Losses at Acibadem, one of Turkey’s largest hospital groups, highlight just how hard Turkish hospitals were affected by the government-enforced ceiling on prices. It also demonstrates the danger of borrowing in dollars.
Acibadem moved from pre-tax profits of TRY16m (€7.4m) in 2007 to a 2008 loss of TRY37m (€17.2m) on sales ahead just 8.6% at TRY423m (€197m).
The sales rise is particularly disappointing in the light of Acibadem’s aggressive hospital expansion programme, which saw the company invest $185m in 2008.
Investor relations manager Pinar Lembet blamed the loss on two factors. The company had taken out a ten year $180m dollar denominated loan in January 2008. As the TRY dropped against the dollar, so this has led to an unrealised, paper loss which she puts at TRY35m-40m.
Sales in the second half of 2008 were badly depressed by the Turkish Ministry of Health’s imposition of a 30% ceiling on what could be charged to state-funded patients over and above what was paid by the state from July 2008 onwards. This effectively meant that Acibadem, and other so-called A group hospitals, which normally charge 4-5 times as much as the state pays, were unable to take on state-funded patients without incurring large losses. This changed from January when Acibadem and other A group hospitals signed agreements with the state to carry out transplants, vascular and cardiology operations for a fixed price.
Lembet said this change will make up the shortfall, but other operators are less sanguine and say the prices offered by the state are too low.
Lembet points out that sales were also impacted by a renovation programme which cut bed numbers during the year but she concedes that the imposition of the ceiling has had a big negative impact.
Acibadem expects to invest a further $50m in 2009 and opened three new hospitals this spring taking the total to 9 hospitals and 8 medical centres. A further three will open by mid-2010. Lembet says Acibadem is looking at a number of projects, but adds that the current liquidity squeeze may limit its appetite.
Our Analysis: Most Turkish hospital groups won’t even reveal sales figures but Acibadem, despite its private equity investment from Abraaj, is still quoted on the Istanbul stock exchange. Given Abraaj’s backing and its reputation as a premier health brand alongside the likes of Memorial, Florence Nightingale and Guven, Acibdadem is in no danger. But these figures show the impact of the ceiling on Turkish hospitals. Other large groups are also believed to have borrowed in euros and dollars too!
Losses at Acibadem, one of Turkey’s largest
hospital groups, highlight just how hard Turkish hospitals were affected by the
government-enforced ceiling on prices. It also demonstrates the danger of
borrowing in dollars.
Acibadem moved from pre-tax profits of
TRY16m to a loss of TRY37m on sales ahead just 8.6% at TRY423m.The sales rise is particularly disappointing
in the light of Acibadem’s aggressive hospital expansion programme which saw
the company invest $185m in 2008.
Investor relations manager Pinar Lembet
blamed the loss on two factors.The
company had taken out a ten year $180m dollar denominated loan in January 2008.
As the TRY dropped against the dollar, so this has led to an unrealised paper
loss which she puts at TRY35m-40m.
Sales in the second half of 2008 were badly
depressed by the Turkish Ministry of Health’s imposition of a 30% ceiling on
what could be charged to state-funded patients over and above what was paid by
the state from July 2008 onwards. This effectively meant that Acibadem, and
other so-called A group hospitals, which normally charge 4-5 times as much as
the state pays, was unable to take on state-funded patients. This changed from
January when Acibadem and other A group hospitals signed agreements with the
state to carry out transplants, vascular and cardiology operations for a fixed
price. Lembet said this would make up the shortfall but other operators are
less sanguine and say the prices offered by the state are too low.
Lembet points out that sales were also
impacted by a renovation programme which cut bed numbers.
Acibadem expects to invest a further $50m
in 2009 and opened three new hospitals this spring taking the total to 9
hospitals and 8 medical centres. A further three will open by mid-2010.
Our Analysis: Most Turkish hospitalgroups won’t even reveal sales figures but
Acibadem, despite its private equity investment from Abraaj is still quoted on
the Istanbul stock exchange. Given Abraaj’s backing and its reputation as a
premier health brand alongside the likes of Memorial, Florence Nightingale and
Guven, Acibdadem is in no danger. But these figures show the impact of the
ceiling on Turkish hospitals. Other large groups are also believed to have
borrowed in euros and dollars too!
