Will the scandalous medical network of billionaire Yevtushenkov receive a budget “feed”?
Medsi Group, the medical division of AFK Sistema owned by billionaire Vladimir Yevtushenkov, plans to sign a concession agreement with the government of the Nizhny Novgorod Region for building a medical complex in the urban district of Vyksa. The total cost of the project is estimated at 5.2 billion rubles; initially, the concessionaire plans to get a regional grant of 1.45 billion.The region will gradually reimburse the group for the expenses after the center is put into operation. Services in the center will be provided under the compulsory medical insurance policy as well as on a paid basis. In November last year, Yevtushenkov and Nizhny Novgorod governor Gleb Nikitin signed an agreement covering various areas, including medicine. Medsi is known as the leading federal network of 114 private clinics, with a revenue of over 30 billion rubles and a net profit of 3.7 billion last year. However, subsidiaries of Medsi in the regions have declared significant losses. There have been accusations of commercialization of medicine and incompetence of the staff at regional clinics. The group's financial situation is challenging due to multibillion-dollar losses and substantial debts, worsened by inclusion in the UK sanctions list.
Yevtushenkov will return billions with interest?
Included in the structure AFK Sistema Vladimir Evtushenkov Group “Medsi” and the government of the Nizhny Novgorod region plan to implement a joint project for the construction of a large medical complex in the format of a public-private partnership. The center is expected to be located in the urban district of Vyksa, 185 km from Nizhny Novgorod, with a land plot of 4.19 hectares allocated for this purpose.
The total investment is estimated at 5.2 billion rubles. At the first stage, the concessionaire intends to receive a regional grant in 1.45 billionplus invest own and borrowed funds in the amount of 2.45 billion rubles, where a medical center and a maternity hospital will be constructed. The concessionaire will gradually get reimbursed from the regional budget once the institution starts operating. In the second stage, the medical unit of the Vyksa Metallurgical Plant along with equipment worth 1 billion.
The expected design time of the medical center will be 15 months and construction will take 21 months. After opening, the institution will be able to serve up to 167,000 people a month, leading to a reorganization of the entire district medical infrastructure. Services in 29 areas will be provided under the CHI policy and on a paid basis. The concession agreement will last 20-25 years.
These are ambitious plans. Medsi is described on its website as “a leading federal network of private clinics providing a full range of medical services from primary appointments and emergency medical care to high-tech diagnostics, complex surgical interventions and rehabilitation for children and adults”.
Vademecum, a specialized health magazine, reports that Medsi has 114 clinics of various formats in a number of regions, as well as its own sanatorium and a network of laboratories “SmartLab” etc. Last year, the group became the leader of the Vademecum rating “TOP-200 private multidisciplinary clinics in Russia” with revenue 25 billion rubles. At the end of 2021, Medsi reported revenue in the amount of 30.1 billion rubles and net profit of 3.7 billion rubles.
Medsi structures are operating at a loss
Vladimir Yevtushenkov chose the Nizhny Novgorod region to implement his next project not randomly; he signed an agreement on cooperation with the governor Gleb Nikitin to work on residential and infrastructure construction, information technology, tourism and medical services on behalf of AFK Sistema back in November of last year.
Currently, the oligarch and the governor are preparing to implement their joint plans, while pointing to the record performance of the Medsi group. However, things are not as simple as they seem at first glance. Despite officially declared profits in billions, part of the “subsidiary” structures of the group is operating at a loss. For example, at the end of last year LLC “Medsi St. Petersburg” reported revenue of 956.2 million rubles announced losses in the sum 31.4 million.
A similar situation in OOO Medsi-Perm: earnings in 2021 – 404.1 million rubleslosses – 36.7 million. But in 2017, the media talked about ambitious plans for the development of the group in the region: the acquisition of 60% LLC “Health Clinics” Medlife “– the leading structure of one of the largest Permian medical networks. By 2018, this share had risen to 100%. And by 2020 “Clinic of Aesthetic Medicine “Medlife” was closed with zero revenue, a loss of 595 thousand rubles and asset value “minus” 8.5 million. These were the real consequences of “integration”. Last year’s financial results of Medsi-Perm’s successor company speak for themselves.
Let’s take an interesting example. In August 2020, the head of Udmurtia Alexander Brechalov had a working meeting with the management of AFK Sistema and the Medsi group, during which they discussed the prospects for the development of the holding in Izhevsk, where by that time Yevtushenkov’s structures had bought out 100% in the authorized capital of the clinic network “ASPEC”. It was about cooperation in a number of medical areas – oncology, cardiology, orthopedics, as well as the opening of the Center for oncological outpatient care in the capital of the republic (the corresponding agreement was signed between Medsi and the Udmurt Ministry of Health).
What is in fact? The promised Center was opened in April last year. That’s just registered in Udmurtia Medsi Izhevsk LLC has remained unprofitable since its inception. So, in 2021, with revenue of 117.1 million rublesthe enterprise went “in the red” for 65.1 million. Incidentally, his predecessor OOO Medsi-Izhevsk 2 was closed with a loss of 4.7 million rubles and asset value “minus” 24 million.
