The private healthcare services are being developed across the country

The private healthcare services are starting to develop in Romania rather through their own forces. The direct foreign investments aren’t significant, and their presence is preponderant noticed in clinics. “Superclinics” have turned up and we hardly entered in the stage of hospital. Then follows the stage of expansion in the country, in the big cities. One of the big players estimates that not for another three-four years a general hospital with 400 beds could become profitable.

From sexual dysfunctions discreetly treated in modern endowed policlinics, the private medical services have lately burst out. Among the first initiatives there were the ambulance services (the emergency transportation) and the stomatological cabinets. The Romanians, because of their tradition, resort to a doctor only when they can’t handle the pain anymore. On the other hand, neither the investments required for developing this type of business aren’t of vast proportions. The market of the private healthcare services has fully benefited of the „lack of competitiveness” from the public ones. The big players have started with individual investments made by several doctors through opening some clinics, about ten years ago. Now they are in the age of maternities, hospitals and of prompting investors. The big foreign players didn’t arrive. The investment funds were more attracted, that bought minority interests. Otherwise, this is usually the first stage in the maturation of a business or market.

Transactions

In 2006, IFC (International Finance Corporation) bought a stock package representing 20% of the social capital of MedLife, for which paid the equivalent in lei of five million dollar. Previous to the transaction with IFC, the shareholders of MedLife were the pediatrist Mihaela Gabriela Cristescu, with 30%, and her two sons, Mihail Marcu (40%), general director of the company and Nicolae Marcu (30%), psychiatrist. Those three shareholders have sold titles, in equal proportions to IFC. Unirea Medical Centre was found in 1995 by the cardiologist Wargha Enayati and at the beginning of 2007, she brought as minority shareholder the 3i Plc fund from Great Britain, within the biggest transaction involving a private clinic from Romania. The investment fund Gemisa bought 45% of Diagnosis’s stock package for 1,5 million euro. As a result of the transaction, the company’s shareholders are Gemisa Investments - 44,9% and the founders of the company Ionescu Dan - 20% and Manea Cristina -14,1%. The rest of the shareholders are natural persons, of which the general director of Gemisa, Dragos Rosca, with 5% from the capital. Diagnosis owns only one clinic in Bucharest that will fusion with Cristal Diagnostics, purchased by Gemisa in the previous years.

Expansion politics

Those two networks dispute the capital city market by extending the service and the presence range, but also aim the expansion in the country. UMC (Unirea Medical Centre) has started this year the expansion at national level, by purchasing 49% of Medical Centre Motilor company’s capital as a result of the transaction of 500.000 euro. On the other hand also MedLife enlarges through taking over. At the end of April followed the centre of psychotherapy and psychological counseling Mindcare from Bucharest. “In province it’s more difficult to take into account the take over of some operators, maybe only where there are university centers with tradition, such as the ones from Iasi and Timisoara. Most of the experts migrate towards Capital city or in foreign countries”, Marcu considers.

Investments

MedLife will open in the next two years four hospitals in Iasi, Constanta, Brasov and Timisoara, aiming also the expansion of the portfolio with healthcare services assured by doctors from the United States of America (USA), Great Britain and Israel. “The hospitals will have each 40 beds, two operating rooms, an operating block and one delivery room. Those from Iasi, Constanta and Brasov will be finished next year, and the one from Timisoara will be opened over two years. The costs for a project is estimated to about seven-eight million euro”, Mihai Marcu, president of MedLife stated. The management is in discussions with teams of doctors that graduated high reputation universities from USA , Great Britain and Israel in order to introduce in the MedLife hospitals new healthcare services. MedLife is leader on the market of the private healthcare services market from Romania and owns over a quarter from the market share in Bucharest on one of the most important segments on the market, the one of the services offered to the corporate customers. At national level MedLife has a market share of 5% of the private healthcare services amount. MedLife has 870 employees, of which over 400 are doctors and medical staff. In the country, MedLife offers to its clients the same health services through those 120 clinics and medical centers partners in the network NetLife.

