Acquisitions in Spanish Health Care

Acquisitions in Spanish Health Care

Spain’s National Health Service, established in 1986, was for many years the jewel in the crown of the welfare state. It provided everyone living in the country with free medical attention and hospitalisation. Funding was covered by taxes and government grants. In 2009, the health service was ranked seventh – one of the best in the world in terms of quality and efficiency – by the World Health Organisation.

However, since mid-2012, reforms have been introduced which allow for the potential of privatisation in Spanish healthcare, a lucrative endeavour for private investors.

A Push for more Privatisations and Public-Private Joint Initiatives 

Budget cuts are being used by Spain´s autonomous regions, which control the health and education purse strings, to drive the privatisation process. The Madrid regional government plans to sell off the management of six of its 20 public hospitals and 27 of its 268 health centres.

Private Investors Cash In

Any industry shake-up inevitably producers winners as well as losers, and risk capital fund CVC Partners has reaped the benefits of its strategic decision two years ago to reclaim its leading position in Spain´s hospital management business. Its Capio unit is now one of two companies which dominate this business.

Investors like CVC are increasingly important participants in the health care industry. They are prepared to make sizeable investments because they believe they can achieve attractive returns even at the low end of the economic cycle. They look at the challenges facing the industry and see opportunities.

With its acquisition of Spain´s biggest private healthcare firm Capio Sanidad from the European hospital group Capio in 2011, CVC regained a business it had owned six years previously. The timing of CVC’s return to Spain’s healthcare sector could not have been better given the current overhaul of publicly-funded services. Capio Sanidad operates some 26 hospitals and healthcare centres in Spain.

Other Reforms

  • Employed citizens have to pay up to 50 percent for medicines depending on income. According to the Health Ministry, the immediate impact of excluding a list of 425 medicines from public subsidy has been a huge price increase.
  • The system of co-payment or partial charges for prescribed medicines has been extended.
  • Pensioners now have to pay for medicines.
  • Illegal immigrants no longer have free medical care.

What investment opportunities do you see in these changes in the Spanish healthcare system?

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