Private healthcare cost in Malaysia still affordable


Malaysia’s private healthcare expenditure is nowhere close to the inflationary level in other South-East Asian markets and is driven by the value of return on investment obtained by consumers, supported by the maturity, complexity and quality of services provided.

IHH Healthcare Bhd MD and CEO Dr Tan See Leng said Malaysia currently ranks as one of the top few in the world in terms of the costs paid versus the quality of healthcare services provided.

“Now, I am not the proxy for the overall private healthcare sector, but from IHH’s perspective, Malaysia still has the lowest average revenue per in-patient out of the four home markets that we are in today, which are Singapore, Malaysia, Turkey and India.

“On average, Malaysia’s in-patient revenue stands at RM6,000, while India is 10% to 15% higher at about RM7,000, Turkey at RM8,000, while Singapore maintains its record high at RM29,000,” he told reporters at a briefing after IHH’s AGM in Kuala Lumpur recently.

Based on IHH’s internal statistics, Dr Tan said free market forces backed by the influx of services available have kept healthcare prices in the private sector at competitive levels in Malaysia.

“I think what Malaysians are able to get out of the healthcare services here is that there are a significant number of consumer surplus in the country than anywhere else.

“If you look at the number of Indonesians coming into our country as at the first quarter of 2018 (1Q18), there is a 20% increase recorded within our sole operations alone, which signals Malaysia must be doing something right in attracting foreigners into the country.”

Dr Tan said IHH is eyeing a realistic stake of between 34% and 35% in India’s Fortis Healthcare Ltd if its bid is successful.

“We will have a board meeting on May 30. With the current board, following the exit of the old four board members, our decision-making process on the acquisition will largely be dependant on the outcome of the upcoming meeting,” Dr Tan added.

He explained that the group had announced on May 25 an extension of the offer tabled to June 30.

“The ideal stake for us to buy in Fortis would be around 51%, but realistically, we are expecting an acquisition of a stake between 34% and 35%.

“We have to do the due diligence first to benefit our respective shareholders before having a final figure.”

Fortis yesterday decided to initiate a fresh bidding process, after the board’s previous choice of investment offer in the bidding war did not appeal to shareholders, Reuters reported.

Three bidders — a consortium of Hero Enterprise Investment Office and the Burman Family Office, a consortium of TPG and Manipal Health Enterprises Pte Ltd and IHH — have been invited to participate in the process with fresh bids to be submitted by May 31, Fortis said.

Dr Tan said the group is constantly on the lookout for new asset injections, but is subjected to stringent evaluation processes due to the premium segment the company is operating in.

As such, any portfolio enhancement initiatives would be dependant on three core fundamentals — asset value creation, extraction of its value, as well as its ability to add to the synergy of the entire group.

IHH non-executive chairman Datuk Mohammed Azlan Hashim said the new Malaysian ruling government is expected to become a boon for the overall healthcare sector on the back of its aim to create a more business-friendly environment.

“We are very confident that the new administration will act in the best interest of the country. Hence, we are very optimistic that things are going to get better for the overall healthcare sector,” he added.

Commenting on the government’s move to zero-rate the Goods and Services Tax (GST) effective June 1, IHH group CFO Low Soon Teck said the company has always absorbed the majority of the cost from the levy since its early days of implementation.

“Therefore, the impact from the zero-rated GST would be very minimal for us. For the Sales and Services Tax, I think it is still early days for us to identify the potential impact until we know the full details upon implementation,” he added.