Tertiary hospital non-profit turn profit! It has been restructured several times

Can a non-profit hospital be converted to a for-profit hospital? Recently, a non-profit hospital under the listed company has been changed to a for-profit hospital.

The author | Xiao Xiang

Source| Medical Community (ID: vistamed)

Hospitals under listed companies are not profitable

Can a non-profit hospital be converted to a for-profit hospital? On April 7, Yihua Health (000150), a listed company, announced that the company's non-profit hospital, the 334th Affiliated Hospital of Nanchang University, has been changed to a for-profit hospital.

Source: 334 Hospital Affiliated to Nanchang University

The announcement revealed that this restructuring act has been prepared as early as 2020. It is understood that on December 9, 2020, Yihua Health disclosed the "Announcement on the Financial Assistance Provided by the Company's Subsidiaries for Affiliated Non-profit Hospitals", which announced that it intends to transform non-profit hospitals into for-profit hospitals.

Recently, the hospital received a reply document from the Nanchang Municipal Health Commission, agreeing to change Nanchang 334Th Hospital to a for-profit hospital. According to the process of restructuring, Tianjin Chengkang and Dazisalekang will jointly invest in the establishment of a hospital co., LTD., and handle the relevant procedures for business licenses such as the "Medical Institution Practice License" in accordance with the law. At the same time, Nanchang 334 Hospital will apply to the Ministry of Civil Affairs and other departments for cancellation and liquidation, and all the qualifications, business and assets of Nanchang 334 Hospital will be undertaken by The Hospital Co., Ltd.

Subsequently, after the hospital co., LTD. obtained the corresponding business qualifications, it was included in the scope of the consolidated statements of the listed company. After being included in the listed company, it will have a positive impact on the operating performance of the listed company.

Tertiary hospitals that have been restructured several times

According to the official website of the hospital, Nanchang 334 Hospital was founded in 1953, and in December 2014, the hospital officially unveiled the "tertiary general hospital". Enterprise investigation information shows that Nanchang 334 Hospital once used the name "Jiangxi Renji Hospital". Network information shows that Nanchang 334 Hospital is an enterprise hospital affiliated to Jiangxi Hongdu Aviation Industry Group, and in 2005, Nanchang 334 Hospital was officially launched from the main and auxiliary separation and restructuring of Hongdu Group. However, hospitals under restructuring are caught in the dilemma that most corporate hospitals are currently facing, such as the loss of disease sources and insufficient funds for follow-up development.

In 2006, Jiangxi Hongdu Aviation Industry Group signed a contract with a medical group in Shanghai on the "Nanchang 334 Hospital Restructuring Cooperation" project. According to the cooperation contract, Hongdu Group and Medical Group jointly carried out joint-stock reform of Nanchang 334 Hospital, but the follow-up cooperation was not reported. A few years later, Nanchang 334 Hospital once again ushered in a restructuring.

In 2015, Yihua Health (formerly known as Yihua Real Estate) announced a comprehensive transformation of medical health, and in September 2015, Yihua Health threw out a restructuring plan to sell three real estate subsidiaries and spend 2 billion yuan to acquire 100% of the equity of two medical service companies, Aole and Dazi Selekon, to expand the medical and health business territory. The 334th Affiliated Hospital of Nanchang University is a non-profit hospital under Dazi Salekon.

Yihua Health's 2020 annual report revealed that one of its business plans is to accelerate the transformation of its non-profit hospitals into for-profit hospitals, actively communicate with the local government of its hospitals, and accelerate the return of medical insurance funds.

It is understood that the transformation from a non-profit hospital to a for-profit hospital has completed the industrial and commercial registration procedures. According to the enterprise investigation, Nanchang 334 Hospital Co., Ltd. was established on March 23, 2022, with 94.52% of the shares held by the Sun Company Tianjin Chengkang Hospital Management Co., Ltd. and 5.48% of the shares held by the subsidiary Dazi Selkang Medical Investment Management Co., Ltd.

The parent company had sold the hospital to pay off its debts

Since Yihua Health transformed the medical and health industry in 2015, it has opened the road of "buying, buying and buying". However, some analysts said that among the dozens of mergers and acquisitions of Yihua Health, many of them have high premium mergers and acquisitions, which has also made the asset-liability ratio of Yihua Health soar. It is reported that Yihua Health's asset-liability ratio in 2015 was 63%, which has increased to 95% in 2020, and in the past 5 years of transformation from real estate to medical health, Yihua Health's performance has been declining, and in 2019 alone, it has lost more than one billion yuan.

It is understood that on October 8, 2020, Yihua Health issued two announcements saying that it would transfer all 60% of the rights and interests of Yugan Chudong Hospital, of which 16% was transferred to Tianjin Xinben Medical Device Co., Ltd. to offset the 75.5 million yuan debt between Tianjin Xinben and the 334th Hospital affiliated to Nanchang University, a non-profit hospital under Dazi Selkang. At the same time, 25.6% of the total rights and interests of Hetian Xinsheng Hospital were transferred to Tianjin Xinben Medical Device Co., Ltd. to offset the debt of 39.9 million yuan between Tianjin Xinben and 334 Hospital, a non-profit hospital under Dazi Sailekang.

During the same period, Yihua Health Also said that its subsidiary Dazi Salekon intends to provide a total of no more than 200 million yuan as a subsidy for the affiliated non-profit hospitals Nanchang University Affiliated 334th Hospital and Fengxin Second Chinese Medicine Hospital, including but not limited to cash loans, equity, etc. The funding items are mainly used to repay the debts left over from the history of the two hospitals, and to promote the transformation of non-profit hospitals into for-profit hospitals, stimulating the operational vitality of hospitals.

In the first half of 2021, Yihua Health's operating income was about 692 million yuan, a decrease of 12.2% year-on-year; the loss attributable to shareholders of the listed company was about 174 million yuan, a loss of 19.87% year-on-year, and earnings per share was -0.1986 yuan. It is understood that the company's 2021 annual performance forecast expects the company's net profit attributable to the shareholders of the listed company in 2021 and the net profit attributable to the shareholders of the listed company after deducting non-recurring gains and losses to be losses, and the equity attributable to the owners of the parent company is negative. The scheduled disclosure date for the official annual report has been postponed to April 26, 2022.

Regarding the conversion of non-profit hospitals to for-profit hospitals, some industry experts have said that before the official implementation of the Basic Medical Care and Health Promotion Law, there was once room for "non-profit" to "profit". It is also believed that it is possible to convert for-profit to non-profit medical institutions, but it will become increasingly difficult for non-profit to convert to for-profit.

However, some experts told the "Medical Community" that the "Basic Medical Care and Health Promotion Law" implemented on June 1, 2020 only clarified that the state encourages and supports social forces to set up non-profit medical institutions, and social non-profit hospitals enjoy the same treatment as public hospitals, and there is no prohibition on "non-transfer", and its investors should be allowed to change private non-enterprise units into for-profit companies according to their wishes. (This article is published by "Seeing the Medical Community", reprinted with permission, and the author and source are indicated at the beginning of the article.) ）

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