Healthe Care buys 13 hospitals from Pulse Health for 155 million
Australian Financial Review, 16 May 2017
Australia’s third largest private hospital operator, Healthe Care, has achieved its goal of owning 30 hospitals three years early after buying 13 hospitals from Pulse Health in a $155 million deal.
Healthe is backed by Chinese health group Luye Medical, which bought Healthe in late 2015 from private equity firm Archer Capital for $938 million.
Healthe also bought three hospitals from Evolution Healthcare in March, and chief executive Steve Atkins expects to add another facility by the end of the month. This will take the total number of hospitals in its portfolio to 35.
The group will now have annualised revenue of more than $700 million and operate more than 2500 beds. Healthe’s previous goal was to have more than 30 hospitals and 2500 beds by 2020, but Mr Atkins told The Australian Financial Review that he had been watching both Pulse and Evolution closely and the time was right to do the deals.
“You strike while the iron’s hot,” he said, adding there would now be an “obvious period of consolidation while we integrate our systems and style of doing things into those business”.
Healthe will now also have six-day surgeries thanks to the Pulse and Evolution deals, plus a hospital in New Zealand, and Mr Atkins is keen to build on both footholds.
“It creates an opportunity for a New Zealand platform … we think there are opportunities in that market,” he said.
While tensions between the private hospital sector and private health insurers over the cost of care have escalated in recent years, Mr Atkins said Healthe had worked to develop strong relationships with health funds, and this would be further helped by the Pulse deal.
“We have very good health fund relationships and I think having these assets in our portfolio enhances this,” he said.
Mr Atkins said he was “a bit tired of this sort of ongoing antagonism” between the two groups. While there would always be negotiating to be done between the two parties, the focus should be on providing a value proposition for people who want to buy private health insurance.
“We are really bound together in this sector and I would really like to see us working collaboratively together.”
Healthe is essentially running a dual-track growth process, building its business in Australia while also helping Luye grow in China and Asia.
Mr Atkins has established a separate team, based in Asia, that is looking for M&A deals outside Australia, with a particular focus on China and south-east Asia.
“We are keeping it a bit separate because it’s such a big piece that we could distract the Healthe Care executive team,” he said.