GenesisCare breaches divide local cancer services industry
The national cancer services industry body has collapsed over a disagreement about whether GenesisCare’s self-reported breaches are an industry-wide problem, as the latter’s negotiations with the health department about its bungled billings drag on.
The crumbling of The Radiation Therapy Advisory Group is the most public representation of division in the local industry following GenesisCare being placed in US Chapter 11 bankruptcy in early June.
Reaching agreement and quantifying the amount owed to the Australian government relating to its failure to offer bulk billing in clinics where it received government funding for expensive equipment is a key plank of GenesisCare emerging from Chapter 11.
A separate billing issue linked to its in-house EasyPay billing system, which is no longer operating, also needs to be resolved. It was vexed by issues with the way it calculated out-of-pocket costs for patients.
GenesisCare declined to comment on how much it might owe the government, but industry sources believe this could run into hundreds of millions of dollars.
As part of exiting bankruptcy protection, GenesisCare must also finalise the sale of its troubled US assets. The auction was pushed out by a week until October 25, and will be sold in parts.
GenesisCare was founded in Brisbane by Dan Collins in 2005 and grew into a global company with 440 clinics. It was owned by KKR, China Resources, and its employees. GenesisCare made a big bet on the US market, which was its undoing from a peak valuation of $5 billion.
GenesisCare told investors that failure to offer bulk billing after accepting government funding for cancer care equipment was an industry-wide issue.
Just two weeks after installing a new chief executive, David Young, GenesisCare self-reported breaches of the grant scheme to the health department. The healthcare provider has 31 clinics in Australia that have received relevant grants. It also identified the EasyPay fault.
In a statement to The Australian Financial Review, GenesisCare said it expected “industry providers will be treated equally” and “recent meetings with the department have been positive and constructive”.
“We look forward to continuing these discussions and reaching a suitable resolution for GenesisCare and our patients,” the statement said.
The Department of Health “is engaging with all providers who are ROHPG grant recipients and has no further comment on these matters at this stage”.
In June, GenesisCare secured $US200 million ($300 million) through a debtor-in-possession financing facility led by Oaktree Capital Management, Bain Capital, Avenue Capital Group, Canyon Partners, and Challenger Investment Management.
In an October shareholder update, GenesisCare said its main focus was the sale of the US business, including a digital solutions unit and its contract research organisation. It also told shareholders it was working to resolve payment issues with the local government.
The company also confirmed that shareholder equity was worth zero. Under Chapter 11 restructuring, the cancellation of shareholders’ existing equity in the business is required to reorganise the structure, which is subject to approval by creditors as well as by the US bankruptcy court.
One source said that doctor shareholders were set to receive their equivalent holding in any new vehicle created, but that the structure and valuation were not yet known. Doctors and management previously held about 11 per cent of GenesisCare’s equity.
Introducing your Newsfeed
Follow the topics, people and companies that matter to you.
Find out moreRead More
Latest In Healthcare & fitness
Fetching latest articles