HBI Deals+Insights / News

Troubled public sector could open opportunities for German hospitals

Ameos, Germany’s largest for-profit psychiatric provider by revenue, is bidding for a non-profit university hospital in Saxony-Arnhalt, northwestern Germany, alongside SRH Kliniken, a top-ten for-profit hospital group. We hear publicly-owned hospitals are in trouble and this could open up opportunities for the private sector across the country.

The hospital, Klinikum Burgenlandkreis GmbH, consists of two clinics about 30mins away from each other which were merged in 2004. The facilities employ 1,500 people over both sites and filed for administration in September.

“All the publicly owned hospitals in this federal state are more or less in big trouble right now,” says a market expert. “It’s not a very affluent area and the local shareholders cannot afford to give out another loan or inject equity. Other German states could end up having the same discussions.

“The underlying problem is with the number of inpatients decreasing and there’s a big issue finding staff,” they add. “I have the feeling this could be the starting point for more acquisitions for private hospitals in the upcoming years.”

Penalties for nurse to patient ratios that don’t meet new standards came into force on the January 1 and will likely hit many hospitals – finding staff is one of the biggest challenges facing the sector today. The staffing issue may also have played an important role in the reason why Ameos’ acquisition of four Sana clinics was put on hold last year. There is still no news on this deal.

When it comes to bidders for Klinikum Burgenlandkreis, we hear local Halle University Hospital was initially in the race but recently pulled its offer, leaving for-profit providers SRH Kliniken and Ameos to compete for the asset.

Ameos may not be the favoured contender. The group is in a tussle with the national ver.di workers union involving its Saszland facility because it terminated a number of employees after recent strikes.

Ameos had sales of €843m in 2018 and reported 4% growth in its 2019 H1 results, after which it made a number of acquisitions. SRH Kliniken, owned by SRH Holding, had estimated revenues of €655m in 2018 and runs ten acute care hospitals, six rehabilitation clinics and 20 medical care centres across Germany.

Our Analysis: As it stands there aren’t many other acquisition options in this region, so it’s no surprise Ameos has some competition. Though the entire sector is battling tough conditions with budget ceilings that restrict earnings and low remuneration rates meaning acquisitions are likely to be loss making for the first few years. Staffing penalties are an added challenge – one can only hope Health Minister Jens Spahn’s measures boost nurse numbers across healthcare services sooner rather than later.

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