Vote of Confidence in Private Health Business
Glen Passmore, a director of both Ross Healthcare and the new Gateway Private Hospital that is taking shape on Umhlanga Ridge says that the company is taking a leaf out of its broader property portfolio. It doesn't simply build, but invests in and actively manages its own property portfolio.
"Gateway is not just an investment in a hospital. We want to provide the whole package. We are not a passive investor. We want to be involved in managing our own assets," he says.
JT Ross' initial entrance into this segment of the market happened by chance, according to Passmore. The company was involved with the construction of the Hillcrest Private Hospital when the developers experienced difficulties in securing an equity investor. In the process of trying to assist, JT Ross took a strategic decision to enter this market, becoming the majority shareholder in the state-of-the-art facility which opened its doors on July 1, 2011.
On the back of its success in Hillcrest, JT Ross was approached by the holders of a Gateway licence to partner with them in the gateway project.
For Passmore and JT Ross, the advantages of managing go beyond simply adding a second hospital to its portfolio. He says that a second hospital provides the economies of scale needed to put in place well resourced structures for the maintenance and management of both hospitals. The advantages will increase as new hospitals are added.
He acknowledges that there are high barriers to entry in the private healthcare sector for a number of reasons not least of which is the high capital investment required for the construction and equipment needed to position a hospital ahead of the pack - and to keep it there.
While the Hillcrest Private Hospital is a 200 bed, general hospital, Gateway Private Hospital will be a high end speciality hospital with cardiac, neurosurgical, orthopaedic and spinal facilities as well as a rehabilitation centre. Set to open in mid 2014, it will have 160 beds with six theatres and a cardiac catheterization laboratory. It will also offer oncology facilities.
He says that Ross Healthcare has concluded a strategic partnership with radiologist group Lake, Smit and Partners which has also committed significant resources to making Gateway Hospital a top quality facility.
Construction on the multi storey building began in October 2012 and, according to Passmore, the building is now at the second level. Procurement of the muti million rand equipment is also well under way.
Aware of the fact that there is a chronic shortage of medical skills in KwaZulu-Natal, Ross Healthcare is positioning the Gateway Private Hospital at the top of the healthcare game in order to attract both the right specialists and staff.
"Our vision is that Gateway, as a Ross Healthcare hospital, will be perceived as a quality facility when it comes to specialists, equipment and staffing. Our strategy is to attract the top specialists and staff," he says.
One of the things that the two Ross Healthcare hospitals share, is an opportunity to fill important gaps in the market. Hillcrest had no facility of its kind while, in Umhlanga, there is significant capacity pressure, making it extremely difficult to secure beds at local hospitals. Passmore believes that the ongoing expansion of both commercial and residential development will not only put further pressure on existing facilities but also provide it will a ready market and potential for growth.
"We are comfortable that there will be more than adequate demand to the north of Durban. Our site has a lot of additional bulk so the design has catered for additional expansion," he says.
He admits that private healthcare is not only a highly regulated but also a fiercely contested market. "This is a very competitive industry that is dominated by the three major players," he says, adding that although it is difficult for an independent hospital, there are opportunities, both because of the introduction of national health and the increasing pressure under which medical aid schemes find themselves.
"If healthcare is to perform, there has to be interaction and closer relationships between all service providers," he says. With this comes a completely new mindset. As Passmore explains, the biggest challenge is for medical aids and government to deliver healthcare. In the private healthcare space, this applies across the spectrum – from hospitals to private practitioners.
The fact that the new Gateway Private Hospital is expected to attract a whole new crop of medical practitioners and facilities is anticipated to have a knock on effect in the growth of the already burgeoning Umhlanga Ridge and Gateway precinct is closely aligned with this.