Going International


Cross-border consolidation in healthcare services is likely to maintain momentum over the coming years, favored by various economic drivers. However, internationalization requires strategies adapted to regional contexts.

Photos: Olivier Hess

  • Challenge: Cross-border M&A is gaining importance for growth diversification and consolidation, for example in the acute care sector. International deals require strategies adapted to regional markets.
  • Solution: Global players from mature as well as developing markets, such as IHH Healthcare, Mediclinic and Fresenius, have substantially expanded their geographic footprint in the last decade. At the same time, multinational operators are focusing on specific market environments in a more limited region.
  • Results: Equity markets have given operators credit for their internationalization strategies, rewarding multi-market players with higher EV/EBITDA valuations. Strong growth perspectives in emerging countries and the risen awareness of healthcare as a long-term defensive investment could spur globalization in the coming years.

Hedley Goldberg talks about the increase of international consolidation
Hedley Goldberg, Managing Director at Rothschild

Cross-border consolidation in healthcare services is likely to maintain momentum over the coming years. For long-term success management strategies adapted to regional contexts are critical. This was demonstrated by the expert analyses and case studies discussed in April at the "Healthcare Business International 2017" conference in London, England.1 In recent years, the healthcare services industry has been characterized by a spate of corporate mergers and takeovers.

Hedley Goldberg, Managing Director at Rothschild, reports that in the record-breaking year of 2015 there were more than 300 transactions in the healthcare sector in Europe alone. And over 280 deals were made in 2016.2 And there are also signs of consolidation in many emerging markets. "I expect that we will see more bold movement by diverse players in the next five to ten years," said Goldberg. In many cases these will most likely be cross-border mergers and acquisitions.

Hospitals expand their healthcare consolidation.
Martin Henrichs, PhD, healthcare expert at UBS

Some examples of the trend towards international consolidation are large operators of private hospitals, like the Australian company Ramsay, the South African Mediclinic Group or the Malaysian healthcare group IHH Healthcare. Back in 2005 these companies generated 100 percent (Ramsay, Mediclinic) and 74 percent (IHH) of their revenue in their home markets, explained UBS healthcare expert Martin Henrichs. Today, thanks to numerous mergers and acquisitions, 43 (Ramsay), 69 (Mediclinic) and as much as 84 percent (IHH) of their revenue is generated outside of their home markets. IHH currently operates hospitals in twelve countries, including Singapore, India, Turkey, China, Iraq and Bulgaria.3

The latest acquisition of Spain’s largest private hospital company, Quironsalud, by Germany's Fresenius Group for approximately $6 billion is no less noteworthy.4 In addition, Fresenius subsidiary Fresenius Medical Care, which is the world's largest operator of dialysis clinics, recently acquired a majority stake in Australia's Cura Group with its 19 private day hospitals across Australia. As a consequence, Fresenius Medical Care not only gained a stronger foothold in Australia, but it also strengthened its portfolio to include outpatient ophthalmology and orthopedic surgeries, for example.5 The experts at the Healthcare Business International 2017 conference in London agreed a general trend in many countries towards outpatient and specialized hospitals could be observed.

Prof. Attila Vegh is convinced that healthcare consolidation emerges internationally
Prof. Attila Vegh, Chairman and CEO at Penta Hospitals International

A key element in cross-border consolidation is that surrounding conditions of different countries have to be taken into account. "In any international expansion to a new geography, working with the right local management team is key to success," comments Henrichs. Disease burden, medical infrastructure, patient profiles as well as the regulatory and reimbursement framework can vary significantly from country to country. In addition, there are often language barriers and cultural peculiarities which need to be taken into account. “There is no one-size-fits-all approach for the internationalization of healthcare services”, says Henrichs. Instead, different business and reimbursement models will continue to coexist in the future and will create operators with different regional, national and international coverage profiles. "We will see global players as well as regional champions."

The hospital group Penta Hospitals International, which operates hospitals and clinics in Slovakia, Czech Republic and Poland, is one example of a regionally oriented company. "Healthcare remains the last untouched industry in Central Eastern Europe, sharing many common characteristics," stressed Attila Vegh, Chairman and CEO of Penta Hospitals International, in London.6 Characteristics for many countries in this region in particular are deficits in public healthcare budgets, extremely obsolete infrastructures and a high degree of market fragmentation, but also traditionally good medical training. Some doctors who emigrated to Western Europe after the fall of the Iron Curtain, for example, have meanwhile returned to their home countries in a "reverse brain drain". The willingness of the general public to pay for high quality healthcare services is also increasing. Vegh is convinced that "healthcare in Central Eastern Europe is ready for disruption." With this in mind, the company is planning to further expand its position as a multinational player by investing in modern technologies, quality standards and mergers. Penta wants to increase the number of its hospitals from 34 to a total of 50 by 2019.


Martin Lindner is an award-winning science writer based in Berlin, Germany. After completing his medical studies and a doctoral thesis in the history of medicine, he went into journalism. His articles have appeared in many major German and Swiss newspapers and magazines.