Business Development Asia LLC

South East Asian Health News

ISSUE 7, JUNE 1998

Focus: Leading SE Asian Hospital Groups

Hospital groups have been suffering since the onset of the economic crisis in SE Asia. Several years prior to the economic downturn property groups had expanded their businesses into the healthcare sector to increase profitability, often with little knowledge or understanding of the industry. The middle class in SE Asia had been growing at a rate that was sufficient to support the growing private hospitals. The current economic instability has, however, curtailed the demand for the services of private hospitals.

The hospital sector is now ripe for consolidation and foreign partners should be able to acquire significant equity positions at a low entry cost. Several private Thai hospitals, including Bangkok General Hospital and Panyavej Hospital, have expressed interest in foreign partnerships.

The depressed demand for private hospitalization and medical treatment has created a difficult scenario for the healthcare industry. Hospitals in Thailand and Singapore are struggling to cope with the financial burden caused by an overabundance of beds combined with low demand.

Malaysian Hospital Groups

Kumpulan Perubatan (Johor) Sdn Bhd (KPJ), a leader in the growing Malaysian healthcare sector, has set up Malaysia's first private nurse-training program in response to the shortage of labor. To attract qualified doctors, KPJ offers equity stakes in its hospitals. KPJ runs a network of seven hospitals in Malaysia and two in Indonesia. Two of these hospitals are listed on the KLSE.

KPJ plans to increase its hospital network in Malaysia and South-East Asia. At the opening of Damansara Specialist Hospital in Kuala Lumpur, the company announced it intended to own more than 20 specialist hospitals in the region by the year 2000. The Damansara hospital, the group's eighth hospital, was built at a cost of RM90m (US$24m).

Sime Darby is a leading conglomerate with extensive regional interests in plantations and light and medium industrial manufacturing plus services. Sime Darby owns Subang Medical Center and has plans to build a hospital specializing in oncology. Sime Healthcare Sdn Bhd, a subsidiary of Sime Darby, manufactures and markets prophylactics in Malaysia. Sime Darby has been troubled by losses in its financial services subsidiaries. The company's shares are listed on the KLSE, but a significant stake is controlled by PNB, a Government investment body.

Singaporean Hospital Groups

DBS Land, a subsidiary of DBS Bank, is a leading Singaporean property developer and major shareholder Dr. Han Cheng Fong is also the CEO and Deputy Chairman of DBS. The company moved into healthcare in 1994. DBS does not currently own any hospitals but Premier Health Holding (PHH), its healthcare division, is developing secondary care hospitals. The secondary care hospitals will be owned and managed under the PremierCare brand.

PremierCare Medical Center, located in Bandar Seri Alam, the first of PHH's secondary care hospitals, is set to open in 1999. The center will have 200 beds and 30 multi-specialty suites for outpatient services. The center will also house a rehabilitation center, renal dialysis center, an adult intensive care unit, a surgery center and seven labor and delivery suites. The hospital will target the middle income bracket. PremierCare Group is currently developing their second (200 bed) PremierCare hospital in Sungai Petani.

Parkway Holdings, controlled by the Tan family, is the leading regional hospital operator. The company's principal activities include private hospital management and ownership and related healthcare services. Parkway owns and operates two hospitals in Singapore, Gleneagles and Mount Elizabeth, as well as seven other hospitals in the UK, Manila and the region. The company owns Gleneagles Intan Hospital in Malaysia, the Duncan Gleneagles Hospital in India, the Siloam Gleneagles Hospital in Indonesia and a hospital in each Medan and Surabaya. The Parkway group has opened one diagnostic laboratory in China and has announced its plans to develop another with the Guangzhou Peoples' Hospital. The group also has plans to acquire four hospitals in Bangkok.

Raffles Medical Group (RMG), the leading primary healthcare group in Singapore, owns 33 clinics (medical and dental) and the Raffles Surgicentre Pte Ltd. The company has joined with Pidemco Land to develop a hospital in Singapore. Additionally, RMG plans to form a consultancy group with the US company Kaiser Permanente to manage and develop hospitals around Asia. Four individuals, including chairman Loo Choon Yong MD, own the group. Other RMG subsidiaries include Raffles Diagnostica Pte Ltd and Raffles Medical Properties Pte Ltd. RMG is listed on the second board of the Singapore Stock Exchange.

Thai Hospital Groups

Bangkok Dusit Medical Services PLC is a leading private hospital group in Thailand. The company currently owns eight hospitals and one pharmaceutical group. Subsidiary Bangkok General Hospital (BGH) reported in June 1998 that the hospital is seeking foreign investments due to financial problems. Dr. Lertutsahakul, the deputy chief executive administrator of the BGH said possible investors come from Singapore, Australia and Sweden.

Bumrungrad Hospital Group is a sophisticated hospital group comprised of four large, upscale hospitals. The group is run by American, Thai, Singaporean and European managers. In 1996, the group opened one of the largest private hospitals in ASEAN with facilities for 554 beds. Bumrungrad works extensively with emergency evacuation assistance companies and also travel insurance companies. The group is run by Curtis Schroeder, formerly of the NME/Tenet Group.

Samitivej is a leading hospital group with shares listed on the SET. Samitivaj Hospital is located in a prime residential area and has 260 beds. The group opened its new hospital, Samitivej Srinakarin, in 1996. The new hospital has 400 beds, 40 units of intensive care and an emergency room open 24 hours. The CEO of Samitivej is Dr. Udom Harinasuta.