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Grupo Ángeles Servicios de Salud, S.A. de C.V.

Grupo Ángeles Servicios de Salud, S.A. de C.V.


Camino a Santa Teresa 1055
Mexico City, D.F. 10700
Mexico
Telephone: (52 55) 5499-6200
Web site: http://www.grupoempresarialangeles.com;
http://www.mediks.com/gass

Wholly Owned Subsidiary of Grupo Empresarial Ángeles, S.A. de C.V.
Founded: 1986
Employees: 8,100
Sales: MXN 5.11 billion ($467.95 million) (2005 est.)
NAIC: 621100 General Medical and Surgical Hospitals; 621511 Medical Laboratories; 621998 All Other Outpatient Care Facilities

Grupo Ángeles Servicios de Salud, S.A. de C.V. (GASS) is the largest private healthcare organization in Mexico, offering medical services to more than one million people a year in its centers and to almost five million people in its outpatient facilities. In addition to its 15 hospitals, GASS, which has been described as Mexico's "Wal-Mart of health," consists of 25 outpatient clinics, pharmacies and biomedical laboratories, an Internet site, an internal hospital Internet channel, educational services for professionals, nursing and equipment services, a support foundation, and gift and flower shops. It is the largest division of a larger privately owned enterprise, Grupo Empresarial Ángeles, S.A. de C.V.

HOSPITAL ÁNGELES: 198596

Born in Mexico City, Olegario Vázquez Raña was the son of a Spanish immigrant, Venancio Vázquez Álvarez, who came to Mexico in the 1920s and prospered in the furniture and linens business he founded in 1947, Bodegas Hermanos Vázquez. Olegario and his brother, Apolinar, added to the family fortune. By 1996 Olegario's Grupo Empresarial Ángeles consisted of 76 companies in far flung fields such as hotels, construction, and airport management.

In 1985, at a reception for the papal nuncio in Mexico, Olegario learned that Humana Corporation was planning to close its recently established but unprofitable hospital in Mexico City, putting 1,500 employees out of work. He checked out the premises and found only five cars in a gigantic parking lot. Humana was asking a nominal sum, only MXN 23 million (about $100,000) for the facility. Vázquez flew to the company's Louisville headquarters the next day and quickly made a deal. Interviewed years later by Sonya Valencia for the magazine Actual, he said, "When I took over Humana, it was totally bankrupt. It had been in operation nearly a year and a half and already had lost $3 million. The first thing I did was to bill the patients in pesos and not in dollars, as had been done before. By March 1986 the hospital was full. Our success was owing to the fact that we gave people what they wanted." Vázquez Raña also, for a time, established alliances with technologies suppliers such as Siemens AG for some procedures, sharing the risks and profits in these areas.

Vázquez named the newly acquired hospital for his wife, María de los Ángeles. Located in Mexico City's well-to-do Pedregal neighborhood, on the southern outskirts of the city, Hospital Ángeles had, in 1996, 315 beds, 700 staff doctors, and another 1,200 affiliated ones. Not many Mexicans could afford care in private hospitals, but for those patients who were able to do so, there were rooms with rugs on the floor and an area for visitors. Hospital Ángeles was the first in Mexico to offer "teleconsultations" by means of a system that put the patient in contact with doctors from Harvard University's Massachusetts General Hospital for a second opinion.

The director general of Hospital Ángeles was Vázquez Raña's son, Olegario Vázquez Aldir, who was only 25 years old. Interviewed by Roberto Morán for the Mexican business magazine Expansión, he said that many of the hospital's patientsalthough upper and upper-middle classentered seriously ill because "In Mexico there isn't a culture of preventive medicine. When people finally need to enter a hospital, the costs are extremely high." He added that the culture also did not encourage saving for medical care. Nevertheless, he went on to say, some companies had stepped forward and begun to create funds to guarantee their employees medical care. For this purpose GASS had created Corpomedic, a company to administer corporate resources dedicated to health care. Unlike insurance companies, which paid only for hospital care, Corpomedic included a plan for preventive medicine.

BUYING MORE HOSPITALS: 199699

The face of Mexican medical care began to change in 1995, when a new law allowed private medical care organizations to compete for clients insured by the nation's social security system. The law, which went into effect in 1997, allowed these private institutions to receive funds from the social security health fund and to purchase services from the social security system's specialty hospitals or the public national health institutions. The law also allowed uninsured persons with regular incomes to buy into social security and allowed employers to opt out of the social security system if they provided their employees with access to private medical care organizations.

