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Healthcare Spire Healthcare - Cinven | European investment ... Flipbook PDF
Healthcare continued Spire Healthcare Company description Spire Healthcare is the second largest private hospital group
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Healthcare continued Spire Healthcare Company description Spire Healthcare is the second largest private hospital group in the UK with 37 acute care hospitals and nine outpatient clinics. Payors include private medical insurance (PMI) companies, self-pay customers and the National Health Service (NHS).
www.spirehealthcare.com
Annual Review 2011
61
Activity Location Acquired Transaction value Sales* Employees Cinven representatives Senior management *to end December 2011 (actual)
Hospital operator UK August 2007 £1,580 million £674 million Approximately 10,900 Simon Rowlands, Rebecca Gibson, Pascal Heberling, Alex Leslie Chairman Garry Watts, CEO Rob Roger CFO Simon Gordon
Healthcare continued Spire Healthcare Cinven origination Given its long history of hospital investments, including creating the market leader in the UK, General Healthcare Group (GHG), Cinven’s Healthcare team had been following BUPA Hospitals, a non-core division of BUPA (the UK’s largest PMI provider) for a number of years. Cinven met the BUPA Group CEO and CFO with an offer to acquire BUPA Hospitals as early as 2005. In 2007, BUPA invited selected bidders to enter into a sale process; Cinven was well positioned given its track record with GHG and Générale de Santé, a leading private accute hospital provider in France, in previous Cinven funds. Cinven’s track record in the UK provided a compelling backdrop, as BUPA was very focused on the experience and future plans of its chosen partner, in part because the consent of the UK Department of Health was a condition to closing the transaction.
Annual Review 2011
62
Investment rationale and strategy Cinven’s strategy for Spire was to transform a previously non-core division of BUPA (a large, not-for profit organisation focused on health insurance) into a dynamic and successful business by fundamentally redirecting the business model with a world-class management team sourced by Cinven. As is typical for a Cinven investment, the strategy has a number of value creation levers, including: — repositioning Spire as a premium operator to attract top hospital physicians, regain lost market share and improve PMI pricing; —d riving organic growth through increased capital investment in medical equipment and expanded inpatient and outpatient services; — implementing operational and cash flow improvements and reducing central overheads through increased management focus, systems and controls; —c apitalising on acquisition opportunities complementing Spire’s operations and patient care offerings; — identifying opportunities to provide additional complementary services to the NHS given changes to the provision of UK healthcare; and — realising value on an opportunistic basis from Spire’s freehold property asset base; and —e nsuring a consistently high level of patient care and, where possible, wider patient choice.
Cinven value creation Key to Cinven’s investment strategy was changing the culture of the organisation by introducing a new management team including a new CEO, CFO and Chairman and changing a number of the hospital directors. Following a global search, the core of the new team was identified by Cinven from the best performing Australian hospital group, Affinity. Together with Spire’s management, Cinven has made significant progress in the following areas: — s uccessfully completing two strategic, add-on acquisitions (Classic Hospitals and Thames Valley) that have increased the company’s size and competitiveness and resulted in significant operating synergies. Most importantly, the acquisitions have reinforced Spire’s national coverage, making Spire the second largest UK hospital group and a key partner for all providers of PMI; — s ignificantly increasing investment in high value-add equipment, services and infrastructure, attracting top physicians and generating attractive returns on capital with higher margin activity; — introducing new management reporting systems, including daily key performance indicator reporting, which targets best-in-class operating standards, identifies underperforming areas and helps drive improved operating margins and revenue growth; — s implifying inefficient systems and procedures that have streamlined operations; and —c onsistently achieving record high levels of patient care as a result of investment and training.