So Who is Making Business Deals in the Uganda Health Care Industry

10-April-2012

With rising costs in medical treatment, International Hospital Kampala (IHK) has partnered two firms – Netherlands’ TBL Mirror Fund and Kibo Fund of Mauritius - to shore up its capital in order to improve its health expertise, especially in the area of surgeries. The two partners will each take up a seat on the board of International Medical Group (IMG) to help run the firm that controls IHK and its subsidiaries “to make it more profitable and smarter in performance,” according to IMG Chief Executive Officer, Kevin Duffy. The move comes almost a year after Nakasero hospital, which started in 2009, acquired a $3 million loan facility from the International Finance Corporation (IFC).

That loan facility allowed Nakasero hospital to expand its facilities by acquiring a new CT-Scan among other equipment and outsourcing laboratory services to Lancet Laboratories Uganda, a joint venture with Lancet Laboratories of South Africa. Other institutions to have acquired IFC support include Kadic hospital and Vine Pharmacy.

Dr Ian Clarke, who remains IMG Chairman, says the new venture will allow IHK and its subsidiaries to improve their performance in several areas. “We will be able to send some doctors to India for training in these specialized areas, so we are at par with the national referral hospital, Mulago,” he said.

Medical health insurance provider AAR also signed a KShs 750m (Shs 2.2bn) capital injection deal with the Investment Fund for Health in Africa (IFHA) of Netherlands in 2009. The move saw IFHA take up a 20% equity stake in AAR with an option of acquiring a further 66%.
The move sought to help AAR implement a low-income health insurance project in Kenya’s Rift Valley province among other initiatives.

The move was also planned to culminate in the listing of AAR on the Nairobi Stock Exchange. AAR, which started its operations in 1984, has over 140,000 members in Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan and Somalia. Clarke, who declined to disclose how much the private equity partnership is worth, maintains that he still controls the majority of shares in IMG.

Both the Kibo Fund and TBL Mirror Fund have a combined total shareholding of 35%. IMG will also draw from the experience of Fortis Group, which is affiliated to TBL Mirror, as it is one of the leading healthcare groups in India. Already, IMG has acquired what it says is the largest CT-scanner in Uganda – a 40-slice scan, and is working on an extensive smart card system that will see IMG-affiliated hospitals digitalising their data within a year.

“Once a patient comes into our network of 90 clinics, the system will allow for easier electronic identification of our 4,000 patients and allow us to accurately determine how much we spend on treatment so we can optimize costs,” Duffy says.

Inherent in Duffy’s admission is that the higher costs of treatment are making it difficult for private hospitals to save and invest in new technology to stay a step ahead of government and foundation body hospitals. Ugandan hospitals are not alone in this. Rising costs and incomes among the middle class in Kenya are driving private equity firms to buy stakes in several Kenyan private hospitals at a time when public medical infrastructure has failed to keep up with the high demand. In just the last two years, equity firms made deals averaging $10 million with the Kenyan private hospitals and this amount is set to increase.

by Moses Talemwa: The Observer Newspaper