Hospital and medical services group Spiritage Health plans to raise $12 million through debt and equity to finance a major expansion programme aimed at taking advantage of the growing opportunities in the health sector, The Sunday Mail Business has established.
Spiritage Health chief executive officer Dr Matthew Wazara said the capital that will be raised will be used to refurbish and re-equip Medix Pharmacies, and fund the purchase of an additional jet aircraft by Medical Air Rescue Services (Mars).
In essence, the firm plans to dispose of about 49 percent stake in the subsidiary.
Spiritage Health owns various hospitals — in partnership with doctors and other institutions — Medix Pharmacies and Mars.
“Our capital-raising programme has reached an advanced stage and we expect to raise an initial $3 million as phase one.
“The anticipation is that both processes are to be complete in the next 45 to 90 days, while phase two, which has already commenced with some DFIs (Development Finance Institutions), will see an additional $9 million come in for the expansion of the hospital and other projects,” said Dr Wazara.
This development comes after its ambulance division, Mars, is facing viability challenges that have seen it struggling to pay salaries for its 200 workers across the country.
Information gathered by this paper indicates that Mars struggled to pay salaries in April and workers had to stage an industrial action.
However, the division has since rolled out a payment plan.
“The reduction in capitation revenue has seen management having to stagger salaries and allowances in recent months.
“Our immediate strategy is to balance between rationalisation of costs without retrenching staff or closing bases, and ensuring that we continue to deliver on this national service.
“We are also in advanced discussions with corporate and private equity investors who are interested in taking up to 49 percent of the stake in Mars,” said Dr Wazara.
He said the strategic thrust of Mars was to acquire additional road ambulances and response cars in the next three years and convert its current bases from cost centres into revenue centres.
The negative effect of the economic meltdown in the past decade had seen the depletion and ageing of the Mars ambulance fleet and related medical equipment.
“With new capital, Mars intends to expand this facility into a national contact centre which not only caters for emergency services, but can be used to address other pressing national requirements such as early warning systems for disease outbreaks, a critical aid to the national disaster command centre and taking all crisis related calls,” explained Dr Wazara.
He added that the air ambulance service under Mars currently operated leased aircraft from third parties and part of the recapitalisation programme will see the company acquire one jet and one plane in the next three years to augment the current fleet.
Dr Wazara further noted that part of the fund-raising effort was intended to support the company’s new business model, which would see most of the eight bases the company has throughout the country being converted to profit centres, as opposed to the current model where they were predominantly cost centres.
“Mars is one of the very few stand-alone ambulance services on the continent as most ambulance services are generally linked to hospitals, central or local governments. The company has traditionally depended on a model where the medical aid companies pay a certain fixed fee for each of their members. This has changed and we are now reviewing the business model,” he said.
CIMAS, a 40 percent shareholder in Mars until recently, has divested from the company for regulatory and other reasons.
CIMAS, on a capitation basis, contributed 30 to 40 percent of the company’s revenues.
Capitation refers to the payment of healthcare service providers a pre-determined amount for each person assigned to that health plan irrespective of whether that person seeks that service or not per a period of time.
Currently Mars employs more than 200 — both permanent and temporary — workers countrywide and has eight bases offering services in Harare, Bulawayo, Victoria Falls,
Kariba, Masvingo, Mutare, Marondera and Kwekwe.
The air ambulance service operates locally and within the region.
Spiritage Health is a subsidiary of Spiritage Holdings, which also has interests in telecommunications through Brodacom, an internet service provider.