Health care group lifts profile

West Perth-based private health care group, St John of God Health Care, has merged its health services operations with those of NSW-based Catholic brotherhood, Hospitaller Order of St John of God, creating a trans-Tasman operation employing 8,000.

The move brings St John of God Health Care’s total portfolio to 14 hospitals, along with a number of other service providers in WA, Victoria, NSW and New Zealand. 

The new acquisitions will become wholly-owned subsidiaries of St John of God Health Care Inc and will add about $55 million in revenue to the Catholic not-for-profit organisation.

The group’s new entities include two private psychiatric hospitals and an outreach service in Sydney, a major disability services provider in Melbourne and two facilities based in Christchurch, New Zealand – a residential disability care provider and a youth and community services agency.

About half of St John of God Health Care’s employees will be based in WA.

St John of God Health Care group chief executive officer, Dr Michael Stanford, said the merger would provide a new growth path for the organisation and diversify its risk.

“It increases our spread of services. We are now able to offer more types of services,” he told WA Business News. 

Dr Stanford said the new acquisitions would also create bargaining power when it came to dealing with health funds and governments.

“We think it will allow us to become more influential,” he said.

Dr Stanford said the NSW Hospitaller Order had been looking to relinquish operational control of its health services because of declining numbers and an ageing membership.

“There’s an economy of scale reality in the hospital sector and they were looking for another Catholic operator to take over,” he said.

“We still have 150 sisters at St John of God, but they only have 30 or so brothers left.”

In 2007-08, the organisation’s budget will be $710 million, up from about $600 million last financial year.

The merger will add about $55 million to the organisation’s turnover, with a further $55 million being generated by growth in operations, such as the $14.5 million redevelopment and expansion of its Bunbury hospital, and the building of a new wing at its Subiaco hospital.

“In five years, we have grown about 20 per cent per annum,” Dr Stanford said.

“We’ve got our eye on the $1 billion mark, and we’d expect to get there over the next three to four years.”

The organisation made six acquisitions in the past year, including four hospitals, one hospice and one pathology group.

“We’re still very, very positive about the growth that is available in WA, but there have been more opportunities in other states,” Dr Stanford said.

He said St John of God Health Care would be looking to expand its psychiatric services and youth and community services in WA and Victoria following the merger.

It will also be investigating joint ventures with other not-for-profit groups.

“We have a lot in common with the church and charitable sector. We generally try to achieve the same thing,” Dr Stanford said.

“We’re definitely sharing information with both the Uniting Church (specifically with groups over east) and the Seventh Day Adventist church.”