Another federal law, passed at the end of 1999, established a government body that allowed insurance companies to offer policies for basic health care, ranging from policies covering care as basic as routine checkups at a private clinic to more expensive packages that would cover all medical needs. Before the new legislation, insurance companies could only offer health insurance covering high-cost medical expenses such as operations and emergencies. (In emergency cases, a private hospital was obliged to treat patients free of charge, whether or not they belonged to a public or private healthcare plan.)

Grupo Ángeles was not slow to perceive the opportunities for profit under the new dispensation. In 1996 it acquired, for $24 million, Hospital Mocel in the less affluent northern part of Mexico City. "It's a question of giving the same service as in Ángeles, without so many luxuries and with lower costs," Vázquez Aldir told Morán. "The level and quality of medicine is going to be the same." GASS also was beginning work on a $120 million hospital in the posh Interlomas neighborhood of Mexico City's western outskirts. The following year it acquired still another Mexico City hospital, the Metropolitan. In 1998 it purchased the prestigious Hospital México, also in the nation's capital.

By late 1999 Grupo Ángeles was easily the most important private medical care institution in Mexico, with eight hospitals and a clinic. The new Interlomas hospital, Ángeles de las Lomas, was the flagship of the enterprise, having opened in that year. Also in 1999, GASS paid $19 million for the majority shareholding in Guadalajara's Hospital del Carmen, after which it spent about another $60 million to remodel the institution. In all, the company spent an estimated $200 million in 1999 alone on the construction of the Lomas hospital and the modernization of the prior eight hospitals.

COMPANY PERSPECTIVES


Grupo Ángeles has the mission of permanently conferring attention to the following principles: To offer installations and infrastructure to fully respond to the population. To activate and renew our equipment with up-to-date technology and world scientific advances. To have highly capable medical and paramedical personnel. To offer internal and external clients honest and courteous treatment.

HEADLONG EXPANSION IN THE 21ST CENTURY

Grupo Ángeles averaged annual growth of close to 50 percent in 1998 and each of the following four years. By 2003, it held the leading chain of private hospitals not only in Mexico but in all of Latin America. The company, with ten hospitals, had entered parts of the nation outside the capital, adding hospitals in Querétaro (1998), Torreón (2001), and Villahermosa (2002) when it completed a remodeling of the Hospital San Juan Bautista at a cost of $12 million. Each GASS hospital, although offering a full range of specialties, had developed a particular niche of its own. Hospital México, for example, traditionally strong in obstetrics and gynecology, was delivering 300 babies per month. Hospital Ángeles de las Lomas included a transplant center celebrated throughout Latin America.

Despite its rapid growth, GASS rejected the claims, by some, that it was laying future plans to corner the market for private health care. "We have no intention of monopolizing the market," the group's communications director told Paul Day for a Business Mexico article published in 2000. "One can see that all our new business is toward the interior of the Republic, where there is little competition and people are usually grateful to have these services made available to them." In spite of this rapid growth, the company was financing its expansion from its own capital, without taking on debt. "We don't like liabilities," GASS's marketing director told Michael O'Boyle for a 2002 Business Mexico article. "That's not to say we won't turn to outside financing for future projects. We probably will at some point. But our philosophy has been to only do what we can do with our own resources."

Grupo Ángeles' five Mexico City hospitals were said to hold half of the capital's market for private health care. As a group, the ten GASS hospitals were able to consolidate their purchases and thereby negotiate better terms from suppliers than smaller competing chainseven more so when other units of parent Grupo Empresarial Ángeles, such as the Camino Real hotel chain, with its own needs, weighed in.

In 2003, Grupo Ángeles opened hospitals in León and San Juan Potosí. It also purchased Mexico City's Clínica Londres (which also functioned as a hospital) for $20 million as the first step in developing a network of outpatient centers. Over the next year and a half, it bought nine more. GASS's executive director explained to Norma Lezcano of Expansión two years later, "We began giving this priority because corporate clients, other companies, and insurers, that now had major medical expenses, began to seek preventive and primary-care services." With the Londres purchase, Ángeles inherited an attractive stock of clients, such as Banco de México, Nacional Financiera S.N.C., and Seguros Banamex-Aegon, S.A. de C.V., the latter a fund concentrating on private banks.

