Bupa goes on $500m health kick

THE giant British health insurer Bupa is making an aggressive expansion into Australia, splashing half-a-billion dollars on acquisitions.

THE giant British health insurer Bupa is making an aggressive expansion into Australia, splashing half-a-billion dollars on acquisitions.

The first is the $374 million purchase of Australia's biggest dental chain, Dental Corporation, which has about 190 clinics in Australia and New Zealand and more than $400 million in annual revenue.

Dental Corporation was 64 per cent owned by the Indian giant Fortis Healthcare, which is quitting Australia.

The second, smaller buy is Innovative Care's aged-care operations - 10 residential aged-care homes and more than 1100 beds in Victoria, New South Wales and Queensland.

The purchase takes Bupa's total residential aged-care portfolio to 60 homes and more than 5600 beds - a small chunk of a cottage industry still strongly represented by churches and charities.

Together, Bupa and the government-owned Medibank control more than half of Australia's private health insurance policies. But unlike Bupa, Medibank does not own or run aged-care facilities.

A spokeswoman for Medibank said the government-owned business was focused on its private health insurance and health services operations.

Paul Gregersen, a Bupa manager in Australia, said the purchase of Innovative was the largest in the sector for several years. Innovative Care is an unlisted public company owned by the Croft family, of Victoria.

"It's an excellent business with relatively new accommodation, strong dementia care and great people," Mr Gregersen said.

A Bupa spokesman played down reports that Bupa was looking seriously at Regis Group's aged-care portfolio or Lend Lease's 2317-bed portfolio.

But this week's Innovative Care purchase coincided with an announcement by the Mental Health and Ageing Minister, Mark Butler, that aged-care providers would have to publish their accommodation prices on a website and seek government approval to charge more than $85 a day.

Charges of more than $50 a day would need to be "justified", Mr Butler said.

Further, new residents would have 28 days after moving in to decide whether to make accommodation payments through a daily payment, a refundable accommodation deposit or a combination of the two.

Mr Gregersen said the announcements were "great for consumers" and provided a "degree of transparency".

Bupa, which acquired MBF in NSW and HBA in Victoria, reported a $225.1 million after-tax profit in the 2011 calendar year, slightly down on the previous year.

But premium revenue increased by 7.3 per cent to $4.56 billion. With more than 3.3 million policyholders, Bupa is expecting to increase profit.

Despite recent cutbacks to government support for private health insurance, a recent report by the Private Health Insurance Administration Council found that the "profitability of the private health insurance industry in recent years has been generally high by historical standards".

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles