KUALA LUMPUR: IHH Healthcare Bhd, one of the largest healthcare groups in the world, is looking to sustain its double-digit growth this year, with a focus on organic and inorganic growth, public and private partnerships, and the expansion of continuum of care via ambulatory care centres (ACCs).
IHH Healthcare, whose shareholders are Khazanah Nasional Bhd, Employees Provident Fund and Retirement Fund Inc, reported a 15 per cent jump in earnings before interest, taxes, depreciation, and amortisation (Ebitda) of RM4.8 billion on the back of a 17 per cent jump in revenue to RM21.3 billion in financial year 2023.
With a network of 80 hospitals in 10 countries, group chief executive officer Dr Prem Kumar Nair said instead of spreading itself thin, the multiple-brand group is very focused on market-specific growth strategies based on organic growth, expanding the continuum of care, going into new business and inorganic growth.
"Therefore, we have outlined our growth plan for the next five years, aiming to add 4,000 beds.
"We chose this timeframe due to the variable speed of regulatory processes across different countries. While some may move faster, others may be slower," he said.
In 2024, this means increasing 160 beds in Malaysia, 240 beds in India and 40 beds in Hong Kong.
"For us, this makes the most sense because these are facilities that are already running at very high occupancy of between 70 and 80 per cent. And you know, right when you go beyond a certain occupancy, like 80 per cent, you're losing patients, right, because you can't get a bed, so they'll go to another place. So we've got to ensure that we can increase the capacity to keep all the patients within our system," he said.
In Malaysia, IHH Healthcare owns three hospital brands, Pantai Hospital, Gleneagles and Prince Court Medical Centre.
Growing across the healthcare continuum
IHH Healthcare's Hong Kong and Singapore markets are a prime example of its push to grow the continuum of care with an aggressive expansion in the ambulatory care space.
"Many perceive Hong Kong solely through our Gleneagles Hong Kong hospital, yet they've expanded with four ambulatory centres - two centrally located and two in the Gleneagles vicinity - with plans for further expansion.
"This growth spans the healthcare continuum," he said.
Dr Prem said hospitals often receive significant attention in the healthcare sector due to their large scale and lucrative profit margins, making them attractive targets for expansion.
"However, when viewing healthcare as a system, the US stands out.
"With healthcare accounting for nearly 20 per cent of the gross domestic product, the US exemplifies the immense scale and importance of the healthcare industry," he added.
Twenty years ago, the US implemented payment systems for insurance and Medicare via the Centers for Medicare and Medicaid Services (CMS).
"Recognising the potential cost burden of hospital-based care, CMS incentivised hospitals to shift certain procedures to ambulatory surgical centres.
"For instance, procedures like total knee replacements, typically conducted as inpatient surgeries in many countries, are now performed on an outpatient basis in ambulatory centres in the US. Patients undergo surgery in the morning and return home the same day."
An ambulatory surgical centre accommodates patients for less than 24 hours, with patients typically discharged at the end of the day.
Dr Prem explained that the shift now was for procedures such as total knee replacements, where patients require physiotherapy, to transition to community-based care.
"This shift enables patients to receive follow-up care at home, including assistance from nurse physiotherapists for walking exercises with a walker.
"In the US, many procedures are now safely performed in ambulatory surgical centres, a trend also observed in Singapore, Hong Kong and other advanced economies.
"This underscores the importance of considering ambulatory care models in healthcare planning," said Dr Prem.
He noted that in the future, with an ageing population, there will be a shift towards home-based care or aged homes following hospitalisation.
Patients will receive care in the comfort of their homes, with mobile nurses monitoring vital signs, checking wounds and providing physiotherapy as needed.
"This shift towards the healthcare continuum becomes crucial as hospitals become increasingly expensive."
The group has two ACCs in Singapore, with another three clinics and ACCs in Hong Kong.
It plans to grow the number of ACCs in Singapore by another two by 2028 and six clinics and ACCs in Hong Kong by 2028.
For a market such as Singapore which no longer allows for inorganic growth for IHH Healthcare, due to its dominant position, this strategy is especially important.
Contributing some RM1.6 billion Ebitda in the financial year 2023, Singapore stands as its strongest market, with higher case intensity from complex treatments.
Managing China
Of all its markets Dr Prem admits, China, a country in which private healthcare is a fairly new phenomenon, will need more management time.
"During the Covid-19 pandemic, private healthcare thrived, benefiting from the presence of expatriates and foreigners with private insurance.
"However, China's emergence from the pandemic was later than other regions, coupled with economic challenges such as banking issues and property concerns, affecting stability," he added.
Dr Prem observed that with the return of expatriates and foreigners post-Covid, concerns emerged over the viability of a business model centred solely on catering to this demographic group.
"I always ask myself, can you go into a country just to serve expatriates and foreigners? That cannot be a business model. So we still have to go to China or any country to serve the local population," he clarified.
This is where public and private collaborations come in, drawing inspiration from similar efforts observed in countries like Malaysia, Singapore and Hong Kong.
"Recognising global pressures on public healthcare systems, many countries are incentivising collaboration with private healthcare providers.
"Discussions with Chinese authorities are ongoing to explore such collaborations."
The China market contributed an Ebitda of RM74.5 million to the group in financial year 2023.