Ramsay Sime Darby joint venture targets Asian countries for growth

Ramsay Sime Darby Health Care, a joint venture between Sime Darby’s health unit and Ramsay Health Care, expects to expand its hospital network to at least 12 in the next three to five years. Tan Sri Mohd Bakke Salleh of Ramsay Sime Darby Health Care explains.

Ramsay Sime Darby Health Care, a joint venture between Sime Darby’s health unit and Ramsay Health Care, expects to expand its hospital network to at least 12 in the next three to five years.

Tan Sri Mohd Bakke Salleh of Ramsay Sime Darby Health Care explains. “ The expansion plans go beyond Malaysia and Indonesia. It is all dependent on the commercial benefits. We are looking at potential in Indonesia and Malaysia, as well as other parts of South-East Asia. Two key potential countries are Vietnam and China. It will take three to five years to generate positive cash flow, as we seek expansion with both greenfield and brownfield hospitals around Asia.”

The company says that three to five years is the normal gestation period for such investments but a typical payback period for hospitals is about nine years. On average, a new hospital would cost the company RM200mil to RM300mil while existing hospitals will depend on the market value.

Expansion into China is slow, as although it has identified certain locations and met up with operators, it cannot proceed without local partners.

The company will continue to source for locations where there is a catchment of middle-class people. In Malaysia and most markets, prime hospitals are always in developed areas.

International patients make up of 6% of total patients in the Malaysian operations at the moment; these are expatriates, travellers and a few medical tourists. The group hopes to increase the international patient numbers to 10% in the Malaysian hospitals within two to three years.

At the moment, the group has three Malaysian hospital assets from Sime Darby Healthcare and three in Indonesia from Ramsay.

Healthcare service providers should tap into the growing health tourism sector in an effort to turn the nation into a regional healthcare hub, argues Malaysian prime minister Seri Najib Tun Razak; “This can be achieved by healthcare service providers entering into cross-border collaborations with their international counterparts. Efforts to develop health tourism sector via national key economic areas and the Malaysia Healthcare Travel Council have shown positive results. Over the past three years, Malaysia has seen more than 20% growth in health tourism, and generated almost RM600mil in revenue last year. The positive growth is due to MHTC’s role in providing the technological platform for web-based medical and health-related information to a global audience. Among the countries fast becoming interested in Malaysia’s medical tourism industry is Japan, which has registered 20% growth. Many Japanese are those under the Malaysia My Second Home programme or via word of mouth from friends and relatives.”

The Malaysia Healthcare Travel Council (MHTC) predicts 700,000 medical tourists to the country in 2013. Dr Mary Wong of MHTC says, ”Malaysia received 392,000 medical tourist arrivals in 2010 which increased to 583,000 in 2011 and 671,000 in 2012. We aim to increase the numbers by up to 15 % per year.”