Virgin health care for Australia?

Virgin Group, run by billionaire sir Richard Branson, has its eyes on Australia’s $65 billion healthcare market.

Virgin entered the British health care market two years ago, and now runs more than 100 National Health Service (NHS) services including doctors, radiology, community health and children’s social care centres. The Group is now looking at opportunities in Australia, where public and private expenditure on healthcare is about 10% of Gross Domestic product (GDP), according to The Australian.

Virgin’s global chief executive, Josh Bayliss, has told the newspaper, “We think health and wellness is an industry we can do well in. Our model is about prevention and flicking it around to make the focus wellness rather than illness.” The company plans to extend its chain of Virgin Active health clubs in Australia and Asia, expanding its presence beyond Europe and South Africa. There are currently three clubs in Sydney and one in Melbourne, while one club is planned for each capital city in the coming months.

The move comes as Virgin looks to enter the higher end of markets, in search of better margins and to take advantage of the fact that its core customers are getting older and wealthier. The company is also looking at employee engagement software and solutions to help companies improve the wellbeing, motivation and productivity of their employees.

Virgin could also look to follow its British steps with entry into pathology, diagnostic imaging and other healthcare services, putting it in direct competition with companies like Sonic Healthcare (ASX: SHL), Primary Health Care (ASX: PRY), Capitol Health Limited (ASX: CAJ) and potentially entry into the hospital industry, where Ramsay Health Care (ASX: RHC) is the leading private operator.

Foolish takeaway

Sir Richard has a knack for entering sectors and giving them a thorough shake-up. The success of Virgin’s Australian domestic airline in the face of a market dominating Qantas, and its financial business Virgin Money are proof of that. Australian health care operators may need to watch the Virgin Group’s moves carefully.

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