Royale Winchester Hospital Group going to equities market

It’s called the Royale Winchester Hospital Group and as Jamaica’s first group of companies solely dedicated to the health sector, the group is getting ready to approach the equities market at ‘the right time in 2024’.

Chaired by Dequity Capital’s Kadeen Mairs, the group has spent the last 18 months doing a loan-backed acquisition of at first, 40 per cent of Royale Medical Centre in Savanna-la-Mar, Westmoreland, and then a 100 per cent acquisition of the Winchester Medical Centre.

Mairs says the first phase of the buildout of what is now Royale Winchester Hospital Group was the 40 per cent acquisition of Royale Medical and Royale Imaging, two associated companies operating in Savanna-la-Mar, Mairs’ hometown.

Next was a J$750-million bond-raise to effect a 100 per cent acquisition of Winchester Surgical Medical Centre.

“Following that we went through a scheme of amalgamation so that the two entities could become one, so that we don’t have three or four limited liability companies operating separately,” Mairs said, adding that the amalgamation allows the owners to centralise a lot of the operations, especially at the back-office level.

“Each hospital may have two head accountants. Now there is one. We’re centralising procurement for things such as medical disposables and so on,” Mairs explained.

Director at Dequity, Garold Hamilton, says now that they’ve acquired Winchester, which he estimates is three times larger than the original Royale, the team has gone to work amalgamating the businesses under the name Royale Winchester Hospital Group.

“The idea behind it is to build a medical system under the Royale brand. We’re looking to acquire other hospitals as well. We’re also looking to acquire other hospitals between Ocho Rios and Montego Bay as we grow the business,” Hamilton said.

Mairs says with Dequity taking care of administration and corporate governance it has freed up the experienced practitioners in the Group to tend to medical and surgical matters. This will then allow Royale Winchester to develop a number of revenue streams, delivering for the first time in Jamaica, comprehensive medical services.

“There’s the pharmacy side of the business, imaging, surgical and in-patient care. Therefore, for the first time in Jamaica, the value proposition is total medical care, covering all aspects, which is different from all the companies presently offering these services separately,” Mairs said.

Hamilton says there is an active search for medical facilities that can be acquired and brought on to the Royale network. He says he is drawing on his experience in building and managing medical systems in the United States to apply similar principles to running a hospital group in Jamaica.

“I think that every private hospital in Jamaica has to navigate the same path to offer what I call the continuum of health, because health is not just going into the hospital and getting treatment,” Hamilton said, adding that preventative care, regular check-ups and lifestyle maintenance are important elements of the plan.

Noting that a lot of private medical systems are being run by doctors, Hamilton says experience has shown that they’d rather be practising medicine than having to tend to administration.

“A lot of hospitals that we see are run by doctors who are not really businessmen. We come in, take care of the corporate governance and manage their work needs so that they can concentrate on the care of patients, which they’re really good at,” Hamilton said.

Dequity CFO, Kevon McIntosh, has been seconded to Winchester Medical Centre. He is tasked with streamlining the operations at the recently acquired company so that the merged entity can be operated along business lines.

Meanwhile, the leadership at Dequity Capital is planning to take Royale Winchester to the equities market. Hamilton says the primary consideration is to reduce the debt load occasioned by the acquisition process.

Mairs confirms there was a leveraged buy-out on the Winchester transaction, adding that depending on advice, the company may be listed on the Junior market of the JSE or the Main market.

Hamilton says in addition to debt-reduction, the approach to the equities market will facilitate expansion through installing additional equipment. He says a few options are under consideration.

“Right now, we’re working with a number of overseas companies with respect to (acquiring) imaging equipment. There are indeed ways that we can get this equipment, whether through loans or other types of instruments so that we don’t have to expend vital capital to purchase very expensive medical equipment,” Hamilton said.

The reliability of imaging equipment has been the bugbear of healthcare both in the public and private sectors. The government has found itself more and more relying on private sector companies for computerised tomography, CT scans and magnetic resonance imaging scans. With this increased reliance has come the twin questions of availability and reliability.

Listed medical imaging companies, Elite Diagnostics and Image Plus, are grappling with establishing machine redundancy, or having spare capacity, in order to cope with demand and counter inevitable downtime.

Hamilton says Royale Winchester is working with big-name companies to shore up its machine redundancy efforts.

“We’re in the final stages of working with the likes of GE to get imaging equipment using lease arrangements so that the monthly payments can be offset by revenue flows,” Hamilton said.

He says Royale Winchester Hospital Group is also looking to extend the business line by including a pharmacy division, which is presently outsourced; and adding telemedicine as part of its primary healthcare offering.

Both Mairs and Hamilton declined, at this time, to name their financial advisors assisting with the approach to the equities market.

neville.graham@gleanerjm.com