The prognosis is healthy as medical firms join forces

THE health service is changing. Large general hospitals are creaking at the seams and politicians across Westminster are hoping that GP surgeries can do more, so that fewer patients end up in Accident & Emergency units or on the wards. Primary Health

Properties (PHP) and MedicX are helping in that process. Both specialise in health centres that can offer services such as blood tests, scans, X-rays, even minor operations, as well as adjacent care from physiotherapists, opticians and chemists.

Last week, the two firms unveiled an all-share merger to create a group with almost 480 modern health centres in the UK and Ireland and a stock market valuation of more than £1 billion. PHP is leading the deal as it is the larger business but the transaction is recommended by both boards. Shareholders will be able to have their say in early February, when the deal is put to the vote. They should follow directors’ lead and approve the deal.

PHP and MedicX have been in the health centre business for years, building up their companies steadily and paying decent dividends. Together, they will be able to grow even faster, while continuing to reward shareholders. There will be £4million of immediate cost savings and, as a bigger company, the business will be able to borrow money more cheaply from its bankers.

The combined group, to be called PHP, still has little more than 7 per cent of the primary healthcare market, yet demand for its brand of health centres is growing, especially as the population ages.

These are not converted homes but purpose-built practices, with facilities designed for the 21st Century. The two firms either buy ready-built properties or invest in the development of brand new sites. In each case, however, centres are rented out to GPs so more than 90 per cent of rents are guaranteed by the NHS or the Health Service Executive in Ireland. That means income is incredibly secure over many years.