What new initiatives is Sime Darby Healthcare involved in?
AZLAN: The initiative that we are currently executing is the opening of our new hospital, SDMC Ara Damansara, which is cardiology, neurology, as well a spine and joint centre of excellence. The expansion of the facility will be rolled out in two phases. Today, we have about 73 beds and expect to have 220 beds over the next 3 to 5 years. Later this year we are looking to open our 4th medical centre, SDMC ParkCity Hospital, which to date is about 96% completed. This hospital will be a centre of excellence in women’s and children’s health, as well as in elderly health and endocrinology. We will be also opening up the Sime Darby Healthcare Mediplex, which is essentially a wellness outlet. The 7 story building is adjacent to our SDMC Subang Jaya hospital and construction is about to commence soon. The Mediplex will include services such as a one stop health screening and wellness centre, and a tenant mix of food and beverage operators, specialty and complementary therapy clinics, as well as wellness salons and retailers. This is a huge project, driven by the prospects of the wellness sector. In the past 5 years we have seen this sector to grow by 18% and its future growth will be more than 22%.
These are the projects that are already in the pipe line. We are working on some new projects such as the expansion of our facilities to areas such as Penang and also Jakarta, but those are very much in the early phases. In terms of operations, we are doing our best to transform our customer service. We want to shift our focus from purely specialist centric to both specialist and customer centric. It is believed that this will enable us to compete with the big names in the hospital business such as Bumrungrad and Samitivej in Thailand. We also have our re-accreditation activities. Today we are JCI (Joint Commission International) accredited and we also have our MSQH (Malaysian Society for Quality in Health), which is the local quality accreditation.
What is your current breakdown of domestic and international patients?
AZLAN: The current breakdown of our patients is about 95% domestic and 5% international, which is basically the medical tourists, together with expatriates. Our intent is to grow the international patients segment to about 20%. Today, we are looking at about 15,000 international patients coming to our facilities. With the opening of this hospital, along with the transformation of our customer services, we are hoping to attract a lot more patients, who usually go to Singapore or Thailand. We have about 60 or 70% of our patients coming from Indonesia. Going forward, we would like to see more patients from other destinations.
Healthcare is one of the fastest growing sectors of the Malaysian economy and promoting Malaysia as a medical destination is one of the government’s top priorities. What is Sime Darby Healthcare doing to target the international market? Which geographic markets are most promising?
AZLAN: We are going to meet the challenges of medical tourism by developing specialised centers of excellence in each of our hospitals. For example, SDMC Subang Jaya is a centre of excellence in oncology, blood diseases, men’s health, breast care, and digestive and liver diseases. In addition to our centers of excellence, we are investing in very high end technology such as MRIs, PET scans and tomo therapy. We are looking to attract medical tourists from Indonesia, Japan, UK, Singapore, and India.
What are the current major trends in the private healthcare sector in Malaysia?
AZLAN: Malaysia aspires to become a high income country by 2020 and that would require at least a growth of 5.5% to 6% per annum. As far as the health industry is concerned, we are about a MYR 36bn ($11bn) industry. In the past we have been growing up to 12.7% and we are looking at future growth rates of about 8%. Then we also have Malaysian healthcare as a proportion of GDP, which is about 4% to 5%. The average for the Asia Pacific is 7.3% versus the more developed countries, where it is about 11%. There is a huge gap in terms of the healthcare component to GDP ratio. When we look at private healthcare revenue, it is growing at a rate of about 12%; versus the Asia Pacific at 8.6%, while the rest of the world is about 6%. On that basis, you can see that the Malaysian healthcare industry is actually very attractive. Thus, we see a lot of transactions in the healthcare sector. The most notable will be the acquisition of the Pantai Group by Khazanah Nasional Berhad. The growth of private healthcare in Malaysia is essentially the number one priority because of the growing affluence of the population, where we see that the GDP per capita has grown more than 8%. The market size of the private healthcare sector is estimated at almost MYR 8bn ($2.6bn) this year, an increase of MYR 2bn ($642m) from 2010. Private healthcare providers are continuously looking to expand beyond major cities, eyeing to increase their penetration rate and reach patients over a wider geographical area.
