Occupational health is a gateway acquisition
Health and safety, absence management, employee surveys .. at first glance occupational healthcare is an unimportant line of business. That is until an acquisition can add hundreds of thousands, perhaps even millions, of new patients to a healthcare operator’s books.
Click here to see the HBI Intelligence report on occupational healthcare.
The sector remains relatively overlooked across Europe, with notable exceptions in Finland and Poland. However, healthcare operators are starting to realise that buying up these businesses has benefits outside of the initial added revenue.
Considering that Finnish outpatient group Terveystalo has €1bn in sales each year, it has added ‘just’ an extra €72m through its acquisition of Feelgood this week. Still, as CEO Ville Iho said, it has more than doubled the number of employees it could treat. The average price per employee at Feelgood is much lower than at Terveystalo, €87 vs €613, but occupational healthcare is one of the most overlooked cross-selling opportunities in healthcare today.
Spain’s largest hospital group Quironsalud often talking of cross-selling with its occupational healthcare division Quironprevencion but owner Fresenius Helios has yet to build a successful twin model in Germany. An earlier occupational healthcare/telehealth joint venture with Canadian group Dialogue appears to have been abandoned.
Listed diagnostics-oncology player Atrys, also in Spain, has also bought into the sub-sector, telling HBI that it solved one of its biggest weaknesses, a lack of locations to access patients. It bought Aspy, which serves 130,000 companies across 200 locations.
Even in the UK, where employers are required by law to do much less occupational healthcare than Finland, Poland and Spain, some of the larger groups look after 2m+ employees.
Buying one of these and verticalising gives access to a whole new pool of patients to sell in diagnostics, wellness, even acute care.
However, this may only work where occupational healthcare benefits are at least subsidised by the public payor. Part of the reason that Terveystalo’s price per employee is so high is that around half the costs are reimbursed by social security (Kela).
Of course, the incentives matter. Most occupational health businesses are monetised through a subscription model to cover the basics like checkups and then offer discounted extras where needed. The risk comes when an occupational healthcare business verticalises with say, a hospital group, meaning it can set high prices for the occasional knee or hip replacement. This can encourage overtreatment and employers may switch to a competitor if it leads to rising prices and overtreatment.
There is a balance to be struck but buying up occupational healthcare businesses could prove a solution to the increasingly difficult task of ‘owning’ the patient.
We would welcome your thoughts on this story. Email your views to Rachel Lewis or call 0207 183 3779.
