Medibank Private is understood to have acquired a 49 per cent interest in East Sydney Private Hospital for $40m.
It could be the start of other acquisitions by the $8.15bn private health insurer, with small privately owned hospitals said to be feeling the strain of the conditions linked to COVID-19.
Many have been forced to postpone elective surgery due to social distancing rules, and the small hospital market was already ripe for consolidation.
The investment by Medibank marks a return to ownership of hospital assets by health insurers in Australia.
About 20 years ago, the health insurer MBF — now Bupa — owned about four hospitals, whereas NIB owned Newcastle Private Hospital before those assets were sold off, so the industry has gone full circle.
Medical insurers are once again keen to have an investment in short-stay hospitals and day-surgery assets in a quest to drive down medical insurance costs for customers.
Driving the acquisition was Medibank’s chief strategy officer, Marc Miller, who is said to have been searching for opportunities in the space for some time.
Some say Medibank will convert the hospital into a mental health facility.
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