Henry Bateman – the son of Primary Health Care founder Ed Bateman – has snared several big backers for his burgeoning medical centres business, including mining heir Angela Bennett.
Mr Bateman spent 16 years at the company his late father founded helping build and run the group's medical centres division, but left in March after he was passed over for the top job in favour of former Qantas executive Peter Gregg.
He is now looking to get a slice of the growing general practice and medical service market – set to be worth over $13 billion by 2020.
Mr Bateman has partnered with former Primary chief financial officer Tim Brewer, raising $40 million of fresh equity for the new business, Cornerstone Health. The pair, along with management, have invested personal funds of $1.75 million, most of which came from Mr Bateman.
The six Cornerstone investors are made up of family offices and wealthy individuals with the largest backer AMB Capital Partners – the investment arm of the Bennett family company. Mrs Bennett, the daughter of the late prospector Peter Wright, has a $1.6 billion fortune according to the BRW Rich List.
AMB Holdings' executive chairman Michael Ashforth has joined the board as a non-executive director as has Todd Bennett, Angela Bennett's son (who leads the family's investment unit), Professor Michael Kidd AM, and John Deakin-Bell, of private investment manager Northcape.
"It's not often you get the opportunity to work in a start-up with someone with Henry's experience who is going to take the best of what he helped build before at Primary and improve on it," Mr Ashforth said.
Quality care
"We were really attracted to Henry's vision of providing affordable, comprehensive and quality primary healthcare. We think this will be a business that the Bennett family will be proud to be associated with."
Mr Ashforth had not dealt with Ed Bateman or his sons, James and Henry, before meeting the youngest Bateman in September.
"I think Henry's got the right moral compass and his experience in primary healthcare sets the business up for success given the demand for the services that Cornerstone will deliver," he added.
Mr Bateman has set up shop in the old Westpac Building in Sydney's CBD, just a few levels down from tech giant Atlassian.
"There is a lot of interest in the health services industry," Mr Bateman said. "You have got an ageing population, who are increasingly educated about their own health, and therefore demanding greater access.The biggest question is how do we deliver better healthcare, to more people at the right price?"
Cornerstone expects to be profitable within 12 months, and has forecast to deliver $20.3 million of earnings before interest, tax, depreciation and amortisation in year five.
While it will be some time before it might compete directly with listed giants like $2 billion Primary or its $9 billion rival Sonic Health Care, Mr Bateman has aspirations to own eight to 10 medical centres over the next three to five years. He is in talks to buy two medical centres, and plans to focus on growth corridors in NSW and Victoria.
Cornerstone centres will operate general practice 365 days a year, alongside treatment rooms, dentistry and allied services such as counsellors or cardiologists. Partners will provide services including radiology, pathology, physiotherapy and a chemist.
"One of the key things I learned at Primary was if you have quality doctors delivering high-quality medicine, then you have a successful business," Mr Bateman said. "My father broke it down to: Good medicine is good business."
Under the Cornerstone model, doctors are independent contractors. Each medical centre will have key leadership doctors who will profit share.
Cornerstone will mostly run a bulk bill model, meaning the cost of care will not be beyond what the government pays through Medicare. Mr Bateman criticised the government freeze on bulk billing rebates, calling it a "Treasury-led response".
"I sat on the health insurance board at Primary, and I know if you deliver high-quality primary health care services to patients it has a multiplicity effect.One, they are healthier and happier; two, if you stop them from entering expensive specialties the return on healthcare dollar spend is greater. So to not support the primary healthcare services is short changing for the future because it ends up being more expensive."
Squashed speculation
Mr Bateman, who counts his father as well as former business coach Dr John Eady as mentors, said he never approached his older brother James to go into business.
He also squashed speculation that he was in talks with private equity about becoming part of a consortium in order to lob a takeover for Primary, stating he is completely focused on Cornerstone.
Mr Bateman grew up in Sydney's Northern Beaches and is a keen surfer. He takes his wife and four young children to his family's rural properties in Orange, which house several thousand head of Angus cattle and sheep, and grow crops. They run the Gilmandyke Angus stud business too.
Having grown up in Primary, which his father ran for 30 years, Mr Bateman said it was a tough call to leave, but during the time of his late father's illness, it was time to reflect on life.
"I owed it to myself to see what was out there and test myself against the market to see what else was happening," said Mr Bateman, who calls himself an optimist and pragmatist.
"While I was an internal candidate for the CEO role, the board decided to go with an external appointment. I'm OK with that. There was not a sense of entitlement from me. I'm proud of what we did but when your father dies you get perspective.
"I'm Henry Bateman and I'm going to run my own life and do my own things, and now is the time to do it."
