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ProMedica eyes expansion into China

In an effort to offset weak revenue growth in the states, Toledo, Ohio-based ProMedica is looking to expand into China, reports The Wall Street Journal.

Eying a deal in the world's second-largest economy, executives from the nonprofit that operates more than a dozen hospitals in Ohio and Michigan have toured hospitals in Shanghai, Shenzhen and Chengdu.

Randy Oostra, president and CEO of ProMedica, said the exploration of a new market is a result of a tough economic model in the U.S. as competition shifts medical care outside of hospitals and population growth remains stagnant.

"We have to look outside our traditional world if we're going to survive," Mr. Oostra said, according to The Wall Street Journal.  

ProMedica is considering up to 12 deals in some of the fastest growing cities in China. While the deals are still undecided, Mr. Oostra disclosed that ProMedica would either potentially run the hospitals or provide consulting services to the developers of the hospitals.

ProMedica's expansion overseas would follow several other hospital systems, including Nashville, Tenn.-based HCA Healthcare, which entered the United Kingdom years ago; Cleveland Clinic, which is leasing a six-story building and renovating it into a 200-bed hospital in London; Pittsburgh-based UPMC which acquired a 50 percent state in a private hospital in Rome; and Boston-based Steward Health Care System, which reached a deal in February to run Malta's two public hospitals and open a third.

In addition, Boston-based Brigham Health and Boston-based Massachusetts General Hospital are helping Chinese partners open new hospitals in the country. Cleveland Clinic has also suggested it was looking to enter China.

The expansion into overseas markets, particularly into China, has gained traction in the past few years as a massive healthcare overhaul takes place in China. The rising rates of chronic disease and an aging population has increased healthcare spending, according to The Wall Street Journal. As a result of the overhaul, China said it would allow foreign ownership of some hospitals.

More articles on transactions and valuations:
CHS to sell 421-bed Florida hospital
Report: Global healthcare M&A surged to $332B in 2017
CHOP signs deal to provide medical services in UAE

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