The investments amount to EUR4.8 million, while spending per project stands at about EUR800,000 to EUR1 million.
“We stopped opening hospitals for now. When the Health Ministry and the National Health Insurance House (CNAS i.e.) decide they want a private sector, then we will open private hospitals,” Mihai Marcu told ZF.
MedLife, a company founded 18 years ago operates 11 large clinics, eight labs, six hospitals and several other smaller entities.
The biggest clinic of the network is the Grivita hyper-clinic in Bucharest, where revenue during the week on busiest days (Monday – Thursday) reaches 250,000 lei (EUR57,000) per day.
Mihai Marcu says MedLife is a “cash operator”, as direct payments generate 65% of the company’s revenue, which could amount to more than EUR80 million this year. Corporate contracts generate 27% to 30% of the revenue, while the rest comes from the government.
MedLife has opened two large clinics in Galati (EUR0.8 million investment) and in Iasi (EUR1 million) since the beginning of the year, but none of the two has any governmental contracts. Each of these clinics has the potential of reaching EUR2 million revenue after three years in operation.
“The project is to expand to cities of more than 200,000 people. But that doesn’t mean we’ll stop at this. The market in Galati is not mature yet, but the brand allowed us a very quick penetration. We got more than 10,000 new subscribers. Active population is 50,000,” Mihai Marcu said.
While in Galati, a city of 250,000 people where companies like ArcelorMittal steel plant, Damen Shipyards Galati, Arabesque, Mairon, Prutul, Vega 93 are based, MedLife had no trouble gaining ground, competition in Iasi is much fiercer. The city already has a large private medical service provider, Arcadia.
MedLife, which made a number of acquisitions in large cities other than Bucharest, says it will not turn down a tempting offer but has not been active in this respect lately.
“If opportunities come up, if there are local partners who have [large] clinics and a strong position and are willing to sell at market price, then yes [we are interested]. We’ve been getting one or two offers a week but nothing worth sitting down for talks over,” Marcu added.
The MedLife boss says many of the private hospitals in Romania are in a very difficult position.
“Half of the private hospitals outside Bucharest are for sale. First of all, this is a government-created problem. There is no country around Romania, Turkey, Bulgaria, Hungary, where the government does not equally finance state-owned and private operators. There was also this trend of repurposing a building into a hospital. It seemed very tempting.”
Judging from the publicly available information so far, no major healthcare provider has gone insolvent or bankrupt, but more and more executives are talking about the hardships private hospitals are experiencing. Some even said back when such investments were inaugurated one after the other that what happened with the real estate sector would happen with the private medical service industry, as well.
“The corporate segment is on the rise. There are companies willing to get subscriptions for their employees, which was not the case before. We can feel an increase, something like 10% to 12%,” Mihai Marcu said.
He is optimistic about this year’s performance of the country’s economy, expecting the gross domestic product to go up by 3% to 3.5%.
Marcu believes a number of hospitals in Bucharest will get more money from the government this year, while smaller operators’ chance will be to specialize on niches.
Most clinics and hospitals operate in Bucharest. The total private medical service market stands at more EUR550 million.
MedLife’s main competitors are Regina Maria, Medicover, Sanador and Gral.
(English version by Loredana Fratila-Cristescu)