UMC will invest this year over 20 million euro in opening new clinics and also in taking over some operators from the big cities in the country. So, in August a maternity will be opened that will be situated next to the medical centre inaugurated in Baneasa. The maternity will have available 20 separate rooms, two operating rooms, one delivery room into water and a reanimation section. The diagnosis & treatment centre has a surface of 2.200 square meters and has 30 medical cabinets, especially outlining the image. The subscribers can make echocardiograms, abdominal echography and computerized tomography. The clinic is also endowed with magnetic resonance imaging that is used in orthopedy, neurology, neurosurgery, oncology and gynecology. “The amounted investment for maternity and centre is of about 12 million euro. We estimate that in the maternity will annually take place 2.000 births, and on long term will cover 5% of the total of births from Bucharest”, the company’s representative added.

Harsh competition

In the first six months of the current year, MedLife, the leader of the private healthcare services market, has strongly consolidated its position reaching to a turnover of 14,3 million USD, double comparative with the same period of 2007, when the turnover was of 7,6 million USD. The company recorded in the first quarter an operational profit of 2,3 million USD. “We’ve managed to increase the gap against the competitors”, Mihail Marcu, MedLife president stated. For this year, UMC estimates businesses over ten million euro, in increase with 25% against 2007. Between UMC and MedLife also was a dispute regarding the term “hospital” Initiated two years ago, it was resumed at the beginning of this year, when Medlife accused UMC of incorrect use of this term in the advertising materials. For this time UMC reacted defending its right of using the term.

Exceptions

If most of the businesses from the healthcare services domain were developed by entrepreneur-doctors, there are also exceptions. Medsana was developed by a medical group. It is controlled by Athens Medical Center in association with the German group Asklepios Kliniken, the last one owing a network of 100 hospitals in Germany, USA, China, Russia, Poland and Portugal. Medsana aims for 2008 an increase of the turnover with about 60%, to 9-10 million euro, last year the businesses reaching to 6,1 million euro. The company has also in plan the construction of a private hospital in the North of Bucharest, with a capacity of 150 beds and the possibility of expansion to 200. The project is estimated to about 24 million euro.

Another example is Fresenius NephroCare Romania, the local leader of the private services of dialysis from Romania, with a market share of 39% at the end of the first quarter of this year and had as target at the end of the first semester a share market over 46%. Fresenius NephroCare also own at the moment four clinics of dialysis in Bucharest, Iasi, Constanta and Oradea, centers in which already benefit of treatment 900 patients. The company intends to open other five new clinics till 2010, in Brasov, Ploiesti, Pitesti, Suceava and Deva. The planned value of the investments in Romania is estimated to about 20 million Euro, and the total capacity of treatment will be over 2000 patients. Through its network of over 2200 private clinics from North America, Latin America, Europe and the area Asia-Pacific, Fresenius Medical Care supplies treatments by dialysis to about 174.000 patients. Fresenius Medical Care is world leader in products and dialysis services and has an experience of over 40 years in this domain.
General hospital

The Unirea Medical Centre (UMC) will examine the possibility of opening a private general hospital in Romania, in three years, now this type of investment being unprofitable. “The market of the healthcare services will develop in the following three-four years and will consolidate also as business volume, as also in what concerns the professionalism and technology. A private general hospital in the true sense of the word, as interests us, should have 300-400 beds, or now it isn’t justified an investment of this proportion”, Sergiu Negut, executive director of the company stated.
Potential

A Delloitte study considers that healthcare services market as being “relatively underdeveloped”, and the increase perspectives are moderate. “The perspectives are moderate, and the market has still reduced dimensions, but the Government encourages the set up of private healthcare units”, it is shown in the study. The key of development the health systems is represented by the public private partnerships, in which the suppliers which don’t have these types of services to receive the counter value of the services carried out from the national funds of health insurances, it is also shown in the study.