Life Healthcare closer to bulking up dialysis service
Private hospital operator Life Healthcare’s deal to acquire German healthcare group Fresenius Medical Care’s renal dialysis clinics in Southern Africa is closer to completion after the Competition Commission recommended conditional approval.
“The proposed transaction raises substantial competition concerns ... relat[ing] to potential foreclosure of other nonintegrated dialysis service providers who require access to the acquiring group acute hospital for the provision of dialysis services,” said the commission on Friday.
“The other concern ... received from market participants was that acute hospitals (through the nephrologist, the specialist that administers dialysis) tend to refer dialysis patients to the dialysis services providers that are linked to their hospitals.
“Lastly, the commission was concerned that postmerger, the acquiring group will be able to raise tariffs charged by the target business for uninsured or selfpaying customers (those who do not have medical aid).”
The watchdog outlined a set of conditions it has imposed on the merging entities for recommendation before final approval by the Competition Tribunal, the ultimate authority on mergers in SA.
One of the conditions proposed by the commission is that the merged business must continue to permit third-party dialysis services providers reasonable access to Life Healthcare’s hospitals on a “mobile basis for a specified period for the purposes of administering acute renal dialysis treatments”.
The other conditions are that Life Hospitals will not provide any incentives to nephrologists to refer patients to any particular dialysis service provider and do not retrench workers for an unspecified period after the merger.
“For an agreed upon time, the acquiring firm will offer provincial health departments in each province in which the merged entity provides dialysis services, an agreed-upon number of chronic haemodialysis treatments for public sector patients,” the commission said.
The deal, first announced in March 2023, will add about 51 renal dialysis clinics to Life Healthcare’s already sizeable network. The clinics will be integrated into Life Healthcare’s renal care programme. The company’s core business is 66 private hospitals it operates in Southern Africa.
The JSE-listed group has been repositioning its portfolio over the past year. In October last year it agreed to sell its UKbased Alliance Medical Group diagnostic imaging business to Icon Infrastructure.
The transaction will earn the group net proceeds of about R10.8bn. It has said most of the windfall would be returned to shareholders as special dividends and/or share buybacks, after repaying debt. Some of the money will be reserved for future growth initiatives.
The group said three weeks ago that it expects the deal to be finalised at end-January after receiving shareholders’ approval.