Medical operators show healthy interest in cash management

Private operators delivering dialyses services are in a different position to other healthcare market players. In theory, as a niche, this sector should be fairly safe from the effects of the financial crisis, according to Alexandru Ciolan, general manager of private dialysis services company Fresenius NephroCare Romania.
“Although the patient's treatment is vital, there are indirect factors which can affect a segment like this,” Ciolan says. Tougher access to financing, for example, will stifle the development of operators on the market. And the unstable EUR/RON exchange rate impacts unfavorably on the sums received as support from the National Health Insurance House (CNAS). The advantage for Fresenius is being part of a wider company, international group Fresenius Medical Care, whose business is built on the company's own funds and inter-company loans.
Showing the same caution as other players on healthcare market, Unirea Medical Center (CMU) is not experiencing a downturn in demand for medical services, neither on the retail nor the corporate side. The firm is in fact seeing a growth in corporate medical services contracts signed, since neither the state medical services or private medical insurance segment offers an alternative. Like the other operators, CMU points to cash which, now more than ever, must be managed correctly. ” Banks are more cautious in opening financing lines. Last year financing costs altered, so the importance of the self-owned and managed resources is vital now. The worst affected will certainly be anyone who now has to pay back loans they took out previously,” Sergiu Negut, the executive manager of CMU, told BR. He thinks that the worst of the crisis in the local economy is still to come, and that, so far, the solutions were mostly “preventive and common sense”.
As is the case in every domain, cash-flow management is the crux. “Following the investments we started last year, we will focus on consolidating our market positions in niches as imagery, obstetric and gynecology by opening some maternity centers,” Negut said. Addressing the company's strategic moves on its specialized market, Negut sees the possibility of a consolidated market following some mergers or acquisitions, since some medical service providers might freeze some of their projects. Producer of medical equipment Novei Medical also feels relatively safe so far. Saying it has not experienced any fallout from the crisis, the company is still planning investments and expansion.
Oana Simion, general manager of Novei Medical, a company based in Bacau, agrees that the worst hit companies are those that took out loans from banks. The company says it will feel the effects of rising costs when purchasing raw materials, and for importers, the current high EUR/RON exchange rate is a big problem. But even in these conditions, Novei Medical plans to double its EUR 1 million turnover of 2008 .
Ciolan sees an opportunity in the crisis for Fresenius, springing from the local real estate market plunge. “The market collapse makes it cheaper to rent and buy properties where Fresenius can open a dialysis center,” Ciolan says.
Local medical services provider CMU is not yet feeling the effects of the financial crisis, and is still following its investment budget of EUR 20 million assigned in 2008, Negut said. “I don't expect the growth pace to be affected, because the previous investments have not started to produce money just yet. But, once they start in 2009, we will definitely see the revenues. Our optimism is restrained regarding 2009's turnover but, regarding expansion, we could open other policlinics outside Bucharest though acquisitions and greenfield investments,” added Negut.

By Magda Purice