3 firms likely to get hospital support services concession renewal

  • Business
  • Thursday, 29 Dec 2011

KUALA LUMPUR: Three parties - Faber Group Bhd's wholly-owned subsidiary Faber Mediserve Sdn Bhd, Pantai Medivest Sdn Bhd and Radicare (M) Sdn Bhd which are vying for the hospital support services (HSS) concessions by the Government are likely to get their contracts renewed within the next month, according to sources close to the matter.

“Yes, I know the contract had been extended for a duration of six months initially, but the contracts will be extended for the next 10 years. This announcement will be made within a month,” a source said.

According to sources, the Government had renewed the contract for a period of six months initially and had called for a tendering process by these three companies about a month before their contracts ended in October 2011.

“We have reached an initial consensus decision to get their contracts renewed. We will inform them in due course through official channels,” the source added.

It is learnt that Faber, Pantai Medivest and Radicare were the only companies which were called to submit their tenders for renewal because of their experience and expertise in providing HSS for hospitals in Malaysia.

The three companies are presently providing HSS for all government hospitals and clinics in Malaysia and a selected number of private healthcare companies.

The contract value is not fixed when the concession is granted but it is estimated that these three companies had raked in a total of RM1.1bil in revenue from these government concessions alone last year.

It is learnt that the revenues raked in per annum by these three companies were not fixed per se as this very much depended on how much actual volume was handled by each respective company. Should the volume increase due to the increased number beds per hospital or any extension by the hospitals that required their services, revenues to these companies would rise accordingly.

Industry sources said that of the three, the only listed entity was Faber, which has a 50% market share in terms of revenues, while Radicare was the second largest with a 30% market share, and Pantai Medivest with a 20% share.

Faber's concession covers 81 government hospitals in the Perak, Kedah, Penang, Perlis, Sabah and Sarawak; while Pantai Medivest's concession covers about 25 government hospitals in the southern region of Peninsular Malaysia; and Radicare's portion includes government hospitals in the Federal Territory of Kuala Lumpur, Selangor, Kelantan, Terengganu and Pahang.

HSS' activities cover the upkeep and cleansing of linen and laundry, biomedical engineering management services, facilities engineering maintenance services, clinical waste management services, hospital planning development services and cleaning and upkeep of the hospital building infrastructure.

These comprise a crucial link to the government healthcare system which provides maintenance of government hospital and healthcare infrastructure.

Faber is 34.3% owned by the Government's investment arm, Khazanah Nasional Bhd, 12.5% owned by unit trust company Universal Trustee Malaysia Bhd, and about 10% by Lembaga Tabung Haji.

Other than being a HSS provider for Malaysian government hospitals and those in India and the United Arab Emirates, Faber also derives a portion of its revenues from property development projects. This figure fluctuates from quarter to quarter depending on the progress of its property projects.

According to the notes in its financial statements, in the third quarter of its financial year ending Dec 31, 2011 (FY11), Faber derived 16% of its revenue from the property industry while the rest came from the integrated facilities management (IFM) services portion of which the HSS segment is also parked under.

Government HSS contracts contributed to 45% of its third-quarter revenue in FY11 compared with a 74% contribution in the second quarter due to additional incoming revenue stream from overseas IFM services in the third quarter.

Faber recorded profit before tax margins from government HSS concessions of an average of about 15% in both the third and second quarters.

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