In-and-out plan might work

The management team at Advanced Health could be forgiven for getting out a Quaich bowl or two of something strong and peaty to calm the nerves after its latest results.

At this stage of the company’s journey, it finds itself in a position to take some advice from that luxuriantly bearded sage of the investment world, Kenny Rogers.

The singer suggested: “You’ve got to know when to hold ’em, know when to fold ’em, know when to walk away, and know when to run.”

Advanced Health is putting decentsized bets on the table as it seeks to establish itself as a leading day hospital group in SA and Australia, and this has resulted in a chunky loss of about R60m in the year to June.

There’s nothing intrinsically wrong with taking some big hits while building your business, as fans of companies such as Amazon will know, and the land grab process can be expected to be expensive, but it does require deep pockets and fortitude from its backers. Since year-end the company has got a rights offer away, and it has also decided to scale back its expansion plans until its existing facilities become profitable.

The good news is that Advanced Health’s patient numbers have increased by 55% in the year, and the day hospital model is proven globally to reduce health-care costs and to streamline the patient experience in comparison to that at acute hospitals.

There’s clearly a lot to be said for getting in and out of hospital as fast as possible in terms of convenience and in minimising the risk of infection, so let’s hope it succeeds.