Digitalisation and innovation a core strategic focus for hospital operator
AS industries adopt the fourth industrial revolution or Industry 4.0 model, the healthcare sector is regarded as a laggard.
After all, it is not possible to apply automation when it comes to treating patients, as cases vary among individuals.
In the case of the largest homegrown private healthcare services provider, KPJ Healthcare Bhd, digitalisation and innovation remain a core strategic focus for the group.
KPJ Healthcare president and managing director Datuk Amiruddin Abdul Satar tells StarBizWeek that digitisation efforts for the healthcare sector will occur in three waves, clinical system, mobile applications, then followed by robotics.
KPJ digitises its clinical process through the KPJ Clinical Information System (KCIS), which holds patient records and treatment orders, among others.
Currently, the group is undergoing upgrading works for KCIS and Hospital Information System (HITS) to second generation cloud-computing, which is expected to be completed by year-end.
This includes linking the core system to app-based devices.
“Our next move would be to develop mobile applications to enhance the patient experience.
“An example would be making payments through machines to speed up the process,” says Amiruddin.
He notes that the main challenges in adopting technological innovations in the healthcare sector lies in cost and the ability of such innovations to meet users’ needs.
“There are no programmes developed in Malaysia and most of the programmes we use are sourced from Europe or US.
“Customisation of programmes incur more costs, like when we had to change the currency symbol to RM,” Amiruddin adds.
The innovation-led transformation embarked by KPJ differentiates it from the other healthcare service providers.
KPJ was the first private healthcare provider in Malaysia to use the IBM Watson for Oncology, a platform for oncologists to generate treatment proposals for cancer patients.
“With IBM Watson’s extensive database, patients can seek for a second opinion without the need to consult another oncologist -- all these at no extra charge.
“It is KPJ’s way of providing value to our patients,” he says.
Commenting on the adoption of robotics in healthcare, Amiruddin opines that robotic surgery is still expensive and will take some time for it to be widely utilised across hospitals in Malaysia.
While the recovery period is shorter and mistakes are minimised, patients who opt for robotics surgery have to pay a premium for the service.
Amiruddin believes demand for private healthcare services will continue to grow over the next five years and KPJ intends to meet the increasing demand through the expansion of its network of hospitals.
He comments that Malaysia generally has good government hospitals that cater to a majority of the population, in terms of providing emergency services and accessibility to modern medicine.
Most emergency cases are also treated within reasonable time.
For those who can afford, through healthcare insurance and corporate benefits, they can rely on private healthcare services.
Private healthcare providers like KPJ help reduce the bottleneck in government hospitals, offering immediate treatment to some 20% to 30% of the Malaysian public.
“Looking at the current occupancy rate and demand, there is still room for expansion.
“Therefore, we are still building more hospitals within the next five years to expand our capacity,” he says.
KPJ Perlis is slated to commence operations by the second quarter of this year, while KPJ Bandar Dato’ Onn in Johor is scheduled to open by the third quarter of the year.
Meanwhile, three KPJ hospitals across Miri and Kuching in Sarawak, as well as Batu Pahat in Johor, are in the midst of construction, with an expected commencement of operations in 2019.
That leaves two states which KPJ is left to venture into -- Melaka and Terengganu.
Amiruddin says the group has recently purchased a plot of land in Melaka, and will have the Melaka state government as its partner. “We hope to begin construction for the hospital before year-end.
“To date, there are no concrete plans for Terengganu,” he adds.
KPJ allocated an estimated RM500mil in capital expenditure for 2018, largely for building capacity and upgrading of medical equipment that are at the end of their life cycle.
KPJ registered a 7% growth in net profit to RM166.9mil in FY17, on the back of a revenue of RM3.18bil.
Going forward, KPJ remains confident that its financial results will improve even further in the coming years, as the new hospitals opened in Malaysia are coming to the end of their gestation cycle of three to five years, and shall start to yield profits.
Meanwhile, revenue from the group’s Indonesian operations dipped by 18% to RM48.8mil in FY17, mainly due to the lower number of patients and appreciation of the ringgit towards end of the year.
The lower number of patients recorded was due to Indonesia’s National Health insurance programme established three years ago, through which citizens seek treatment from participating government and private hospitals.
Despite the decrease in the number of patients visiting KPJ’s Indonesian hospitals, medical tourists from Indonesia continue to grow, remaining as KPJ’s largest overseas patient base.
While KPJ owns and operates two hospitals in Jakarta and Banten, Indonesia, the group finds that many Indonesians prefer to seek treatment in Malaysia, due to the close proximity, high quality, and lower cost.
It is noteworthy that Indonesians trust the quality of healthcare and medical professionals in Malaysia, as compared to Indonesia.
One of the reasons would be because doctors in Indonesia are trained locally, while most Malaysian doctors are trained abroad, such as UK and US.
KPJ’s medical tourists currently makes up 5% of its patient base.
During the financial year ended December 31, 2017 (FY17), the inpatient and outpatient figures for Malaysia amounted to 286,465 and 2.47 million, respectively, while occupancy rate was at 66.1%.
“Along with our expansion plan, we hope to see more medical tourists in the medium term and target to grow our medical tourist numbers to 10% of our patient base.
“This will be largely driven by Indonesia, with China as our new target, which we are still learning of their healthcare preference and needs,” says Amiruddin.
He adds that there are still untapped areas in the Indonesian market and that the prospects there is larger than Malaysia’s.
“The private healthcare sector in Malaysia will soon be saturated and growth will be slower compared to Indonesia, due to its size and improving economic growth,” says Amiruddin.