HMi meets… Fredrik Rågmark

Fredrik Rågmark, chief executive of Medicover

Fredrik Rågmark is a healthcare visionary. The chief executive of Medicover is a force to be reckoned with in Poland, Romania and the Ukraine. And now he is looking to India. 

There is a sense of normality about Fredrik Rågmark with little of the baroque excesses that all-toooften go with running a multi-national company. On the day we are due to speak, I miss his first telephone call. This usually results in panicked emails and communications from frantic press relations staff, instead Rågmark himself calls back five minutes later and we start to talk.

It feels much more like a conversation than an interview.

He has been chief executive of healthcare and diagnostics provider Medicover since it was founded in August 1995. Although headquartered in Sweden, the company’s heart is in Central and Eastern Europe. It is the largest private employer of medical professionals in Central and Eastern Europe, with getting on for 21,000 employees, of which 80% are based in Poland, Romania and Ukraine.

By any metric you choose, the company is a success.

It listed on Nasdaq Stockholm in May 2017 and its shares have risen almost 50% since then. In early May, Medicover’s first quarter results showed what Rågmark calls a ‘strong start’ to the year with revenues up more than 23% to €199.7m (US$223.3m).

‘We have seen… first quarter revenue growth continuing to accelerate from an already strong level during the prior year, and profit margins expanding,’ he said at the time.

Medicover has two divisions split almost 50/50 between healthcare services and diagnostic services. The former has 17 hospitals and 108 clinics and medical facilities while the latter has a network of more than 95 laboratories and 570 blood-drawing points.

I start by asking about whether he defines Poland as his real ‘home market’. As company lore has it, it was there that the idea for what was initially called ABC Medicover came about. ‘I don’t define it as the home market. It is the largest and most important market and it is where most of our business is, but it isn’t the home market,’ Rågmark says.


There is a sense that the growth of the company emerged as a reaction to circumstances,
in the best sense of the word. Certainly Medicover had no intention of getting into the hospital business. It was demanded by the group’s customers.

‘If we look at Poland and Romania – we own hospitals not because we want to own hospitals, but for our insured [customers], we need quality programmes,’ he says, talking about customer retention and reduction of waste.

In the early days, Medicover used to lease parts of hospitals to bring in its own doctors for operations. ‘There was a limit to that model,’ he said. It was natural then to ‘go and do it ourselves’ but Rågmark emphasises that it was ‘driven by customers, in order to provide hospital services’.

It took a while to build up that business, but now hospitals provide a good revenue stream. ‘A third of patients come from insurance, half are out-of-pocket, with the remainder from the public,’ he says.

And it is continuing to grow. Most recently, at the end of February, Medicover acquired Neomedic, a neonatology and obstetrics hospital group in southern Poland, for €70.5m which operates two large hospitals in Kraków and Nowy Sącz and one smaller private hospital in Krakow as well as outpatient and primary care medical centres.

The other half of the Medicover business is diagnostics services. Along with an acquisition in Romania in 1997, it also obtained a small laboratory operation, performing in vitro diagnostics.

The company hasn’t looked back since. In the first quarter of the year diagnostic revenues grew by 18.7% to €100.2m.

Medicover has a solid business in Germany, but as Rågmark explains the majority of the business is in Poland, Romania and the Ukraine.

‘Germany is the big exception with public funding. Outside Germany there is little or no public funding. It is largely in the private pay market,’ he says.

The importance of diagnostics to the entire healthcare care chain is a frequent theme to which Rågmark returns and it is notable that several of the company’s acquisitions last year were in this field. At the start of the year, for example, Medicover completed the acquisition of the Centre for Genetic Diagnostics near Munich for €25.3m.

An issue for any multinational organisation is how to manage multiple currencies.

But what is also notable about many hospital groups is quite how bad many of them are at it. The briefest of skims through HMi’s pages shows repeated weak quarterly figures for many hospital groups thanks to being on the wrong side of a currency hedge.

Medicover is different, for philosophical reasons as much as for financial ones. ‘We keep it simple for ourselves. We do not hedge. We are operating for the long run,’ says Rågmark proudly.

His thinking makes a great deal of sense especially when he complains about the cost of trying to be smarter than the markets. He also admits that during the Ukraine crisis from the end of 2013 and rising geopolitical tensions in the region did hit the hryvnia. ‘But relatively quickly – in 18 months or so – it came back,’ Rågmark says.

Its commitment to the country has never wavered.

In October last year Medicover acquired the Ukrainian operations of Invitro with 61 blood drawing points and one laboratory, focused on eastern and central Ukraine for €6m. Although that deal awaits competition clearance, it now has almost 300 blood drawing points in the country.

But Medicover is now on the brink of a new adventure: India.

The considered way that the group has invested in India should be held up as a model way to conduct international business. In August 2017 it took its first steps in India when it took a 22% stake in Sahrudaya Healthcare, which runs nine hospitals in Andhra Pradesh and
Telangana under the MaxCure brand, for US$15.5m. In January last year it upped that stake to 26.8% through a capital injection, and then took it up to 37.2% via a secondary share purchase.

Medicover currently hold 45.1% of the group and as Rågmark says, ‘we will own over 50% by the end of the year’.

Medicover’s caution is born from experience. Rågmark talks about international expansion as a ‘learning curve’ and is refreshingly open that ‘we have made a few mistakes and we have changed’.


The chief executive explains his thinking about India. ‘We were historically in the Czech Republic, Slovakia and the Baltics, but the growth opportunities are too small there and so we sold out,’ he says.

‘We are in the larger markets – Poland and the Ukraine and Romania – where there is plenty of opportunity, but as a company you have a mandate to grow. But where do you go?’

There are few large geographies with a lot of opportunity and ‘India is a new geography,’ he says.

There are some obvious differences between the healthcare markets in India and Europe.

As Rågmark says, given the stature of the hospital system and the private pay market in India, ‘you need to be in the private pay hospital business’. But I am curious about business culture. Despite the number of its employees in Europe, Medicover has a tight brand and a unified communication. There is a sense that its operations in Poland, Romania and the Ukraine are all singing from the same hymn sheet. Is something like that even
vaguely feasible in India?


This is clearly something about which Rågmark has thought deeply. ‘I would definitely agree that there are more similarities in business culture between and India and Eastern Europe than there are between Eastern Europe and Western Europe,’ he says.

But he turns the question of imposing a corporate culture on its head. ‘I don’t think you can change the culture of a company when you buy it. It might not be identical [to your own] but you have to see whether it is aligned,’ he says.

With MaxCure, he recognises that integration is a significant challenge. Of course the group is large in its own right – it has around 5,000 employees.

‘It is not that India is different but that it is far away and the company has its own culture,’ he says. And it does not make sense to attempt to change that. ‘But,’ he emphasises, ‘One thing we do early in any M&A process is to look at whether [the target company] is compatible with what we represent. The biggest challenge we have is to make sure that the culture of a company we acquire is in line with ours.’

As a final question, it is natural to ask what else Rågmark wants to achieve.

After more than 20 years at the helm, companies often naturally begin to slow down and consolidate. But there is little sign of that here.

‘I have been here since day one,’ he reminds me. ‘A company needs vitality and energy to keep building for the future. I want to create the environment for that to happen.’