Deutsche Beteiligungs : Healthcare platform with growth potential

Portfolio6.4.2021 Healthcare platform with growth potential

The dialysis care market is changing

The nucleus in which DBAG Fund VII invested in May 2019 has grown strongly over the past two years: after having purchased its third dialysis centre in Fürth (Bavaria) in January 2020, operasan acquired another medical service centre for nephrology in Nuremberg in December 2020, as part of the spin-off. operasan now serves around 300 patients on a regular basis and aims for further growth. Their goal is a network serving at least 2,000 patients - not only in operasan's own medical care centres but also through cooperation with private practices.

Cooperation with experienced partners
DBAG and DBAG Fund VII intend to reach this goal with the help of experienced partners. Dr Jürgen Kämper, Chairman of the Management Board, and Jörg Fischlein, operasan's CFO, have been successful in the dialysis business for more than 20 years. They have built a closely-knit network and know this particular market well. More importantly, they enjoy a good reputation among the doctors who operate dialysis practices. Between 2006 and 2013, they already implemented a buy-and-build strategy for dialysis practices with great success. In the space of six years they had created a platform called Via Medis, which served 800 patients in eleven renal centres and generated 24 million euros of revenues per year. A strategic investor purchased the platform's operator, Via Medis Nierenzentren GmbH in 2013.

90,000 dialysis patients in Germany
Currently, around 90,000 patients require dialysis in Germany. It is especially the widespread conditions diabetes and high blood pressure which drive kidney diseases that require treatment. In recent years, the number of patients has grown by around one per cent annually. A higher level of health awareness among younger population groups gives hope that this growth can be stopped in the medium term and that the development can even be steered in the opposite direction in the long term. Initially, however, demographic change will probably ensure that this growth rate remains unchanged in the coming years.

A stronger impulse for the growth of the group will come from the acquisition of existing dialysis practices. The reason: New practices have not been allowed to be founded in Germany for more than ten years due to regulatory requirements.

Structural changes in the medical sector: Succession is also an important factor among doctors
The chances to take over existing practices are indeed good: similar to radiology practices, the equipment of a dialysis practice is costly. 'We are talking about a small medium-sized enterprise,' Dr Kämper explains. Caring for 100 patients requires 20 employees, 1,500 sqm of practice space and the corresponding amount of dialysis equipment. 'Nowadays, young doctors view their profession differently than the previous generation: the role 'part doctor - part entrepreneur' with all the risk attached is becoming increasingly unpopular.' Thus, among the around 600 private practices in Germany, operasan targets those which face a generational change.

'Our pipeline is well stocked', Dr Kämper says. In the middle of the month, the purchase of another medical care centre in Göttingen serving 160 patients was agreed upon. Moreover, talks are being held with the owner of another practice with around 70 patients, which would nicely complement an existing location in Brake.

The advantages of a network of practices are clear: purchasing terms for equipment and consumables are better, and the overhead can be spread across several practices. Organisational synergies will come on top if the practices are located in a regional cluster, as is the case in the Nuremberg area where operasan already operates three practices. 'In such a constellation, we can offer more specialised procedures, for example overnight dialysis, which a single practice would not be able to offer to its patients,' Dr Kämper explains. Staff deployment then also becomes more flexible.

Improving care through home dialysis
Another advantage is what you can call an 'expansion of the product range': operasan intends to set up an effective structure to promote and perform home dialysis. The DBAG portfolio company will take over the responsibility for the dialysis treatment towards the patients, together with health insurance companies and the Associations of Statutory Health Insurance Physicians. The cooperating doctors are relieved from their organisational and administrative tasks, allowing them to focus on the medical work. This includes all procedures of home dialysis, haemodialysis and peritoneal dialysis. The latter saves patients from being attached to a dialysis device several times a week - a significant gain in quality of life. operasan focuses on patient care in their homes, but also in qualified inpatient and elderly care institutions.

This requires a tight and efficiently organised network of private practices, hospitals, inpatient and outpatient care institutions, health insurances, Associations of Statutory Health Insurance Physicians, pharmacies, pharmaceutical companies and their suppliers.

operasan intends to set up, organise and operate such a network under the name of dialysis@home. Within ten years, the company hopes to increase the share of home dialysis in Germany to more than 20 per cent.

DBAG invested approximately 3.2 million euros alongside DBAG Fund VII (including the top-up fund); further funding may be provided in the course of the platform's expansion. DBAG Fund VII holds around 71 per cent of operasan, of which approximately 13 per cent is attributable to DBAG. Other shareholders include the company's management and a digital transformation consultancy firm. For 2021, operasan forecasts around 13 million euros in revenues.

'With the investment in operasan, we are increasing our exposure to the growth sector of healthcare,' Lucas Herbert, Managing Director and responsible Deal Captain, explains. 'At the same time, we also contribute in this area to solving succession situations in a goal-oriented way - and to ensuring good care for patients with the resources of a larger group.'