Bupa supposedly interested in operating about half of the hospitals in Healthscope’s portfolio

Bupa also operates 20 hospitals in Europe and the UK.

More details are filtering out into the market surrounding takeover attempts for Healthscope, with Bupa supposedly interested in operating about half of the hospitals in its portfolio.

It comes after DataRoom revealed last week that HMC Capital was forming a consortium to bid for the embattled hospital operator, of which one of its listed satellites, HealthCo REIT, is a major landlord.

The understanding is that health insurer Bupa would operate about 11 of the top-performing hospitals of 38 overall as part of a joint venture deal with HMC Capital and the current management team would likely remain.

Bupa operates 20 hospitals in Europe and the UK, and the move by a health insurer to operate hospitals in Australia would be a return to the past, when such groups provided private hospital services.

Three hospitals in Victoria have been identified as being likely earmarked for closure, including Ringwood Private, the Victorian Rehabilitation Centre and Fort Street House.

Other hospitals in the portfolio could be turned around with new operators, and sources say HMC Capital managing director David Di Pilla has approached St John of God, while St Vincent’s Health and Healthe Care, owned by Pacific Equity Partners, could be part of discussions. Aurora Healthcare could buy the mental health rehabilitation clinics.

Mr Di Pilla’s overall game plan is thought to be putting Healthscope’s properties and operations back together as one company after owner Brookfield sold off the real estate when it made its $4.4bn purchase of the country’s second-largest private hospital operator in 2019.

Meanwhile, Bain Capital separately has interest in Healthscope, but is also thought to be just interested in owning the top 10 or 11 hospitals.

A third separate party is also thought to be around the hoop.

Any acquisition of Healthscope would be a highly complex deal that would take at least six months to execute and require state government approvals.

Mr Di Pilla’s plan could involve buying debt from Healthscope’s lenders, which sources have suggested would now be worth less than 50c in the dollar, as it is expected to breach its banking terms on its $1.6bn of loans in the coming weeks.

With HMC Capital as owner, its debt repayment costs would be reduced, placing Healthscope in a better position to pay its rent. An option is cutting rents on the portfolio in exchange for equity, so its landlords, including HMC Capital-run HealthCo REIT and perhaps North West Properties, also become Healthscope’s owner.

Brookfield is understood to take the view that there is no equity left in the business and has put restructuring experts in charge.