Medibank strikes deal to buy stake in Cura Group from Fresenius Medical Care

Medibank Private is understood to have agreed to buy a stake in Cura Group day hospitals from Fresenius Medical Care. Picture: Hollie Adams/The Australian

Medibank Private is understood to have struck a deal to buy into Cura Group day hospitals, in what is further evidence that Australia’s largest health insurer is wading deeper into the area of asset ownership.

Cura is 70 per cent owned by Fresenius Medical Care, which purchased the stake in the business during 2017 from Intermediate Capital Group for a price that was believed to value the company at more than $400m.

DataRoom understands that an agreement has been reached to buy into the business but sources believe it may be yet to settle.

Cura is the largest day hospital owner across Australia, with 19 assets and in the financial year before it was purchased by Fresenius in 2016, it was generating $127m of revenue.

Medibank is Australia’s largest private health insurer with a market share of about 27 per cent ahead of Bupa and its market value on the ASX is currently $8.9bn.

The acquisition may be getting lined up for Medibank to announce in time for its results on February 25.

Last year, it was believed to be looking at the private hospital owner Healthe Care last year when it was up for sale.

In 2020, Medibank purchased a 49 per cent stake in East Sydney hospital in Woolloomooloo.

The purchase of a stake in the short-stay hospital in 2020 was part of a move by Medibank to reduce healthcare costs for its customers while also reducing their medical insurance expenses and offering a shorter stay for patients.

It went on to last year form a joint venture with more than 40 specialist doctors to develop a short-stay surgical facility in Kew, Melbourne.

Working on the venture is also real estate investor Centuria Healthcare that will provide a 15-year lease of the new hospital.

Last year, Medibank appointed chief executive David Koczkar and while delivering the company’s full year earnings in August, he said policy holder growth would slow in the year ahead, which underscored the need to offer differentiated and compelling products such as investing in short-stay hospitals to cut out-of-pocket costs.

For the year to June, Medibank grew its number of policy holders by the largest number in a decade, as its net profit increased 40.1 per cent to $441.2m and revenue gained 2.1 per cent to $6.69bn.

At the time, Mr Koczkar said around half a million Medibank customers had access to the short stay, no gap, procedures for joint replacement.

There were about 100,000 joint replacement procedures in the country annually, many of which could be carried out in a short stay environment.

Mr Koczkar said Medibank would continue to pursue hospital investments to drive further uptake of private health insurance and ease pressure on the public health system.