Grupo Ángeles had sales seven times higher than its closest competitor in 2004 and accounted for 6 percent of all private spending on health in Mexico, excluding medications. Its facilities included 13 hospitals and nine clinics. A center for neurorehabilitation, in Mexico City, opened in 2005. GASS's operating profit was said to be 15 percent of annual revenue. The company, expanding outward from Mexico City, also was gradually expanding its efforts from general hospital care to outpatient consultations, basic specialties such as gynecology, and subspecialties such as neurosurgery.

Vázquez Aldir, director general of GASS, told Lezcano in 2005 that parent Grupo Empresarial Ángeles had financed the company only for eight years and that since 2000 it had financed itself, earmarking nearly $200 million a year for investment (including about $50 million for technology). Two more hospitals, in Tijuana and Cancún, had opened, and work was under way on another five. GASS also was concentrating its efforts on building its chain of outpatient centers. This lucrative market of about $1 billion a year (excluding medications) was being financed out of pocket to private institutions by families without any type of medical coverage.

Another market for Grupo Ángeles consisted of an estimated five million Mexicans enrolled in social security plans but using a mix of public and private facilities, such as the many women who attended the company's clinics during pregnancy before giving birth in a public hospital. Still another was the growingalthough still smallnumber of individuals with major medical insurance coverage who were also enrolled in a new program for health maintenance and preventive care. Some 1.25 million Mexicans were believed to hold this kind of coverage.

KEY DATES


1985:
Olegario Vázquez Raña purchases a Mexico City hospital.
1998:
GASS has bought three Mexico City hospitals in three years and is building a fourth.
1999:
The company opens its flagship hospital, Ángeles de las Lomas.
2003:
The ten GASS hospitals form the largest private hospital chain in Latin America.
2006:
The Ángeles chain includes 15 hospitals, with work on another seven under way.

Like some of its competitors, Grupo Ángeles was devoting marketing effort and creativity to some of the few health services that patients wanted to think about, such as film and video of births, plus a product kit for mother and child. The GASS hospitals even offered a gala dinner, with champagne, for the third night of this stay. (But, according to its detractors, private hospitals were recording a suspiciously high proportion of caesarian births, which helped pad the corporate bottom line.)

Grupo Ángeles' Tijuana hospital was considered by the company to be a test of whether Mexican services were up to the standards demanded by American patients or Hispanics resident in the United States. Each year, an estimated 500,000 Mexicans were seeking medical care north of the border, entering medical centers in cities such as Houston and Miami. "GASS's first stage will be to stop the flow of high-income Mexican patients toward the United States," Vázquez Aldir told Lezcano. The saving would certainly be worthwhile; the cost of private medicine in Mexico was between 30 to 40 percent lower than in the United States. GASS believed that its hospitals in northern Mexico would attract thousands of American retirees because of low cost.

In 2006 Grupo Ángeles' 15 hospital centers had 140 operating rooms and 1,600 beds. New hospitals were to open shortly in Ciudad Juárez, Mexicali, Monterrey, Puebla, and Tampico, as well as two more in Mexico City: one at Plaza Satélite and the other in Lindavista. The staff included 8,500 doctors specializing in 40 different fields.

Robert Halasz

PRINCIPAL COMPETITORS

The American British Cowdray Medical Center, I.A.P.; Grupo Médica Sur; Millenium International Hospital Corporation; Sociedad de Beneficencia Española, I.A.P.

FURTHER READING

Day, Paul, "Bill of Health," Business Mexico, September 2000, pp. 4344.

Lezano, Norma, "Sin anestesia," Expansión, February 16March 9, 2005, pp. 3842, 44, 46.

Morán, Roberto, "Crecimiento Anti-Doping," Expansión, September 11, 1996, pp. 58, 6061.

O'Boyle, Michael, "Growing Health," Business Mexico, September 2003, pp. 3843.

Ruiz, Yolanda, "Jaloneos en bata blanca," Expansión, October 1327, 1999, pp. 82, 85, 8788.

Valencia, Sonya, "Olegario Vázquez Raña," Actual, August 2001, p. 46 and continuation (on Informe database).

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