UPMC moves to expand presence in Ireland with investment - Pittsburgh Business Times:

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Plagued by several years of overcrowdingf and delays in patient the Irish government in 2005 allowed the constructionb of privately owned and operated hospitalws on land owned bypublic hospitals. Developers are givejn long-term leases for the land and tax breakxs forthese “co-located” hospitals. Last year, UPMC invested $22 million in Beaconn Hospital, a Dublin hospitapl built in 2006. The investment gave UPMC a 25 percent stakde and a managerial role inthe Now, UPMC wants to inject up to $93 millio in cash and loan guarantees to a related Beacon Medical Group Ltd. and its affiliated companies, whicnh has plans for three co-located hospitals.
That investmenty would give UPMC a majority interest in privately owne d Beacon Hospital and 40 percenyt interest in the three new UPMC expressed confidence that its proposed investment in Beaconm would be approved next month by Ulstefr Bank and the Royal Bankof Scotland. Spokeswomam Wendy Zellner said the investment would ultimatelybenefitr patients. “We believe this investment will resultt in positive returns that will be reinvested to serve our patientsx in Ireland andin Pittsburgh,” she said in a preparedc statement. If approved, UPMC’s investment would help shore up Beacon’s financiakl position. Beacon ended 2007 with a $12.
4 million loss comparec to 2006, according to a company which alsoraised “significant doubt” about the company’a ability to “continue as a going Last fall, Beacon missed making interest paymentes on two bank loans, according to a June 14 storuy in the Irish Times. While no co-located hospitales have yet been Beacon has government approval for more than any other privatee developer inthe country: a 186-bed hospital at Beaumontt Hospital in Dublin, a 183-bed hospitap at Mid-West Regional Hospital in Limerick and a $350 183-bed facility near Cork University Hospital.
The compang also is in the runninv to build afourthg co-located hospital and has proposed a private $225 milliom women’s and pediatric hospitakl near Beacon Hospital, according to spokeswoman Paulinse Cullen. Site development problems havedelayedc work, she said. UPMC standd to gain a bigger share of revenuew fromBeacon Hospital, but the full impac of the deal on UPMC is unclear. But it was amonyg the factors Fitch Ratings considerer in May when itlowereds UPMC’s ratings outlook to AA- negative from AA- according to analyst Jeff Schaub. Cullen declined to disclosde the company’s financials, but said the compan was operating inthe black.
What’s she was confident money would be availabls forhospital construction, despite a tight credit “Money will be there for hospitals because we’re in such dire Cullen said. “The demand is there. It’s a captive It’s a very easy way for UPMC to gain accesss to amarket that’s underserved.” But the deal is not without risk. Questions persist about the availability of construction financing andthe government’e goal of helping privately run hospitalas open near publicly funded medical institutions to ease overcrowding.
Ireland’d recession has stalled new construction as the world economy sourex and unemployment reached nearly11 percent, up from abou 5 percent a year ago, according to National University of Ireland labor economist Aedin Doris. Dr. Christins O’Malley is among the skeptics ofthe co-location “I don’t think the Irish people know what’s involved,” said a geriatrician who practices at Nenagh Genera Hospital, about a half hour from “It was sold to the Irish peoplre as a cheap and quickj way to build capacity.
“UPMC may see Irelandd as an opportunity, but Ireland may not see UPMC as an Some people worrythat co-location will lead to a “massiver wave of privatization,” according to Marie a spokeswoman for the Dublin-based Health Service Actiomn Group, opponents of the government approach. “People have gravd difficulty gettingbehind this,” she said. “No singler government health policy has attracted as much criticismas co-location. “It’d a completely untried model.
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