Mainboard-listed
Health Management International (HMI), which is expanding its two tertiary-care
hospitals in Malaysia to boost capacity, is also eyeing a bigger footprint in
the region to cater to the rising demand for healthcare.
Increasing
affluence, an ageing population as well as a growing transition to private
healthcare in the middle-income segment are underpinning demand for private
healthcare in Malaysia.
More
Singaporeans are also headed across the Causeway for elective treatments and
health screenings at Medisave-accredited hospitals.
"There
are a lot of opportunities for growth in private healthcare in the region - in
Malaysia and other countries," says Chin Wei Jia, group chief executive
officer of HMI, adding that the group is in a net cash position which gives it
the flexibility to scale up.
HMI
currently has a 49 per cent stake in the 270-bed Mahkota Medical Centre in
Malacca as well as a 61 per cent stake in the 200-bed Regency Specialist
Hospital in Johor Bahru. Together serving over 400,000 patients annually, both
are operated by the group under management contracts. In addition, HMI runs the
HMI Institute of Health Sciences (IHS) in Singapore.
Mahkota
is being ramped up to 360 beds and will also introduce new services, such as
nuclear medicine, which uses radioactive material to diagnose or treat
diseases. This comes after it recently launched a new day surgery unit last
September.
Over at
Regency Specialist, the group plans to build a RM90 million (S$30.7 million)
medical block, which will effectively double capacity by adding more beds,
clinics as well as inpatient and outpatient facilities.
Construction
of the 10-storey medical block at Regency Specialist is expected to begin this
year-end and will be completed in 2018. The expansion will be funded through
internal cash and loans.
Meanwhile,
the group is on the prowl for new investment opportunities in the region, given
the growing demand for private healthcare services. While Malaysia is a likely
option, given its familiarity with the country, it hasn't ruled out other
markets as well.
Ms Chin
said: "Medical tourism is still expected to grow. The growth for Malaysian
healthcare tourism has been in the high double-digits over the past five years,
and we expect this number to increase. Malaysia attracted about 850,000 medical
tourists in 2015. As a two-hospital group, we contributed about 10 per cent of
that."
According
to industry data, the Malaysian medical tourism market will roughly double from
RM1.09 billion in 2014 to an estimated RM2.03 billion in 2017. The weaker
ringgit also makes Malaysia a more attractive proposition to medical tourists.
"We
expect to see continued growth in medical tourists," Ms Chin said, adding
that the group is working on improving the way it reaches out to foreign
patients. Indonesia, in particular, is an important market for the group, given
the cultural similarities between Indonesia and Malaysia. Foreign patients
currently account for about 20 per cent of the patient load across both
hospitals.
Meanwhile,
HMI will continue to tap HMI IHS here for internal training as well as use the
institute's facilities to offer training to Singaporeans and others in the
region. The institute is in the process of shifting to e-learning, which will
allow it to broaden its base of users by reaching out to those who are working
full-time and those in developing countries.
While a
listed company, the group is in a sense the family business for Ms Chin.
Founding member (and Ms Chin's mother) Gan See Khem, is the executive chairman
while Ms Chin's brother, Chin Wei Yao, is an executive director as well as
director of finance and corporate development. Meanwhile, Dr Gan's husband Chin
Koy Nam (also a doctor) was an executive director until he retired in 2014.
Ms Chin
joined HMI in 2002 as a management trainee just as it was undergoing a period
of major restructuring. At that time, HMI had a small hospital in Balestier,
with little room for expansion. In addition, the group was facing the double
whammy of a falling volume of foreign patients and local hospitals in Singapore
proving tough competition. This prompted the decision to turn the Balestier
hospital into HMI IHS, a private provider of healthcare training and education.
At the
time, HMI was also running Mahkota Medical Centre, in which it had acquired a
20 per cent stake during the height of the Asian financial crisis in 1998. By
2002, HMI managed to get the loss-making centre to break even.
Fresh out
of school then, Ms Chin was involved in some very tough situations, such as
having to let people go, in order to keep HMI going. The group tried to help
some of its former employees by absorbing them into the HMI training institute
or finding them positions elsewhere in the industry. The experience was one
that left an indelible impression on Ms Chin. She highlighted that it made her
realise that every decision has to be made with sustainability in mind.
"You
just have to be very strategic and very hands-on," she said, of the
lessons learnt during those years. "You can't manage a company just
looking at the numbers. But numbers are extremely important; by doing well,
you're able to reinvest in the business and the people. And everyone grows
together."
Today,
the group has grown to over 1,500 employees and more than 180 specialists.
Mahkota,
once heavily loss-making, turned around after HMI changed the business model;
instead of employing doctors, it made them partners by renting or selling space
to them in the hospital.
"This
model was quite new in Malaysia," Ms Chin said, adding that this attracted
more doctors to the hospital. At the same time, the group focused more on
medical tourism by setting up representative offices in Indonesia to drive
traffic to the hospital. Today, HMI has some 14 such offices across Indonesia's
major cities. The private healthcare provider also made a great effort to make
the entire experience as hassle-free as possible for patients by establishing a
concierge team, which helps out even with details such as hotel bookings.
Regency
Specialist was added to its portfolio when the group acquired a 35 per cent
stake in an empty hospital building in 2007. The hospital opened its doors in
2009. HMI raised its stake in Regency to 61 per cent in 2008, and the hospital
was contributing to the bottom line within five years.
"New
hospitals (aren't) easy," said Ms Chin, who stepped down as chief
executive of Regency Specialist in February.
"You
need to attract doctors - and doctors are trained to make good assessments of
risk! It took us time to recruit doctors and to let the market know that
there's a new hospital."
Since
2011, HMI's topline has roughly doubled from RM174 million to RM345 million in
FY2015, while earnings before interest, taxes, depreciation and amortisation
(Ebitda) have nearly quadrupled from RM19 million to RM75 million in the same time
frame.
"For
us, it was always looking at what a patient needs, and then building our
services around it," Ms Chin said. "One thing we learnt from the
Singapore experience is that you need to have a clear differentiating factor
for patients to want to continue to support you. We decided that our approach
was to build comprehensive hospitals where it can be as 'one-stop-shop' as
possible. In all the disciplines we have, we want to build them up into centres
of excellence."
Going
forward, HMI plans to eke out growth by improving quality and raising its
service standards.
"The
economy is a bit up-and-down now," acknowledged Ms Chin, adding that the
group is focused on building fully comprehensive tertiary hospitals to give it
an edge over competitors. "For us, we just focus on our core competencies.
We're also trying to innovate our service delivery mechanism through
technology, processes, and by making it very personalised.
"That's
what patients and their families are looking for: someone to support them along
their healthcare journey."
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