The business of hospital beds

In addition to making calls on Carlos Slim’s phone lines, lunching in his restaurants, and driving on his roads, Mexicans can now be born in his hospitals.

The billionaire businessman has staked a claim to the private healthcare sector after his infrastructure firm IDEAL (Impulsora del Desarollo y el Empleo en America Latina) took a large stake in privately-held hospital chain Grupo Star Médica. The group, which began operations in 2002, currently owns hospitals in Acapulco, Morelia, Aguascalientes, Mérida, San Luis Potosí, Puebla, and Mexico City.

Star Médica also opened a 53-bed facility in Ciudad Juárez in September, and plans others in Tijuana and Mexicali, according to the Bloomberg news agency. The chain will target American patients for elective surgery such as arthroscopy and laparoscopy.

The concept of “medical tourism” is already well established in Mexico’s northern border towns, where US citizens who often cannot afford medical treatment and/ or insurance in their own country come for discount surgeries, dental treatment, and cut-price pharmaceuticals. Many Mexican doctors are US-trained, and can keep their prices down as rents and malpractice premiums are considerably lower than north of the border.

“There is definitely a market out there, now it is just a question of conquering it,” said the general director of one Mexico City hospital who asked not to be named. Although the number of medically insured Mexicans is still very small, “retirees from the United States for example that come and live here in Mexico—this is a sector that is insured and demands certain quality standards.”

An official in the investment section of 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 hospitals themselves but rather is an investor helping to finance restructuring projects, bring in new technology, etc.,” said the hospital general director. “Healthcare is a business like any other business and I think it’s a good investment for him. It’s a market he can exploit.”

When contacted, Grupo Star Médica declined to comment, but according to press reports they are planning to build two new hospitals in Mexico City in addition to the existing Hospital Star Médica Santa Fe and Hospital Infantil Privado, as well as the new facilities in the northern border towns.

The number of private hospital beds in Mexico rose 28% to 34,576 in 2005 from 27,015 in 2000, according to the census bureau. Health spending in Mexico in 2005 was about $49 billion USD, or 6.4% of gross domestic product.

“I think it will have a positive impact on the private healthcare sector, assuming that the restructuring projects are carried out the way they should be,” said the general director, “and it is good for the traditional hospitals in this sector, like the ABC for example, to have competition.”

CONTACTS:

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

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