International is difficult for hospital groups

HBI Deals+Insights / M&A/IPOs

Martin De Benito Gellner
July 8, 2022

Max Hotopf

Vivalto Santé has taken the courageous decision to go international. This is a bold decision for a hospital company based in a single European country. Very few have succeeded in doing so and those who have been the best players buy the best players. We think of Fresenius Helios buying Quiron in Spain, Ramsay buying Générale de Santé in France then Capio in Sweden, and Mediclinic buying Hirslanden in Switzerland.

In all three cases, the acquirer purchased the largest hospital operator in the country. And Fresenius and Ramsay have long pedigrees in running international businesses.

This is not the case with Vivalto Santé. And it is clear that most national players struggle to develop internationally. The jury is still out on Schoen’s expansion into the UK. But the expansion of Penta Hospital in Poland and its attempt to build a very large pan-CEE hospital group failed. Famous, Helios Fresenius bought a single Austrian hospital more than ten years ago, then retired to Germany. Asklepios withdrew from California and Greece.

There are many risks. You need to familiarize yourself with a completely different national system of payments, regulations, and culture. You have to find synergies that can pay the cost of acquisition. You have to be more competitive in your own home market than your competitors who have decades of experience.

And there are not many synergies to be drawn from it. The main advantages come from diversification and economies of scale and most of the advantages of scale can be obtained by expanding within a country, if there is still room to do so.

Expanding into low-capital ambulatory sectors is much easier. And telehealth allows a group to grow and establish a strong presence in primary care. This is what Helios Fresenius is trying with Helios Global Health.

But new digital technologies have the potential to make managing teams across borders a little easier by giving managers faster, more up-to-date and more accurate information about what’s happening on the ground. And Daniel Caille, the CEO of Vivalto, has a talented and savvy team and we are sure he will exploit some of these advantages as well.

We will follow its development with interest.

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