The business of hospital beds

In addition to making calls onCarlos Slim’s phone lines, lunchingin his restaurants, and drivingon his roads, Mexicans can nowbe born in his hospitals.

The billionaire businessman hasstaked a claim to the private healthcaresector after his infrastructurefirm IDEAL (Impulsora del Desarolloy el Empleo en America Latina)took a large stake in privately-heldhospital chain Grupo Star Médica.The group, which began operationsin 2002, currently owns hospitals inAcapulco, Morelia, Aguascalientes,Mérida, San Luis Potosí, Puebla,and Mexico City.

Star Médica alsoopened a 53-bed facilityin Ciudad Juárezin September, andplans others in Tijuanaand Mexicali, accordingto the Bloombergnews agency.The chain will targetAmerican patientsfor elective surgerysuch as arthroscopyand laparoscopy.

The concept of “medical tourism”is already well established inMexico’s northern border towns,where US citizens who often cannotafford medical treatment and/or insurance in their own countrycome for discount surgeries, dentaltreatment, and cut-price pharmaceuticals.Many Mexican doctors areUS-trained, and can keep their pricesdown as rents and malpracticepremiums are considerably lowerthan north of the border.

“There is definitely a marketout there, now it is just a questionof conquering it,” said the generaldirector of one Mexico City hospitalwho asked not to be named.Although the number of medicallyinsured Mexicans is still very small,“retirees from the United States forexample that come and live here inMexico—this is a sector that is insuredand demands certain qualitystandards.”

An official in the investment sectionof IDEAL revealed that the 49% stake was bought last year,and that IDEAL also owns a few of Star Médica's buildings.

“Slim has not bought the hospitalsthemselves but rather isan investor helping to finance restructuringprojects, bring in newtechnology, etc.,” said the hospitalgeneral director. “Healthcare is abusiness like any other businessand I think it’s a goodinvestment for him.It’s a market he canexploit.”

When contacted, Grupo Star Médicadeclined to comment,but according to pressreports they are planningto build two newhospitals in MexicoCity in addition to theexisting Hospital StarMédica Santa Fe and Hospital InfantilPrivado, as well as the newfacilities in the northern bordertowns.

The number of private hospitalbeds in Mexico rose 28% to34,576 in 2005 from 27,015 in 2000,according to the census bureau.Health spending in Mexico in 2005was about $49 billion USD, or 6.4% of gross domestic product.

“I think it will have a positiveimpact on the private healthcaresector, assuming that the restructuringprojects are carried out theway they should be,” said the generaldirector, “and it is good for thetraditional hospitals in this sector,like the ABC for example, to havecompetition.”

CONTACTS:

Grupo Star Médica, tel: (01) 443-322-7777, www.starmedica.com

Ideal, tel: (01) 55-5625-4900, www.impulsoraideal.com