The First "Big Failure" Of Private Hospitals

"As the first stock of private hospitals, Hengkang medical is directly facing the delisting crisis. In addition to their rapid expansion, the management failure of the acquired hospitals is also one of the reasons for the failure of listed companies, including the gambling agreement and the lack of reasonable hospital management mode." Recently, a reporter in the field of economics has reported to song Lijun for many years.

As a matter of fact, with the development of medical services, many listed companies, such as medicine, real estate and coal, have entered the medical field for investment. However, due to many problems such as management and operation, since 2018, a number of listed companies, including China Resources 39, Yibai pharmaceutical, Lvjing holdings, Wanfang development and so on, began to "spit back" to sell hospitals.

"It is very difficult to plan the internal management of a hospital, which is different from that of a general hospital. It needs detailed management, which is the same as that of a hospital in terms of detailed management Recently, Tao Ran (pseudonym), vice president of a secondary specialized hospital in Henan Province, analyzed and said in an interview with the reporter of the 21st century economic report.

Professor Deng Yong of Beijing University of traditional Chinese medicine also pointed out that there are certain risks in the merger and acquisition of hospitals by enterprises, hospitals and governments. For the enterprises, there are many problems, such as the diversification of the main body of M & A, the confusion of the hospital M & a market, the improper selection of the acquisition object and investment mode, and the inadequate pre investment evaluation and post investment management. In addition, the staff are worried about the reform of the hospital, the cancellation of the original establishment, the pension problem in the future and the fierce competition in the workplace.

Medical failure under market value management

Under the market value management concept of Que Wenbin, the largest shareholder of Hengkang medical, after 2013, Hengkang medical began to purchase hospitals on a large scale.

Why he chose the hospital, que Wenbin explained to the media in an interview: it's not OK to do medicine alone, we have to combine medicine and medical treatment! By 2015, Hengkang's medical service revenue has exceeded the drug revenue, accounting for 56.17% of the revenue.

In the 2015 annual report, Hengkang Medical Co., Ltd. said that with the further deepening of national health care reform, various medical and health policies have been introduced, and the support for social capital to run hospitals has been continuously increased. While the industry development is more standardized and healthy, under the guidance of the "drug manufacturing + medical service" dual drive strategy, Hengkang Medical Co., Ltd. further consolidated the manufacturing and sales of "Duyiwei" series of drugs, and at the same time increased The merger and integration of medical service targets.

On August 29, 2016, Hengkang Medical Co., Ltd. reported that its medical service income accounted for more than 70%. In this regard, Hengkang medical evaluated its "strategic transformation has achieved initial results". In 2019, medical service has become the core business of Hengkang Medical Co., Ltd. in 2019, the annual number of outpatient service and inpatient service is about 3 million and 250000 respectively, realizing the operating income of 3.203 billion yuan, accounting for 86.94% of the total business income of the company.

In March 2016, que Wenbin also said in an interview with the media that Hengkang medical will develop to about 20000 beds in the next few years, and Hengkang will deeply cultivate the medical field in the future. On February 1, 2016, Hengkang medical and que Wenbin respectively received the notice of investigation issued by the CSRC, and they filed a case for investigation because they were suspected of violating securities laws and regulations.

Que Wenbin's 20000 beds have not yet been realized. By the end of 2019, nearly 8000 beds have been opened.

At the end of 2019, Hengkang medical (including M & A fund) held 12 hospitals. After the acquisition of more than a dozen hospitals, Hengkang medical did not establish a mature hospital management team. More importantly, it relied on the management of the original acquired hospital. There was no improvement in operation and management, and the performance was weak. In the follow-up, Hengkang medical could only sell some hospital assets roughly or initiate litigation.

On April 21, 2015, less than two years later, Hengkang medical announced that the company agreed to transfer 100% equity of Deyang hospital to Yongdao medical, a wholly-owned subsidiary, and to transfer 100% equity of Qionglai hospital with RMB 60 million. This price is exactly the same as the original purchase price. Prior to the acquisition of these two hospitals, Hengkang Medical Co., Ltd. helped raise many stock prices.

The reason given by Hengkang medical for selling Qionglai hospital is that it is affected by the total payment control of basic medical insurance. However, in fact, the Ministry of human resources and social security issued the opinions on the control of total payment amount of basic medical insurance in November 2012, and Sichuan Province issued the implementation plan for implementing the opinions in early 2013.

The reason for the transfer of Deyang hospital is that in the course of its operation in 2014, the lease term of the operating site expired, and the site lessor was unable to sign a lease renewal contract at the request of the superior unit, which affected the business performance of the hospital. At the same time, the change of the business site required administrative re examination and approval from the health and environmental protection departments, which took a long period.

Shi lichen, the person in charge of Beijing Dingchen medical consulting management center, pointed out that in the early stage of private hospital merger and acquisition, many listed companies did not understand the medical treatment at the time of acquisition, and chose some hospitals with "hidden dangers" and poor quality. Sometimes, the performance and expectation of the acquired hospitals did not meet the standard.

A senior person in the industry pointed out to the reporter of 21st century economic report that pharmaceutical enterprises do cross-border medical treatment, lack of hospital investment experience, and there will be a big gap with the actual situation in risk control and hospital management. However, more que Wenbin is only market value management. The acquisition of the above four hospitals has driven the company's share price to 38 yuan, the market value has exceeded 16 billion yuan, which has doubled, and even is in deep debt crisis in Hengkang In 2018, que Wenbin is still trying to boost the confidence of the capital market by purchasing Ma'anshan central hospital with a large sum of money.

Long term healthcare attributes

In Song Lijun's opinion, que Wenbin's Medical Bureau didn't go up because of his "short-term" psychology. Medical treatment is an industry with a long return period and needs meticulous management. However, both Hengkang medical and que Wenbin framed the acquired hospital by "gambling agreement".

For example, Wafangdian No.3 hospital had an annual net profit of 32 million yuan in the first two years of its acquisition. The gambling agreement requires that the net profit of the hospital in the three years after the acquisition reach 91.3 million yuan, 100.43 million yuan and 104.7 million yuan respectively, more than three times of the net profit before the acquisition. "This is impossible for a hospital with normal development. Take Kanghua medical, a listed company, as an example, its net profit increased by 7.2% in 2018, and its group hospital service income in 2018 was 1.571 billion yuan, an increase of 13.9% year-on-year."

It is understood that among the hospitals acquired by Hengkang medical, many hospitals have not completed the gambling agreement and triggered lawsuits, such as Lankao first hospital, Fuyang hospital, Oriental Hospital, etc.

Tao Ran pointed out to the 21st century economic reporter that the acquisition of a hospital is far more complicated than the acquisition of an ordinary enterprise, which involves hospital positioning, enterprise staff management, hospital department construction, supply chain, medical insurance and other aspects. It is not easy for capital to intervene and grow together. "Moreover, the daily management of the hospital is extremely trivial and complex, and the allocation of human resources and the optimization of service process are all meticulous activities."

An industry person who has been following social capital for a long time told the 21st century economic reporter that the post investment management after the merger and acquisition of hospitals is particularly important, and if the management is not proper, it may be "vomiting". It is understood that since 2018, China Resources 39 and Lvjing holdings have been selling hospitals previously acquired.

"Winner" Que Wenbin?

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