The UK’s economy heavily relies on services, and one of its major contributors is the healthcare industry. Historically, this sector has been slow to embrace innovation. However, the pandemic has spurred a renewed interest in adopting new technologies, faster solutions, and patient-centred services.

Investments in healthcare, focusing on improving accessibility, building a more skilled workforce, and addressing issues, have shown great promise. These changes have created both fresh opportunities and challenges for investors looking to capitalise on the latest trends in this rapidly expanding field. This week, we shed light on the latest trends in healthcare and how they relate to the overall increasing rates of insolvency across the country.

Sector Overview

As the baby boomers generation (which makes up a significant part of the UK’s residents) gets older, the healthcare sector has seen a greater demand for its services in the last few years. However, a shortage of caregivers and infrastructure still remains. Many caregivers themselves are getting older and nearing retirement. A recent report shows that the cost of hiring clinical staff has gone up by $24 billion per year compared to before the pandemic.

Added to this, the cost of equipment and integrating technology into NHS systems is also quite high. These trends have seen private equity buying out many healthcare companies in recent months to combat the long waiting lists of the NHS. These companies include ambulance services, eye-care clinics, and diagnostic businesses. 

More than 150 deals have been made since last year; the past two years have seen the highest number of deals since at least 2014. Even though there is a slowdown in mergers and acquisitions in other industries, investment in healthcare remains strong this quarter. 

The Acquisition of Circle Health Group by PureHealth

Centene, a health insurance company, is all set to divest a British hospital operator as it shifts its primary focus towards its core U.S. health benefits segments, including Obamacare, Medicaid, and Medicare Advantage. PureHealth, a major healthcare company based in Abu Dhabi and the Middle East’s largest healthcare platform will acquire Circle Health Group, the UK’s largest independent hospital operator. The deal is worth £950 million.

This acquisition marks PureHealth’s entry into the UK and is part of its global expansion strategy. The merger promises enhanced healthcare options to patients across both the UAE and the UK. This will be delivered through a larger network of medical professionals and cross collaborative knowledge sharing. 

Circle Health Group, known for its partnership with Radar Healthcare, has the UK’s largest network of private hospitals, specialising in neurological and musculoskeletal rehabilitation services and pathway management. It is also the first European healthcare provider in the Chinese market.This acquisition gives PureHealth full ownership of Circle Health Group’s portfolio. It includes their state-of-the-art hospitals, 8,200 dedicated employees and 6,500 consultants. 

Two divisions of Babylon Health placed into administration

Babylon Health, a once multi-million dollar valued London telehealth startup, is at the end of its journey. After experiencing insolvency and the devaluation of its U.S. shares, the U.K. subsidiary of Babylon Health has officially entered administration. A large portion of its assets has been sold to eMed Healthcare UK, a subsidiary of U.S. company eMed.

This includes a preventative telehealth practice serving around 700,000 individuals in the UK, through contracts with major providers like Bupa. In August 2021, the company’s GP at Hand service, funded by the NHS, became the first general practitioner in the UK to have a patient list exceeding 100,000. However, this digital-first service was criticised for primarily attracting younger, typically healthier patients.

Babylon has over 650 employees in the UK. However, it remains uncertain how many jobs are in jeopardy and how many might be transferred as part of the sale. A significant number of employees in the United States have already been made redundant. The business has also been seeking a buyer for one of its US divisions, specifically a clinical business located in California. 

For investors with expertise in healthcare and turnaround strategies, there may be an opportunity to strategically restructure the acquired assets, address regulatory concerns, and rebuild the company’s brand. Since the value of its assets is now down to a few thousand, the acquisition of these assets at a potentially reduced cost also presents an opportunity for investors to invest intelligently in a growing industry.