Avenue Group embarks on Sh1.6bn hospital network expansion programmeFebruary 3, 2020
NAIROBI, Kenya, Feb 3 – Avenue Group has embarked on an expansion programme that will see the Healthcare provider spend Sh1.6 billion in the next five years in growing its hospital network countrywide.
The new strategy follows the change in ownership that saw US private equity fund Evercare Health Group and local partners acquire stake in Avenue Group.
This was announced during the opening of a new hospital in Thika town bringing its hospital network to three – the Group already operates two hospitals in Nairobi and Kisumu – plus 16 outpatient clinics spread across the country.
Speaking during the launch of the Thika hospital, Group CEO Dr. Denis Ogolla said Avenue Health will bank on its ‘Provider-based Managed Healthcare’ model to fund the expansion programme and grow her market share in the country.
“Although the traditional medical insurance system which involves risk pooling has played a significant role in addressing the cost of medical services, there’s still room for experimenting with cheaper alternatives in order to ensure that all Kenyans have an adequate medical cover. The beauty of the Provider-based Managed Healthcare system is that premiums are paid directly to medical institutions thus making it more cost-effective,” said Dr. Ogolla.
The CEO noted that the direct link between the patient and provider was the most efficient solution in reducing costs as it provides a regular and predictable source of income for the provider.
“This form of risk pooling eliminates the need for costly middlemen, such as insurance companies, by making the medical provider itself a repository for the pooled funds. The provider, instead of investing in office buildings, the stock market, or interest bearing bonds, uses member funds to build hospitals, clinics, and otherwise invest in medical equipment and facilities to be used for patients as need arises,” he said.
The 87-bed hospital in Thika town will provide a full range of tertiary care services including dialysis, adult and neonatal intensive care, specialized radiology, and advanced laboratory and physiotherapy services. Additional facilities include state of the art modular, laminar flow operating theatres, medical, surgical, maternity and pediatric wards.
Evercare, wholly owned by The Evercare Health Fund- a $1billion emerging markets healthcare fund, is an integrated healthcare delivery network operating in Africa and South Asia.
It seeks to improve access to medical resources and the efficiency of the healthcare systems across Africa and Asia through creating a network of healthcare facilities that can share resources.
The Evercare fund has also invested in Nairobi Women’s Hospital, Avenue Hospital, Metropolitan Hospital and Ladnan Hospital.
Speaking at the launch, Evercare Group Chief Operating Officer Andrew Currie disclosed that the Fund is planning to acquire more medium-size hospitals in Kenya.
Currie said the fund has so far spent more than 10 billion in Kenya on acquisitions and development of infrastructure in medical facilities since entering Kenya in 2017.
He said the new acquisitions will focus on middle-level hospitals with a strong presence in rural and semi urban areas.
Dr. Ogolla lauded the Evercare partnership saying it has been instrumental in Avenue Group’s expansion plans and staff training programmes.
He singled out increasing incidences of fraud coupled with general inefficiency in management of medical insurance schemes as the key contributors to the escalating cost of medical insurance in the country.
These, he said, together with poor insurance penetration and emergence of lifestyle and costly diseases to manage need to be addressed for Kenyans to enjoy affordable healthcare.