Africa – Harbinger Capital Invests $47m in African Healthcare Company

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New York private equity firm Harbinger Capital Partner is to invest in African Medical Investment, a UK-listed provider of private hospitals, trauma centres and Well Woman clinics in Africa.

African Medical says that the capital will be used to expand its existing array of hospitals and clinics. Currently under construction is a 30-bed hospital in Maputo, Mozambique, with a trauma center, intensive care unit, radiology department and X-ray and ultrasound facilities.

Link to the article:
This article was listed in the November 9, 2009 PHM Emerging Markets Healthcare News Feed

We’ve listed African Medical Investment (VIP Healthcare) articles in the News Feed earlier.  This is a company that has a well defined strategy, a mistaken strategy, but well defined nonetheless.

I like the company’s focus on small bed counts for their hospitals.  And we especially like their targeted efforts to women and the middle class in general.  Other targeted markets include ex-pats and the wealthy, but that’s not particularly special, nor sustainable.

But what we do not like is the company’s orientation to trauma care.

As we’ve written in the past, hospitals and trauma care don’t mix all that well, particularly where legislation requires an “all takers” service.  That is, the hospital must accept all patients in the emergency room (e.g. trauma) and stabilize the patient until the patient can be moved.  This approach includes those patients with resources to pay and/or insurance, and those patients without even the ability to pay.

And it is those patients without the ability to pay that brings trouble for hospitals.  Emergency rooms and trauma care are loss leaders.

So, for VIP Healthcare, should the countries where it operates bring about legislation that guarantees medical access to all citizens, its facilities will immediately become loss makers.

Rather, I should say, WHEN the countries bring about legislation………HK 

PS: We’d also like to see a more diversified board.  Even with this new investment, the board is overly weighted to the oil sector…extraction executives don’t play well with the politics of healthcare.

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On November 26, 2009
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