How would you describe the dynamic between private and public healthcare providers in Malaysia today?
AZLAN: If you look at the statistics, the government represents about 44% of all expenditure. However, in terms of doctors, 55% come out of the government and the outstanding 45% come out of the private sector. In terms of the number of beds, we have 75% coming from the public sector and 25% from the private sector. Although Malaysia has advanced healthcare, the country has issues with infrastructure. Today we have a 18 per 10,000 to 20 per 10,000 beds to population ratio versus the WHO (World Health Organization) requirement of 27 per 10,000. Our government is now encouraging the private sector to help close this gap and this also ties with the growing affluence of the population, which will inevitably turn to the private sector given the issues, such as long waiting time, experienced in the public hospitals. The government is providing tax incentives to the private sector to build up hospital infrastructure. In addition to that, the government has introduced a MYR 3,000 (S962) tax deduction in premiums for those people that subscribe for medical insurance. This will certainly give a boost to the medical insurance industry.
As far as the health industry is concerned, we are about a MYR 36bn ($11bn) industry. In the past we have been growing up to 12.7% and we are looking at future growth rates of about 8%. Then we also have Malaysian healthcare as a proportion of GDP, which is about 4% to 5%. The average for the Asia Pacific is 7.3% versus the more developed countries, where it is about 11%. There is a huge gap in terms of the healthcare component to GDP ratio.
What indicators are showing positive trends in healthcare in Malaysia?
AZLAN: Malaysia has shown tremendous improvement in infant mortality rates and also in maternity deaths. Today, life expectancy has increased to 73 years for men and 77 years for women. However, given the rapid economic growth and the challenges of an urbanizing society, we are finding constrains on health such as increasing obesity, increasing hypertension, and increasing cardiovascular diseases. About 61% of total death cases are caused by non-communicable diseases. Generally, the most positive thing that we have seen in terms of the private healthcare sector is that it is growing at a very strong rate of about 16%.
What are the key challenges that the country’s healthcare sector still faces? How are they being addressed?
AZLAN: The number one challenge is to deliver quality healthcare at a lower cost. This will be a continuous concern, not only in Malaysia, but also in other countries, due to factors such as inflation, rising cost of medical supplies, and an increase in construction cost. The second challenge is the shortage of medical personnel. We are yet to reach the WHO average requirements in terms of doctors, nurses, lab technicians, and therapists. I think it will take us about 5 to 10 years before we are able to close these gaps. Another challenge is the lack of universal health insurance coverage. There are already action plans in place to ensure that we will overcome these challenges in the most efficient way. In terms of the shortage of medical professionals, many medical education institutions are starting to provide medical undergraduate courses. The government provides sponsorship through PTPTN (Perbadanan Tabung Pendidikan Tinggi Nasional), which sponsors partially or fully students’ enrollments into these courses. In terms of bed shortage, the government is providing tax incentives to encourage the construction of new hospital infrastructure. The government is also working to introduce a new healthcare reform, the 1Care health scheme, which is a blueprint of how to transform healthcare across the country, both in the private and public sector.
To what extent are local medical educational institutions meeting the demand for medical practitioners?
AZLAN: Today, the ratio of doctors to population is 1 to 1,200; which is short of the WHO requirement of 1 to 600. In terms of nurses, the WHO requirement is 1 to 200. However, we are only at 1 to 490. There is lack of high-skilled nurses in our country. Thus, we have developed our Sime Darby Nursing College, particularly to close this gap. We are in fact one of the first colleges to introduce post diploma specialist nursing programs. Certainly there will be a huge demand for high quality nurses, given the growth of healthcare in this country and also the growth in medical tourism.