All eyes on Medibank AGM as it shapes as Cura Group...

All eyes on Medibank AGM as it shapes as Cura Group frontrunner

Other strong contenders are Intermediate Capital and Partners Group, both in the final stages of the competition.

A price of about $600m equates to about 14 to 15 times its earnings before interest, tax, depreciation and amortisation, which last financial year were believed to be about $42m.

Should Medibank prove to be the winner, it’s bad news for other private hospital operators.

The motivation for Medibank to invest in day surgeries is that it drives down the cost of patient care for its customers.

But what that means for private hospital operators like Healthscope, which is owned by Brookfield, and the Australian listed Ramsay Healthcare, which took an early look at Cura Group but is now out of the race, is that it will place pressure on their margins as they battle to compete with their day surgery providers to win business.

Then there’s the matter of the Australian Competition and Consumer Commission and how it feels about Medibank, the country’s largest private health insurer with about a third of the market share, owning the country’s largest day surgery operator.

The risk for day surgery competitors is all its insurance customers get referred to the day surgeries it owns.

It leaves the market – and Medibank’s investors – with plenty to think about.

Particularly in a market where the healthcare industry is being hard hit across the board with rising costs.

One of the earlier suitors for Cura, Pacific Equity Partners, is understood to have recently closed Tuggerah Lakes Private Hospital within its Healthe Care hospital business that it purchased in 2021 for about $400m after about $30m had been spent on the facility, demonstrating the tough conditions the industry is facing.

It will be also interesting to know what doctors would make of the move.

Meanwhile, much focus will be on the ownership split between Macquarie and Medibank.

But perhaps a major point of contention at the AGM will be whether the health insurer raises equity to fund the ambitious acquisition.

German company Fresenius purchased a 70 per cent stake in the nation’s largest day hospital owner, Cura, in 2017 from Intermediate Capital for a price believed to value it at more than $400m.

Medibank in 2020 purchased a 49 per cent stake in the East Sydney hospital in Woolloomooloo and has formed a joint venture with more than 40 specialist doctors to develop a short-stay surgical facility in Kew, Melbourne.

Shares in Medibank closed 1c lower at $3.51 on Tuesday.