Primary looks to MedicalDirector to create new revenue streams
Listed healthcare provider Primary Health Care is looking to increase its portfolio of multi-disciplinary medical centres in Australia as well as use the strategic position of its wholly owned health IT subsidiary MedicalDirector to develop new income streams.
Announcing its annual results last week, Primary's new managing director Peter Gregg also outlined the findings of its strategic review, which was aimed at identifying the key drivers of future performance.
Primary had healthy revenues of $1.6 billion in the 2015 financial year, up 6.2 per cent on last year, with earnings before interest and tax (EBIT) of $248.1 million and reported net profit after tax (NPAT) of $136.5m, up 19.1 per cent on last year.
Mr Gregg said the financial results reflected reasonable revenue growth in the company's core business in what he described as a “challenging transition year”. Primary's founder and long-time MD Edmund Bateman announced his retirement last November, with Mr Gregg taking over in March.
The company also had intense negotiations with the Australian Taxation Office over the tax treatment of general practice acquisitions, and it sold its shares in ophthalmic day surgery group Vision Eye Institute for $38m, money it used to pay down debt. It also bought private health insurer Transport Health.
Primary's portfolio of 54 large-scale medical centres brought in $327.9m in revenue for earnings before tax and interest of $103.9m. Its pathology business raised $937.8m in revenue for an EBIT of $129m and its imaging business brought in $339m for EBIT of $34.3m.
Its MedicalDirector business, renamed during the year from Health Communication Network (HCN), had revenues of $38.2m, up 2.4 per cent from last year, with an EBIT of $13.9m, up from $11.4m last year (21.9 per cent).
In addition to launching its own online appointments booking system this year, MedicalDirector also launched a cloud-hosted offering called MedicalDirector Online which CEO Phil Offer expects to gradually become the dominant hosting method in the future.
The company also added several new widgets to its MD Sidebar, including a specialist referral directory called Healthshare Referrals, signed a partnership with patient flow technology vendor Jayex for its self check-in kiosk, and signed an agreement with care pathway developer Map of Medicine to act as the Australian distribution arm.
While Primary is looking to expand the number of medical centres it owns – eyeing off five large-scale centres and one super-centre over the next 18 months – it is also looking to expand its large-scale imaging clinics.
It highlights Melbourne's Bridge Road Imaging Centre, near Epworth Hospital in Richmond, as a new model for further expansion.
Primary says Bridge Road “represents one of the country’s largest dedicated imaging facilities with state-of-the-art equipment and a team of high quality experts, capable of providing patients and their specialists with the best diagnostic data available”. In pathology, it is investigating offshore markets to expand.
With MedicalDirector, it plans to invest for growth by continuing new product development such as online appointments as well as develop new income streams through eHealth and consumer connectivity, the company said.
“More than 60 million patient consultations are transacted through Primary’s Medical Director clinical software each year,” it said.
“There is a significant opportunity to leverage this footprint and offer new services and products around e-health, data analytics and consumer connectivity which will greatly increase potential income streams.
“The company is currently evaluating strategic partners and assessing the appropriate corporate structure for Medical Director.”
Mr Gregg told the Australian Financial Review that Primary had held talks with “strategic partners from around the globe” about selling off MedicalDirector, understood to have included Telstra.
It has been rumoured in the industry for some years that Primary would like to offload the profitable technology arm, but that its asking price of well over $100m is too steep.
Posted in Australian eHealth