KUALA LUMPUR: IHH Healthcare Bhd
continues to aim for a strong growth rate ahead and will strive to maintain or even improve its profitability, moving forward.
The biggest hospital group outside of the United States plans to cut capital expenditure (capex) costs this year with a planned allocation of up to RM2.5bil.
“We want to continue with our growth rate.
“However, we want to see whether we can reduce the amount of capex that we use,” its chief financial officer Dilip Kadambi said at a press briefing after the group’s AGM yesterday.
“Planned expansion into ambulatory care centres and day care centres are more cost efficient, but this can also help in revenue growth.
“Our planned capex this year is somewhere between RM2bil and RM2.5bil across the group. This compares with RM3.5bil last year. We are rationalising capex, but not compromising on growth,” Kadambi said.
Its group chief corporate officer Ashok Pandit said the focus is now on brownfield expansion, noting that in some of its country markets, expansion would be done differently due to regulations.
“For most of our geographies, especially where we’re seeing good growth, our focus is on brownfield expansion.
“In Turkiye, Malaysia and India, we can grow through brownfield expansion,” Pandit said.
While for markets like Singapore and Hong Kong, IHH’s expansion route is through establishing more ambulatory care: out-of-hospital care, which is its focus.
The group noted that in the two markets, expansion through establishing more hospitals is now no longer an option.
“In two countries in particular, Singapore and Hong Kong, we cannot expand hospitals anymore because the Health Ministry said no more (new) licences for private hospitals.
“So, we have shifted to what we call an out-of-hospital strategy,” its group chief executive officer Prem Kumar Nair said.
“In Singapore, we already opened a few ambulatory centres a few years ago and we have opened another one now. I’m still looking at more here,” he added.
IHH expects its Singapore market to see a rebound in the second half of the year, while Malaysia will continue to be an attractive medical tourist destination.
“Malaysia is probably the most attractive medical tourist destination in this region for a variety of reasons: a good pool of specialists in almost all areas and cost effective – whereby many patients are coming from Singapore (into Johor) and from Indonesia as well,” Prem said.
He said the prominence of the Malaysia Healthcare Travel Council also helps the country in some sense.
“The medical tourism reach is very pervasive in the north, central and south (of Peninsular Malaysia).”
Prem expects medical tourism revenue to the Malaysia country segment to grow further from 15% at present, and possibly to 20% or more, moving forward.
Commenting on any potential impact of the Iran war to its operations, Kadambi said it has not seen any impact thus far.
“Given that most of our supplies come from within Asia, and a very small part of it comes from Europe or the United States, the supply chain disruption has not affected us so far.
“In most places, we have long-term contracts with our suppliers.
“Sometimes one, two, or even three years in terms of supplies and so far, we’re good,” he said, but did not rule out potential impacts from rising costs – especially pertaining to the usage of plastic materials.
