14 April 2016
HealtheCare System Declared in Good Shape

Healthecare system declared in good shape

The Australian, 14 April 2016


The finance head of China’s Luye Medical Group, Charles Wang, says despite a list of government reviews into Australia’s healthcare system, he is confident its private sector will continue to grow.

Mr Wang, fresh from completing a $938 million acquisition of Australia’s third-largest private hospital group, Healthe Care, said when eyeing its target the Chinese group concluded that Australia had the best private healthcare system compared with other developed countries they reviewed for investment.

“In healthcare services, political risk is always in the back of your mind, but we viewed Australia as relatively low risk,” Luye’s chief financial officer, in Sydney yesterday, said. “We are comfortable (with Australia). Australia has the right balance between private and public.”

Mr Wang said Luye, which started more than 20 years ago as a pharmaceutical company, had been looking to expand out of Asia and Australia was its first significant investment outside the economic powerhouse.

He added that Australia’s healthcare system was “unique”, given almost half the population had private health insurance.

He also said that while the Turnbull government was conducting six different reviews into the healthcare sector, he understood the general trend was that the government wanted more patients in the private sector and people to buy health insurance.

“We are confident it will continue to grow. The growth of private healthcare will still outpace general healthcare,” he said.

Healthe Care, which operates 17 hospital sites, was sold by private equity operator Archer Capital in December and the deal completed on Tuesday.

Healthe Care chief executive Steven Atkins, who will stay in his role along with his management team, said contact was made with Lye 18 months ago but formal talks started in October last year.

He said the new owners had signed off on a $300m investment on Tuesday to expand and introduce new services across Healthe Care’s hospital portfolio.

Mr Wang added that Luye – producer of China’s best-selling chemotherapy drug – wants to accelerate Healthe Care’s Australian growth plans.

“The focus of the Australian management team is to continue to grow in Australia and execute the plan we agreed on and we want them to accelerate the plan,” he said.

The Luye CFO wouldn’t rule out a public listing, saying “we’ll see” when questioned on whether the company would seek an initial public offering.

“Naturally one will have to, some time in the future, consider how we tap the capital market for future expansion needs,” he said.

“Our focus right now is not capital markets though it is, over the next 12 to 24 months, making sure we partner with Healthe Care to do what we set out to do.”

The deal is important to Australian and China relations and Luye chairman Liu Dian Bo will meet NSW Health Minister Jillian Skinner in Shanghai on Saturday to discuss its plans.

Mr Atkins said he and his team had been in China about six times in the last 18 months and were keen to work on collaborations with counterparts in the economic powerhouse. “We can see us enhancing their (Luye’s) aspirations to grow in China,” he said.

Mr Wang said China’s regime was pushing for reforms in its healthcare sector and were looking to align traditional healthcare services with Western models.

“They want more community style hospitals and highly specialised hospitals,” he said.