Centene, the US health insurer, is selling its GP clinic chain, along with the largest private hospital group in Britain, abandoning ambitious plans to penetrate the British healthcare system.
Three people familiar with the sale process said that the NYSE-listed Centene had launched a process to sell its UK chain of Operose GP practices. A deal is expected before Christmas.
Analysts estimated that the business, with revenues of £89mn by 2021, would sell for around eight times its ebitda or £51.2mn.
Centene made the announcement just days after it announced that its Circle/BMI UK Hospital chain would be sold for $1.2bn.
These people claim that the twin disposals are a sign of abandonment for Centene’s UK strategy. This was to create a seamless path to private healthcare through buying up taxpayer funded GP services, and encouraging doctors in England to refer their patients to its 53 Circle/BMI hospital chain.
Centene purchased Operose GP practices in 2021, but anti-privatisation activists challenged the purchase. The activists’ case was rejected, but they viewed this purchase as an indication of increasing privatisation in the NHS.
Analysts also said that Centene had difficulty incentivizing doctors because their GP practices located in north London are not near Circle/BMI Hospitals.
Victor Chua, of Mansfield Advisors and a healthcare consulting firm, said that Centene had found it difficult for Operose to be profitable as many Operose locations are located in less affluent regions where recruiting GPs is difficult. There was no cross-selling between Operose and Circle Hospitals. They serve different demographics and have limited geographic overlap.
Centene also decided to concentrate on the US market, after discovering that other countries were more lucrative than the UK where it faced rising operating costs, such as staffing. It sold the Ribera chain in Spain last year.
Centene offers low-cost healthcare to uninsured or underinsured people, mainly through government-sponsored programs such as Medicaid in the US and Medicare for retirees. The company was accused of overbilling Medicaid for pharmacy services. It paid millions HTML0.
Centene stated in a press release that it was concentrating on “its three core business lines in the United States”, which included Medicaid and Medicare.
The company stated that “part of this strategy included a review of the portfolio and the decision to sell assets in the United States or ex-United States which do not fall within this core focus.”
Centene announced on Monday that it will sell its Circle/BMI hospital portfolio to Abu Dhabi’s PureHealth, for a total enterprise value of $1.2bn including debt. PureHealth will acquire Circle’s portfolio including the UK’s first purpose-built rehab hospital in early 2019.
In recent years, US healthcare providers have made inroads in the British market. The Mayo Clinic opened new clinics, as did the Cleveland Clinic and HCA Healthcare.
Chua stated that US operators have a difficult time.
He said that many US providers thought the UK would be a simple market to crack, but found it more difficult than they expected.
Private hospitals benefitted from a deal made during the Covid-19 pandemic, where the UK government paid all of their costs including rent, staffing and interest. The long NHS wait lists have led to an increase in patients, some of which are self-funded and others who are covered by insurance or the NHS.
Only 14 percent of England’s hospitals are privately owned. The rest is owned by the NHS. It outsources the work to private hospitals, primarily hip and knee surgeries and ophthalmology.