IHH Healthcare: Health care

THE COMPANY: With a total network of 30 hospitals and more than 4800 beds spanning eight countries, IHH Healthcare (IHH) is the second-largest private health care service provider in the world. IHH’s core operations are located in three main markets: Singapore, Malaysia and Turkey. Its wholly owned subsidiary Parkway is currently the largest private health care service provider in Singapore, with a network of four hospitals and 910 licensed beds. Equipped with advance medical equipment and more than 1200 specialist doctors, Parkway offers mainly high-margin tertiary and quaternary health care services and recently opened its new 333-bed flagship hospital, Mount Elizabeth Novena Hospital. The new facility is equipped with 13 operating theatres and is the first private hospital to invest in a positron emission tomography and magnetic resonance imaging (PET-MRI) system and a cardiac hybrid operating theatre, which reduces pre-operation waiting time, as well as patient risks and distress.

In Malaysia IHH operates a network of 11 hospitals under Pantai and Gleneagles with a total of 2010 beds across seven states, offering advanced health care services through Centres of Excellence, including the Pantai Cancer Institute, Breast Care Centre, Hand and Microsurgery Centre, and the Spine and Joint Centre. It also offers six medical specialties in the field of general surgery, heart and vascular, musculoskeletal, neuroscience, oncology, women’s health and paediatrics apart from other ancillary and supporting health care services offered at Pantai Premier Pathology, Pantai Integrated Rehab and the Twin Towers Medical Clinic.

IHH’s operations in Turkey are held under its 60% owned subsidiary, Acıbadem, the largest private health care service provider in Turkey with a chain of 13 hospitals and nine medical centres, with approximately 1572 licensed beds. All of Acıbadem’s hospitals offer full primary to quaternary health care services with a primary focus on the affluent Istanbul region. With the highest number of Joint Commission International accredited hospitals in the country, Acıbadem has a strong presence in cancer treatment (five hospitals which are oncology reference centres in Turkey), organ transplant (three hospitals with the ability to conduct living donor liver and kidneys transplants, and bone marrow transplants), and cardiology and cardiovascular surgery procedures (12 cardiac centres, two of which are able to perform paediatric cardiac surgeries).

DEVELOPMENT STRATEGY: IHH’s operations in Singapore have been the group’s largest contributor, accounting for 36.9-39.9% of revenue for the fiscal year (FY) 2011 (year end: September), and 27.4-39.2% of earnings before interest, taxes, depreciation and amortisation (EBITDA) in FY 2011. Operations in Singapore will continue to be the main earnings driver over the next few years, driven by the newly opened, state-of-the-art Mount Elizabeth Novena Hospital.

For Malaysia, comprising 18.5-19.5% and 22.3-32.8% of FY 2011 revenue and EBITDA, respectively, IHH aims to capture new markets in Peninsular Malaysia and East Malaysia through the opening of Gleneagles Medini, Pantai Manjung and Gleneagles Kota Kinabalu, which will add around 606 beds to current capacity. Further expansions at four existing hospitals are also expected to increase the number of Centres of Excellence, while advanced clinical programmes will allow IHH greater clinical differentiation from competitors and access to more of the medical tourism market.

As for the group’s operations in Turkey, accounting for 32.5-37.5% and 6.8-35.6% of FY 2011 revenue and EBITDA, respectively, construction of four new hospitals and capacity expansion plans at two existing hospitals (726 beds in total) would enhance Acıbadem’s operations in both premium and mid-market segments, as well as extend its leadership as the preferred medical tourism destination in Turkey. For other international markets, IHH is looking at China, Hong Kong, India, South-east Asia, Central and Eastern Europe, and the Middle East and North Africa through partnerships, joint ventures and hospital management agreements to mitigate concentration risks in its home markets.