CHRISTUS plans joint venture with university health system in Chile

November 1, 2012

CHRISTUS Health of Irving, Texas, is in talks with a Catholic health system in Chile to form a joint venture early next year. Under the agreement, CHRISTUS would own a stake in — and have management control of — the Santiago-based pontifical university and its academic medical system.

The plan is part of CHRISTUS' broader strategy to expand Catholic health care's presence in Latin America, according to Ernie Sadau, CHRISTUS president and chief executive. "We're not growing to have a larger portfolio — our growth plans are grounded in what's best for the ministry — to continue to ensure we're extending the healing ministry of Jesus Christ.

"We're growing so more people can be embraced by God's healing," he said. While the country has universal health care coverage through a hybrid public-private system, there is a need for improved health care access. Health care needs "are great and deeply felt in Latin America," Sadau said. CHRISTUS plans to invest capital so that the Chilean system can bolster its existing network and expand. CHRISTUS plans to help the system to expand into Peru and other Latin countries as well.

CHRISTUS was one of about a dozen organizations to respond to a request for partnership proposals issued early this year by Pontificia Universidad Católica de Chile. The university has the same name as the health system, which it owns. That university health system has two Santiago hospital campuses with a total of more than 600 beds as well as 11 outpatient health care facilities and a network of affiliated services. Its medical school is located on one of the hospital campuses.

According to information from CHRISTUS, Pontificia Universidad Católica is one of the largest health systems in Chile and the university ranks among the top in Latin America. The Chilean system has net revenues of about $300 million and assets of up to $500 million. CHRISTUS' net revenues are about $4 billion; and its assets, about $5 billion.

Plans call for CHRISTUS to have a 40 percent stake in the Pontificia Universidad Católica health system, and for the Chilean university to retain a 60 percent ownership position.

Sadau said by the end of the year, CHRISTUS and Pontificia Universidad Católica plan to sign a definitive agreement and to have secured approvals from the Vatican and the Archbishop of Santiago necessary to complete the transaction.

CHRISTUS likely will begin managing the system late this year or early next year. CHRISTUS plans to place six senior executives with the Chilean system: other CHRISTUS executives will travel to Santiago to assist with management. CHRISTUS also will recruit some additional leaders from within the CHRISTUS system and hire leaders from outside that system. The joint venture will report to CHRISTUS' board, and it will have its own board with representatives from both CHRISTUS and the Pontificia Universidad Católica.

Sadau said Pontificia Universidad Católica had been seeking a partner with the capital, management expertise and experience in Latin American health care to help the Chilean system to increase its presence around Santiago and beyond.

The university system's expansion vision aligns with the growth strategy of CHRISTUS. Since 2001, CHRISTUS has been a partner in a joint venture company called CHRISTUS Muguerza, which includes seven Mexican hospitals and a network of outpatient clinics. Sadau said that, building on that successful experience, CHRISTUS wants to continue to invest in that Mexican health system; and expand its presence in other Latin American countries. Doing so through partnership is the most effective approach, Sadau said.

Investing internationally helps CHRISTUS to diversify its operations so that it is not reliant entirely upon its success in the U.S. He noted that both Mexico and Chile are experiencing strong economic expansion, with growing middle classes.

Sadau said having a multi-country presence "broadens our thinking and shows us new possibilities. … We can learn how to strengthen our organization in new ways."

Copyright © 2012 by the Catholic Health Association of the United States
For reprint permission, contact Betty Crosby or call (314) 253-3477.

Copyright © 2012 by the Catholic Health Association of the United States

For reprint permission, contact Betty Crosby or call (314) 253-3490.