Trial and Error

Within Poland Medicover strived to learn and adapt to its client’s needs adapting the scope and place of services to match their requests. The different “colours” of benefit plans were introduced; cooperation was established with state owned hospitals so that Medicover could also provide access to inpatient care, and for the largest corporate clients Medicover also began to run “onsite” clinics dedicated to their employees’ healthcare.

Medicover assumed the model, which was beginning to work so well in Poland, would also be successful in other Central European countries, so it planned to offer the same services elsewhere. To expand quickly Medicover needed more experienced people with local languages and market knowledge, therefore it decided to expand by acquiring businesses rather than by opening new Greenfield clinics, as it had done in Poland.

Medicover found that the differences in the healthcare system between neighbouring countries, though apparently small, were still significant. In Romania, many more people than in Poland wished to pay “fee for service” for healthcare, so individual customers were more important to develop. In the Czech Republic, the healthcare system had multiple insurers and so it was not attractive for customers to propose a system independent of state sponsored healthcare, and in Hungary the taxation of health benefits altered what customers wanted to buy. Medicover had to adapt its services to each local market.

Medicover also found that the managers of the businesses it acquired were independently minded and had their own views on how the businesses should be run. This made coordination and achieving synergies more difficult. Ultimately Medicover decided that clinics businesses in smaller national markets could be developed and run just as well by local management teams. The Medicover businesses in Estonia, Czech and Hungary have since been divested and are now doing well as independent concerns.

However, the Romanian business has been retained and is still developing within Medicover. It was the original acquisition in Romania that first showed Medicover the attractions of being in the laboratory diagnostics business, as will be described further...

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