Eight Roads' China hospital wins backing from Swire

Swire is now the second-largest investor in the company after Eight Roads, which re-upped in the round. DeltaHealth will use the proceeds to build new facilities and expand into new service areas, such as thoracic oncology, according to Professor Sun Lizhong, president of Shanghai DeltaHealth Hospital.

DeltaHealth Hospital, a general hospital focused on cardiovascular diseases, is DeltaHealth's key asset. The company also has DeltaWest Clinic, an outpatient medical clinic.

The group was granted entry to China's basic medical insurance scheme, which covers more than 95% of the population, in 2018. Last year, DeltaHealth Hospital performed 294 aortic surgeries, the second-highest total of all Shanghai hospitals.

A liberalization of China's healthcare services industry, notably a 2014 decision to permit 100% foreign ownership of private hospitals in seven provinces and municipalities, triggered a surge in PE interest in the space. Most investors have concentrated on brownfield assets under roll-up strategies.

Eight Roads, the proprietary investment firm backed by Fidelity, took the less conventional route of building a hospital from scratch. Trustbridge Partners also pursued this option.

Eight Roads chose cardiovascular care as the key focus for its facility, having recognized a gap between those who suffer from heart disease and those who receive treatment for it. DeltaWest Clinic opened in 2012 and the construction of DeltaHealth Hospital began the following year.

“What might be unique about us is that we look way ahead,” Daniel Auerbach, a senior managing partner at Eight Roads and chairman of DeltaHealth, told AVCJ in a previous interview.

"There was a bet that the healthcare system in China was going to experience a stress test. To us it was very obvious – the government couldn’t deliver public healthcare services to the entire population with an infrastructure that was not yet modernized and scattered throughout the country."

As of 2017, Eight Roads had invested $200 million in the hospital, including a $100 million loan secured from China Merchants Bank in 2013.

Recruitment is a major challenge for private hospital operators, although the government has sought to ease the burden by allowing doctors to practice at cooperative medical institutions with permission from their primary employers. Sun was brought in from Beijing Anzhen Hospital to serve as president and chief medical officer at DeltaHealth Hospital, originally on a part-time basis.

DeltaHealth has recruited several other senior medical professionals with experience overseas. Staff are kept up to speed through a training partnership with Columbia University, which sees Chinese doctors go to the US and US doctors come to China.

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• Topics
• Greater China
• Expansion
• Healthcare
• China
• Eight Roads
• Fidelity
• Swire
• Growth capital