Rhoen-Klinikum Looks at Clinic Partnership With Fresenius

Rhoen-Klinikum AG said it’s in talks on a partnership with Fresenius SE nine months after the competitor abandoned a takeover offer that would have created the biggest German hospital-operating network.

The two companies are in initial negotiations on a program that would allow patients to buy insurance for in-network services such as single-bed hospital rooms and treatment by top doctors, Bad Neustadt An Der Saale, Germany-based Rhoen-Klinikum said in an e-mailed statement today. The talks are part of a reorganization in which Rhoen plans 1 billion euros ($1.32 billion) in investments for the next five years.

Rhoen-Klinikum has said it needs to make its hospital network more competitive after last year’s failed Fresenius deal. Dubbed ImPuls, the reorganization announced today won’t include mass firings and isn’t a cost-cutting exercise, the hospital operator said.

“We’re focusing on above-market-level organic growth for the company and its clinics,” Chief Financial Officer Jens-Peter Neumann said in the statement.

Rhoen-Klinikum said it plans to increase earnings before interest, taxes, depreciation and amortization in the two- to three-digit million-euro range in the next two to three years.

Union Customers

The partnership with Fresenius’s Helios hospital unit would create a “network medicine” project along the lines of the Helios Club program that Fresenius announced last month, starting with individual unions and employers and moving toward nationwide coverage. Talks are under way on how to structure the partnership, which would not be exclusive, said Sascha Schiffler, a spokesman for Rhoen-Klinikum.

Fresenius, which is based in the Frankfurt suburb of Bad Homburg, decided against pursuing a bid for Rhoen-Klinikum in September after rivals such as Asklepios Kliniken GmbH bought stakes to prevent it from winning at least 90 percent of the stock, a mandatory threshold for full ownership.

Swedish pension fund Alecta, Rhoen-Klinikum’s second-biggest shareholder, is pushing for a vote to abolish the 90 percent threshold at the German company’s annual meeting on June 12. That would pave the way for a second bid, Konrad Lieder, a Frankfurt-based analyst for Equinet Bank AG, wrote in a note to investors today.

The size of Asklepios’s holding makes it unlikely that Alecta’s proposal will pass, Lieder wrote.

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