellence, told Business Insider South Africa that most of Discovery Health’s schemes fund two rapid antigen tests and two PCR tests per year, and an unlimited number where indicated as a prescribed minimum benefit.
Most competing medical aids also pay out for Covid-19 tests - with each scheme carrying various terms and conditions.
From March 2020 to 09 August 2021, Discovery Health paid out this R1.4 billion for a total of 1.77 million tests, Nematswerani says.
The cost of these tests varies according to the providers and laboratories used. But to standardise costing, Discovery, like most medical aids, has established medical scheme rates when clients make claims outside of prescribed minimum benefits and the Discovery network.
“Where a non-network provider is used for rapid antigen testing, cover will be up to the Discovery Health Rate of R165. The cost of a Covid PCR test is R850,” Dr Nematswerani said.
This combination of expenses makes up Discovery’s R1.4 billion paid out thus far - but South Africans have taken significantly more Covid-19 tests at private labs than Discovery’s 1.77 million.
By early August this year, private laboratories in South Africa had reported 8.47 million tests - nearly five times that of Discovery’s figure, according to the National Health Laboratory Service (NHLS).
Currently, most private labs have levelled out their pricing at roughly R850 per PCR test, while rapid antigen tests typically cost between R350 and R390 per test. This cost is down significantly from those charged at the start of the pandemic - but likely still includes a sizeable profit for the companies concerned.
Although the NHLS does not publicly provide a breakdown between PCR and antigen tests, after 1.77 million combined tests, Discovery’s median rate per test at private laboratories is approximately R790.
Assuming this median rate to be somewhat accurate, the private laboratory industry in South Africa may have turned over a total of more than R6.5 billion in the last 18 months from Covid-19 testing alone.
Although the above figure does not take into account the expenses of collecting and processing the swabs, last year, a GroundUp article estimated that the cost of collecting a PCR swab, plus the chemical reagents used to process it, could be as little as R150 - with an upper estimate at R400. The same article concluded that at 2020’s prices, labs were in line to make a “handsome profit” from the testing associated with the Covid-19 pandemic.
This is a trend seen elsewhere in the world where the global Covid-19 testing industry has exploded.
In February last year, the share price of a small US healthcare logistics company jumped up by 425% after receiving an order for millions of its Covid-19 tests. Those of several commercial labs in the United States have also recovered sharply off the back of coronavirus testing. And firms such as Abbott and Serco have also seen profits in the hundreds of millions due to innovations and contracts in the coronavirus testing space abroad.
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