Mater Private majority owner proposed merger with rival Hermitage

Capvest, the majority owner of the Mater Private, proposed at the end of October

to merge its north Dublin private hospital with rival the Hermitage Medical Clinic in west Dublin to create a "major new force in Irish private healthcare".

A letter from Seamus FitzPatrick, the chief executive of Capvest, to the owners of the Hermitage clinic on October 22nd, obtained by The Irish Times, warns that "unprecedented changes" in Irish healthcare meant there was huge "logic for consolidation".

Mr FitzPatrick refers in his letter to earlier talks at the start of 2013 about a possible merger, and says he would like to begin these discussions again given the “benefits that would flow from a consolidation in the market, with the creation of strong players characterised by high quality, scale, breadth of services, balance sheet strength and access to capital”.

“With a contracting health insurance market, and increased competition from the public sector, it was also becoming increasingly clear that challenges will continue,” Mr FitzPatrick said.

The Hermitage clinic is owned by a consortium of four businessmen: Larry Goodman, the beef baron, Dr George Duffy and developers Sean Mulryan and John Flynn.

Mr FitzPatrick tells the Hermitage's owners that five other Irish standalone hospitals have had to "struggle to remain viable," ranging from Mount Carmel hospital which "failed", to the Beacon Hospital which required a "major debt restructuring".

Consolidation

“The logic for consolidation, in our view, is stronger now than ever before,” Mr FitzPatrick said. He said a merger would allow the two hospitals combine to become the “leading healthcare operator in Ireland,” with 400 beds, 19 operating theatres and speciality services.

A merger, he said, would give the combined hospitals greater credibility with the State and a stronger position when dealing with insurers, as well as give greater opportunities for consultants and reduce costs by sharing some services.