Fulfilling a need

SHARES in recently listed day hospitals specialist Advanced Healthcare have enjoyed a robust recovery after it detailed expansion plans locally and abroad. The shares, listed at 100c in April this year, have surged over 30 percent to 197c in the past two weeks as the market reassessed its prospects for establishing a footprint in the affordable healthcare niche.

Financial Mail, 11 December 2014

After the company's AGM last month, CEO Carl Grillenberger confirmed that Advanced Healthcare would open six new day hospitals in SA in the next 15 months. Grillenberger said projects in the pipeline for SA include twoday hospitals in Cape Town's northern suburbs - Advanced Durbanville Surgical Centre (under construction and set to be operational in the third quarter of next year) and Advanced Panorama Surgical Centre (under construction and scheduled to open ill the first quarter of 2016). Construction is also underway at the Advanced Soweto Day Hospital, which is expected to open in the first quarter of 2016.

Construction at Advanced Waterkloof Somerset Surgical Centre will begin next year. The hospital will be operational in the first quarter of 2016. Also, construction will begin next year on the Advanced Knysna Surgical Centre and the Advanced Worcester Surgical Centre, scheduled to open in the first quarter of 2016 and fourth quarter of 2015 respectively. Grillenberger said these facilities will bring the number of operational SA day hospitals to eight, in line with the company's prelisting growth plans. Advanced's business model works in partnership with medical practitioners. Participating doctors are offered shareholdings in the operational company of each day hospital, with Advanced retaining the majority shareholding. Though Advanced has made encouraging progress and has pleased investors, some market watchers caution that SA's major private hospital groups are unlikely to stand back and let the company build a lucrative niche.

However, after the AGM Grillenberger reiterated that Advanced remained confident that the investigation of the Competition Commission into the services rendered by private hospitals in SA would affirm the valuable role that day hospitals could play in offering cost-effective surgery on a same-day basis. Though it would seem management is focusing on building a meaningful presence in SA, Advanced is also adding to its more mature Australian operations. Grillenberger said the company is investigating taking the acquisition of two-day hospitals in Sydney, Australia. Advanced already owns three day hospitals in Australia and recently started construction of a fourth.