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October 2, 2022
BUSINESS

After a very satisfying year 2010, CMU stakes 2011 bet on ongoing innovation

Sergiu Negut, Deputy General Manager of Unirea Medical Centre predicts that this “atypical” private medical service market is going to coagulate, with players needing to either specialize or integrate themselves.

Year 2010 was seen by many players from a variety of sectors as a difficult one, with the business challenge starting to shape up better in 2011. How would you therefore characterize year 2010 from a financial point of view with respect to CMU’s activity and what are your expectations in Q1 of this year?


Year 2010 was a capital one for CMU. In February 2010, CMU completed the selling process of its 80 per cent majority stake to Advent International, a global private equity fund, the biggest such deal on the private medical services market in Romania. Also, late last year, we concluded the merger with Euroclinic, the first private hospital in Romania, which led to a fusion creating the most complex supplier of private medical services in this country, with over 1,000 doctors employed and collaborators in three hospitals and over 23 polyclinics in Bucharest and the country at large.


What has CMU’s most profitable segment been so far? The corporate or the fee-for-service one?


CMU had long focused on the corporate segment. For example, in 1996, we introduced the subscription-based medical concept to the market. However, in later years, we have directed out attention to the fee-for-service, which resulted in CMU splitting its business 50/50 between the two segments, both of which witnessed growth. After merging with Euroclinic, the group has been operating on three basic segments, each of them covering about one-third of the business turnover: retail polyclinics, retail hospitals and corporate respectively. Profitability is a matter of maturity on one and hand, and of uniqueness, on the other. In order to make a profit, a segment must go beyond the market introduction stage and also requires some limited competition on the market. In other words, what we are talking here is a market that has yet to mature.


The private medical clinic market has been sought by other relevant actors right from the start, therefore it poses an interest to investors. What developments do you expect in Bucharest and other major Romanian cities in the coming future and what is your view on the Romanian business environment?


The market of private medicals services in Romania is not in inception stage, is just atypical. There are many very small-sized suppliers of polyclinic services nationwide and but a few large suppliers operating in large cities. In the future, the market will get coagulated, with players either going to specialize or integrate themselves. The independent polyclinic with seven to eight medical offices and a small laboratory is a model that worked in Bucharest ten years ago and is still working in the small towns, but this model is already obsolete in the large cities in this country.


A major patient migration could be noticed from public to private medical care both in Bucharest and the rest of the country, because of the still inadequate quality offered by the former. Nonetheless, the introduction of the shared cost system is often regarded with scepticism by low to medium income patients. How do you explain this phenomenon?


On the Romanian market, there is a tradition of informal payments for medical services rendered by the state. The conduct of doctors, and patients too, could only change over time, therefore, scepticism is natural with regards to implementing a system so much different from that mentioned. People are afraid they will have to contribute to co-payment and also make informal payments only to get no additional benefits from it.


What is CMU’s current strength on an extremely competitive local market such as that of private medical services?


Longevity on the market of private medical services in Romania, advanced equipment, very well trained doctors and its presence in key areas, both in Bucharest and in the country. Also, a cohesive strategy relying on good knowledge of the market and supported financially by one of the largest investment funds in place. This is a market where only the permanent innovators manage to hold out, those able to provide services tailored to the increasingly complex demands of patients.

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