LATEST UPDATE:
- Concierge Medicine Today (CMT) has learned that Procter & Gamble Co. (NYSE: PG) has hired Piper Jaffray & Co. to find a buyer for MDVIP, a Boca Raton, Fla.-based provider of personalized healthcare services for the wealthy, according to Dow Jones.
NOTE: Concierge Medicine Today (CMT) is attempting to reach out to several physicians, industry business resources, and others, including MDVIP leadership, for comment and will continue to follow this developing story and apprise you of any comments, statements and/or developments. Thank you for reading Concierge Medicine Today (www.ConciergeMedicineTODAY.COM)
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By Amy Or, The Wall Street Journal
P&G bought a minority stake in MDVIP in January 2007 and acquired full ownership in 2009. The terms of the transaction weren’t disclosed then. P&G said at the time of the investment that the proactive approach leads to lower hospitalization rates and significant cost savings to patients, employers and the health-care system as a whole.
Feb. 24, 2014, 9:41 a.m. EST - Procter & Gamble PG +0.51% Co. is seeking to sell MDVIP, a personalized health-care operator catering to the wealthy, in what would be the latest divestment by a consumer goods and health-care company, people familiar with the situation said.
P&G has mandated investment bank Piper Jaffray PJC +1.15% & Co. as its adviser on the sale, one person said.
Corporate makers of health-care products that have aggressively expanded over the past few years are getting a reality check on their various business units, as they seek to cut costs and enhance efficiency amid slow global economic growth. A few have started to cut ties with operations that aren’t star performers.
Peer Johnson & Johnson JNJ +0.13% last month sold its blood-testing unit, Ortho-Clinical Diagnostics, to Washington, D.C., private-equity firm Carlyle Group in a $4.15 billion deal as part of its plan to shed slow-growing products and businesses.
Boston-based buyout shop Thomas H. Lee also bought online contacts lens company 1-800 Contacts Inc. from U.S. health insurer WellPoint WLP +2.51% Inc. last month. WellPoint, which bought the Draper, Utah-based contact lens retailer for close to $900 million just 18 months ago, said it would record an impairment charge of $153 million to $168 million as a result of the divestment.
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Potential buyers for P&G’s MDVIP unit would likely be private-equity firms, a person familiar with the situation said, as the business may not be a good fit with health-care operators, which either aren’t interested in such a niche segment of the market or find it hard to grow a network of independent doctors willing to focus on a smaller number of patients.
Boca Raton, Fla.-based MDVIP is what is often referred to as a “concierge health-care operator.” It offers personalized health care to the wealthy at a time when insurance reimbursements have squeezed primary-care doctors to take on a large number of patients.
P&G said MDVIP‘s network of 700 MDVIP-affiliated physicians—which span 42 states and the District of Columbia—each care for 600 patients or fewer, much lower than the average of more than 2,000 patients among traditional primary care practitioners. It added that the doctors also provide preventive, personalized health-care to patients, not just the detection and treatment of disease. MDVIP—founded in 2000—currently serves more than 215,000 patients, up from 50,000 when P&G first invested in MDVIP in 2007, the consumer goods giant said.
The memberships don’t come cheap. MDVIP said on its website memberships start at $1,500 a year.
The person familiar with the situation said MDVIP posted $16 million in earnings before interest, taxes, depreciation and amortization last year.
P&G declined to comment on the sale process, noting only that “MDVIP is highly valuable, rapidly growing, and the undisputed leader in personalized and preventive health care.”
At this point, it is unclear how the health-care overhaul passed in 2010, which began its rollout last year, could affect demand for personalized physician-care networks such as MDVIP, which charge anywhere from $100 a month to $25,000 a year for services not covered by insurance companies.
While insurance costs are likely to increase, squeezing household spending for additional health-care services such as concierge medicine, consumers may look to take better care of their health to prevent punitive measures that employers could impose for various conditions such as high blood pressure and thick waistlines. Concierge health-care providers, which pride themselves on knowing their patients so well they can detect medical conditions early on, hope to meet that need.
Trade publication, Concierge Medicine Today tells The Wall Street Journal in November of 2013 that it estimates there to be approximately 5,500 doctors in the U.S. now run such boutique practices, charging an average $135 a month for such services.
P&G bought a minority stake in MDVIP in January 2007 and acquired full ownership in 2009. The terms of the transaction weren’t disclosed then. P&G said at the time of the investment that the proactive approach leads to lower hospitalization rates and significant cost savings to patients, employers and the health-care system as a whole.
Sources:
- http://www.marketwatch.com/story/pg-seeks-to-sell-health-care-operator-2014-02-24-94494120
- http://online.wsj.com/news/articles/SB10001424052702303426304579402841866668148
