Circle Holdings has teamed up with Chinese investors to develop and manage a medical clinic in Shanghai, joining a wave of foreign operators seeking to capitalise on the nation’s ageing population.
The Aim-quoted company has formed a joint venture to design, build and operate 10 medical clinics throughout China in the next five years. The first will open on the site of a refurbished hotel in Shanghai in 2017, offering a range of GP, diagnostic, outpatient and treatment services to wealthy individuals who will be offered membership or pay-as-you-go treatment.
Circle’s move underscores the growing appetite by western healthcare companies to expand in China after Beijing removed a cap on foreign ownership of private hospitals in 2012. Just 7 per cent of Chinese healthcare is provided by the private sector but companies have been encouraged to expand after Beijing’s decision to extend medical insurance to private hospitals.
Steve Melton, chief executive of Circle, said it hoped to press forward with the other openings “quite quickly” once the infrastructure has been established. He added that the deal proved that the UK’s “horizons remain global in the wake of Britain’s decision to leave the European Union”.
A government initiative to shift treatment away from hospitals — where many Chinese are treated for minor ailments — to care by family doctors and local clinics should also boost the market along with the increasing urbanisation of its 1.4bn population, Mr Melton said.
Other investors include China Taiping, the third-largest insurer by revenue in China, which has 5.5m private medical clients, the state-owned Xinxing Cathay International Development Group, a conglomerate which provides all the uniforms for the Chinese army, and Huzhou Yongxing Investment Company. The investor group has committed Rmb200m (£22m) to the projects.
of Chinese healthcare is provided by the private sector
Circle is best known in the UK for its takeover of Hinchingbrooke Hospital in Cambridgeshire, the first NHS hospital to be managed by a private company. The trailblazing deal came to an abrupt end last year when Circle pulled out of the hospital just three years into a decade-long contract amid financial troubles and mounting criticism of its performance.
Circle will provide the management and development services under the Circle Harmony brand, which it has formed in partnership with Deep Sea Capital, a Hong Kong-based investment house.
Once the facility is operational Circle Harmony will receive an annual management fee of £150,000 per clinic for a minimum of 20 years and annual profit-share of up to 10 per cent. It will also receive 10 per cent of the value should the new company decide to pursue a stock market listing.
The Shanghai clinic will also give patients access to specialist and secondary care services at the state-run Ruijin Hospital. In return, Circle will provide Ruijin Hospital with access to training and research opportunities in the UK in a deal that has been supported by the British government.
University College London Hospital has agreed to provide specialist medical advice while the Moeller Centre, a leadership development centre in Cambridge, which has several Chinese clients, will develop a training programme.