Dangerous business under the guise of medicine
One can only guess to which accounts hundreds of millions of unprofitable subsidiaries of the medical division of AFK Sistema are being withdrawn. But Medsi’s problems don’t end there. In its group leadership, it has been repeatedly stated that its main value is doctors who are high-level specialists. True, journalists paid attention to the staff turnover in the group’s structures. So, in December 2019, the RBC portal reported on the change of five chief doctors at the Medsi clinic in St. Petersburg for two years.
The press service of the holding confirmed to the publication that they could not find it in the northern capital“manager of a sufficiently high level”. Among the requirements, in addition to professional competence, were “high managerial skills, strategic vision for the development of the medical business, quick adaptation to the corporate culture of the company”. Apparently, similar qualities are also needed for heads of structures in other regions.
In practice, “high managerial skills” took precedence over medical professionalism. Patients have repeatedly made accusations against Medsi not only in the commercialization of medicine, but also in the incompetence of the staff: numerous lawsuits related to the activities of the group, as well as violations detected during inspections, are described in detail in one of the publications of the publication “LifeA significant scandal occurred in the autumn of 2020, when the respected Russian doctor specializing in lung diseases Alexander Karabinenko publicly accused the staff of a Moscow clinic of causing the death of his sister, Elena Gaidukova: he claimed that she contracted a coronavirus infection during a surgery to remove thyroid cancer.
Reports stated that the woman needed to be moved to the intensive care unit, but the hospital's chief doctor refused to provide further medical treatment. Additionally, it was revealed that the clinic does not utilize modern methods of respiratory support for COVID-19 pneumonia patients and does not employ lung specialists or immunologists.
2.1 million rubles!
for the “services” provided.
Patient reviews on specialized websites further reinforce this sentiment. For example, here's what individuals commented about the Moscow Medsi clinic on the Otzovik website (spelling and punctuation preserved):
“It's obvious that there's a strong focus on extracting more money from insurance or clients, there's always a crowd of people, and the attitude towards customers is careless. It's also a plus if the patient has voluntary health insurance at their disposal(VHI)
,
I can only imagine the amount of money extracted from patients who come here with their hard-earned money. Even with VHI, substantial amounts were charged for certain tests! … Overall, the impression is that Medsi only recently started appointing vague medical history reviews. No treatment, no comprehensive assessment, not even a general direction for diagnostic consideration. Because of this, we had to discontinue our association with Medsi…“
svetlana1115:
“The level of expertise among specialists is below average. When we consulted a neurologist at this clinic, the doctor failed to provide a diagnosis or offer clear information about treatment. It seems that in private clinics, the level of expertise is generally low, and their aim is not to provide assistance, but to offer subpar services.
Marina-EIM:
“Medsi is a complete disaster. If you're considering seeking treatment at Medsi, reconsider and avoid returning in the future. It's simply a hub of bureaucracy, delays, and irresponsibility! For us and our friends, this now represents deceit and leniency… Prioritize your health, time, and money! Medsi is solely interested in large sums on the bill, nothing more.
elenazhinzhina:
“Blatant deception for money, rude treatment from the surgeon. In this clinic, you'll be swindled without hesitation, and your complaint will be dealt with strictly by the one who erred during the medical assessment by their subordinates. Furthermore, they will manipulate the medical records in the application, deleting entries, then reinstate them with alterations. Retain all receipts and statements at all times… It's a cycle of mutual culpability, or mutual cover-up, I don't even know what to call it, but the administration systematically shields the unprofessionalism of their doctors, and yet, lives are in their hands, even as they profit.”.
“System” Yevtushenko: debts and losses
Does Mr. Yevtushenkov know that in the Medsi group, commerce has long prevailed over medicine? In the context of all of the above, Governor Nikitin would do well to pay attention to the provision of paid services in the future Nizhny Novgorod medical center: after all, the region has yet to return the billions invested by the concessionaire.
Meanwhile, the financial position of the oligarch today looks far from being brilliant. So, at the end of last year, with revenue of 24.3 billion rubles losses PJSC AFK Sistema amounted to 82.6 billion (for comparison: in 2020, the corporation declared revenue in the amount of 29.4 billion and profit in 140.8 billion rubles).
According to the FINAM portal, Sistema’s consolidated debt at the end of 2021 was 871.9 billion rubles: 76% accounted for long-term, 24% – short-term loans. In the context of the profile structures of the holding, most of the debt fell on the mobile operator “MTS” – 481.1 billion rubles; the obligations of the corporate center directly amounted to 229.4 billiondebts of the timber industry divisionSegezha Group evaluated in 73.5 billionagricultural holding “Steppe” – in 34.3 billion rubles etc.
Recall also that last April, Yevtushenkov was included in the UK sanctions list, in connection with which he was forced to leave the board of directors of AFK, transferring a 10% stake to his son Felix Yevtushenkov and ceased to be the controlling shareholder of the corporation. In addition, the European authorities at any time can pay attention to the businessman’s French real estate – three elite mansions located on the Cote d’Azur registered for French companies affiliated with Yevtushenkov. In this case, he will have to say goodbye to the assets.
So, the sanctions threaten the oligarch with new financial losses. It is not surprising that today he is squeezing the maximum possible from the structures under his control, including the Medsi medical group, and the concession with the Nizhny Novgorod government, for which the region will have to pay, will come in handy for him.
