We know that Larry Goodman has deep pockets. The beef baron’s corporate affairs are generally locked in offshore vehicles, so it is impossible to determine just how deep they are. However occasional transactions, such as a €3.3 billion restructuring of group companies in 2020, reveal a staggering wealth.

We can see it also in relation to the Blackrock Clinic, albeit on a smaller scale. The dominant shareholder in the country’s biggest private hospital, Goodman cut it a cheque for €38.6 million on December 18, 2020. The money was used to pay the group’s bank debt in its entirety.

By fully eradicating its €34.4 million bank borrowings, the injection by Goodman will reduce the hospital’s interest repayments by around €650,000 a year. Coupled with a revelation of assets, it helped bolster shareholder’s funds at the hospital from €101 million in 2019 to €133 million at the end of 2020.

The cash injection by Goodman is part of an overall restructuring of the tycoon’s healthcare interests and is outlined in accounts just filed for the holding company of the Blackrock Clinic.

“The accounts also make reference to the long running shareholder battle control of the hospital”

On 7 December 2020, Blackrock Hospital Limited re-registered as a private limited company under Parma Healthcare Holdings Unlimited, its parent undertaking. Its subsidiaries, such as the Galway Clinic, were also re-registered as private unlimited companies. In return for the shares, Parma handed over the €38 million, the bulk of which was used to pay debt. Parma is owned by Goodman Family Trusts, or companies owned or connected to them.

The accounts also give an update on the trading performance of the hospital and give an outlook for the wider private healthcare market.

Turnover fell from €136 million in 2019 to €130 million in 2020. With fixed costs and staffing remain the same (the hospital employs more than 800 people), this saw pre-tax profits fall from €10.5 million to €6.3 million. The hospital said the decline in profitability was due to the pandemic, citing the March 2020 agreement between the government and private hospital operators where hospitals provided capacity to the HSE on a not-for-profit basis for three months.

The hospital has since entered into a second agreement with the HSE in January 2021, The Safety Net Services Agreement. This agreement provides for the hospital to set aside capacity or services “for public patients with the HSE as a consequence of any surge event due to the Covid pandemic”, according to the accounts.

Healthcare pressures

The company spent €8.7 million on capital expenditure during 2020 and committed a further €7.3 million going forward. However, despite the investment programme in recent years,  the company said “the cost of providing healthcare remains a concern as medical inflation is not being matched by price increases being received from health insurers”.

It also said that medical inflation, driven by the adoption of new technologies and techniques, together with the use of more expensive consumables and drugs, poses a significant challenge for healthcare providers.

It added: “In addition to medical inflation, the Covid-19 pandemic has also significantly increased the cost of providing healthcare, which is likely to remain a challenge for the foreseeable future.

“Over the coming years there will be a considerable increase in demand for healthcare in Ireland due to an aging population and continuing advances in healthcare. The challenges that this additional demand will place on healthcare providers will be exacerbated by the impact of Covid-19 and therefore it is imperative that government policy supports the training, recruitment, and retention of healthcare professionals in Ireland.”

The hospital said that the shortage of suitably experienced and qualified medical personnel will continue to pose a major challenge for both the public and private sectors over the next few years.

The cost of litigation

The accounts also make reference to the long running shareholder battle for control of the hospital, a legal saga ultimately won by Goodman. It said the hospital was previously named as a defendant in a series of shareholder legal actions initiated by a former shareholder and director. “The hospital was awarded the right to recover its legal costs, of approximately €1.2 million by the High Court Taxing Master, which the hospital will seek to recover from the former shareholder and director,” it said.

Last year, an overarching board was set up to oversee Goodman’s healthcare interests. as Tom wrote at the time:

“The decision by Parma to create a single board to oversee the three hospitals makes strategic healthcare and business sense. It will undoubtedly lead to speculation that the group could become a consolidator in Ireland’s still fragmented private healthcare sector or that it is preparing for some future event. But as so often with Larry Goodman nobody really knows outside his close circle.”

The Galway Clinic

Accounts have also been filed for the Galway Clinic, also controlled by Goodman. Revenues dipped slightly from €99.3 million in 2019 to €96 million in 2020. This impacted pre-tax profits, which fell from €7.6 million to €4.1 million. “The decline in profitability is due to the impact of the Covid-1 9 pandemic,” it said.

Further reading:

Heavy debts and low returns – under the hood at Beacon Hospital

Ireland’s €1.2bn private hospital industry: The margins, the market share, the profits and the debts

The King of M&A and the beef baron: Inside Larry Goodman’s ABP boardroom