HBI Deals+Insights / News

If integrated managed care systems are so great, why aren’t they everywhere?

CVC might be about to create a major integrated managed care system in Greece. Its target is the insurer Ethniki, and should it succeed HBI understands it would become the dominant player in Greek healthcare services, with competitors potentially frantically scrambling to merge and acquire to make up lost ground. So why hasn’t this happened more in Europe?

“Imperialistic” is the way one Greek source describes how he would see the landscape post-acquisition. Having already acquired a majority stake in Metropolitan Hospital group, and a hospital from IASO in 2017, and Athens-headquartered Hygeia in 2018, you can see our Greek source’s point.

It should be made clear at the outset that this is far from a done deal. The process has just restarted following a COVID freeze, and if reports are to be believed CVC bid less than owner, National Bank of Greece, wants. CVC, of course, is saying nothing. But HBI understands a deal is still a distinct possibility – and talks have resumed.

The appeal of integrating finance and delivery is strong. An umbrella organisation providing the full gamut of services and able to control cost and pathway is obviously appealing.

But experience – and few have been created – suggests this isn’t the recipe for success one might imagine. Many believe there is fundamental conflict of interest in integrated payor-providers. The provider side wants to treat while the payor side wants to save money. “When an insurer buys a provider, it’s no longer medicine. It’s cost control,” is how one Swiss insurer described the climate around verticalisation. Getting professionals from two sides who often consider themselves antagonists can be a challenge.

There are some examples to look at, but few clear cut successes. Far, far to the west of Athens, the death of the once much-vaunted Alzira model in Spain provides a salutary warning. The payor-provider, or HMO, model is common in Latin America where anecdotal evidence suggests overtreatment is rife, potentially making the model the only way for insurers to be able to control costs. Penta Investments owns Slovakia’s largest hospital chain and one of its three large insurers but this has proved highly controversial. The HMO model is also developed in Poland by various actors, and across CEE by listed player Medicover.

CVC has deep pockets and commercial nous to spare. Should the deal go ahead, we expect operators across Europe will be interested in seeing its success – it’s Greek rivals less so.

We would welcome your thoughts on this story. Email your views to David Farbrother or call 0207 183 3779.