Health giant takes aim at rival

New Zealand's largest private medical chain, the Southern Cross Health Trust, wants to take on MercyAscot - a business associated with Warehouse founder Stephen Tindall - by buying the Auckland Surgical Centre in Remuera.

The Commerce Commission said yesterday the trust had applied for clearance to buy the centre, which is owned by 63 shareholders, mainly health professionals.
The price was not disclosed.

The centre is New Zealand's largest day-stay hospital.

The commission said it would soon rule on whether the deal would substantially reduce competition in the national healthcare business.

Southern Cross's chief operating officer, Terry Moore, said the purchase would pit his business against MercyAscot and allow it to expand its day-stay business.

But the deal would not hurt competition because of the sheer number of operators.

MercyAscot is a private hospital and clinics facility owned by Healthcare Holdings, associated with Tindall and chaired by Warehouse chairman Keith Smith.

Southern Cross owns two hospitals in Auckland - one in Epsom, the other in Glenfield.

It also owns half the Gillies Hospital in Epsom, in a joint venture with surgeons.

"The acquisition will result in aggregation in the provision of hospital facilities and related non-specialist services for elective secondary services in the Auckland region," the commission said.

Its role was to decide whether the deal would harm competition nationally.

A founder and the chairman of the Auckland Surgical Centre, Dr Joseph Petoe, defended the proposed sale yesterday.

He said Southern Cross would expand its short-term and day-stay surgery with the purchase of the St Marks Rd centre.

"This would complement the Southern Cross operations and provide better competition between the MercyAscot group and Southern Cross."

He said the Auckland Surgical Centre was founded 17 years ago, employed 80 full-time and part-time staff and had about 6000 patients annually.

"We started with two theatres and, seven years ago, we doubled that to four," he said.

"Since then, we have been expanding and the building has been getting larger and accommodating more people. We have a 10-bed overnight stay ward which enables us to do larger surgery."

The centre was primarily for patients having surgical treatment in which they could have their operations and be discharged on the same day.

Petoe said about 60 per cent of operations at the centre were orthopaedic surgery.

Moore said Southern Cross, which treats about 40,000 patients annually, was New Zealand's only national chain of private hospitals.

Plans were in hand to expand the Auckland Surgical Centre.

The trust was a separate entity from the medical insurance provider, which had more than 800,000 members.

Who, where and what's next

* Southern Cross Health Trust wants to expand in Auckland by buying a private day-stay hospital
* Southern Cross is the country's largest private medical chain, owning nine hospitals outright and another three in joint ventures
* MercyAscot, associated with Stephen Tindall, has hospitals in Epsom and Greenlane
* A regulator will decide if Southern Cross can expand its day-stay surgery services in Auckland. The trust says it will increase its competition with MercyAscot.