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Fortis Healthcare targets Asian growth

Eng Aik Meng, chief operating officer of Fortis Healthcare International, has had a busy year charting the company’s growth in Asia-Pacific. Since joining the company last September, Eng has completed several acquisitions for the company. More recently, he helped set up Fortis’ new colorectal hospital in Singapore.

Fortis Healthcare International was set up by billionaire brothers Malvinder and Shivinder Singh of India as the international arm of Fortis Healthcare, India’s fastest growing integrated healthcare provider, which is listed on the Bombay Stock Exchange.

Fortis Healthcare acquired Fortis Healthcare International last September in a move to consolidate its healthcare businesses outside India and form one of Asia’s fastest-growing healthcare service providers. Eng, who left container ship operator Neptune Orient Lines last year, now runs the international arm.

Sandwiched between the True Jesus Church and Trinity Church Centre on 19 Adam Road, the Fortis Colorectal Hospital (FCH) will be the company’s first healthcare facility in Singapore and Southeast Asia’s only centre that specialises in the management of colorectal diseases when it opened on Tuesday.

FCH will partner four former Singapore General Hospital colorectal specialists — including world-renowned surgeon Francis Seow-Choen — to offer the public a wide range of colorectal disease treatments. The private hospital will house 31 beds, 10 single rooms as well as two operating theatres and two gastrointestinal endoscopy suites.

For S$520 (RM1,301) a night, patients recuperating from surgery will enjoy complete privacy, pre-programmed flat-screen TVs, personalised iPads and even bidets in the restrooms. Typically, patients requiring surgery or hospitalisation will be referred to the hospital through FCH’s outpatient clinic at Novena Colorectal Centre, which opened in February this year.

The Fortis Colorectal Hospital is Southeast Asia’s only centre that specialises in the management of colorectal diseases.
(Inset) Eng: We want to be a major healthcare provider in Asia-Pacific.

Meanwhile, FCH will also enable surgeons to conduct research on colorectal treatment. Medtronic — one of the world’s largest medical technology companies from the US — has already set up its first Southeast Asian research centre for pelvic-floor disorders at FCH. On July 18, FCH also announced a partnership with A*star’s Institute of Bioengineering and Nanotechnology under which a tissue, blood and bodily fluid bank would be set up at the hospital for research purposes.

FCH sits on a 1,818 sq m plot formerly occupied by the Adam Road Hospital. In 2009, local healthcare provider Pacific Healthcare Holdings and Indonesian hospital real estate trust First REIT said they would invest S$42 million to build an oncology centre on the site. Last year, Eng bought the site and began construction of FCH for a total of $75 million.

“We took over the site but did not think the oncology centre was feasible,” Eng tells The Edge Singa­pore.

“Then, we came across this group of surgeons who were passionate about building a hospital dedicated to colorectal treatments and research.

So, we decided to build a small hospital dedicated to the full spectrum of colorectal diseases.”

The opening of FCH comes at a time when competition in the regional healthcare space is heating up as players jostle for market share in the light of rising demand.

In a recent IPO, Malaysian hospital operator IHH Healthcare Bhd listed its shares on the stock exchanges of both Singapore and Kuala Lumpur.

IHH owns Turkish hospital group Acibadem AS, Singapore’s Parkway Holdings, India’s Apollo Hospitals Enterprise as well as Pantai Hospitals and International Medical University in Malaysia. In fact, Fortis Healthcare had made an offer to buy the 75% of Parkway Holdings it did not own for S$3.2 billion in 2010, but lost out to a higher S$3.3 billion privatisation offer from Malaysian government investment arm Khazanah Nasional Bhd, which is now a significant shareholder of IHH.

Meanwhile, Fortis Healthcare still faces competition from formidable rivals such as Kuala Lumpur-listed KPJ Healthcare Bhd, Singapore’s Raffles Medical Group and Bangkok Dusit Medical Services.

Specialists in demand
Eng is confident that FCH’s ability to offer the latest treatments or conduct on-going medical research in a single facility will give Fortis an edge over its competitors. Indeed, with the Internet becoming more available and affordable, patients have begun to educate themselves more thoroughly about ailments or conditions they may be suffering from before consulting their doctors.

“As a result, they expect their healthcare providers to be more communicative and informative and expect to see a specialist, for the money they are paying,” says Eng. “If you have a heart problem, you want a heart institute. If you have cancer, you go to a cancer centre.

The same goes for colorectal ailments. People are demanding and willing to pay for a hospital that specialises in a certain disorder. Also, diseases are getting more complex, so specialists will be more and more sought after. We are catering to unmet demand.”

In Singapore, colorectal cancer is the most common cancer among men and second most common among women after breast cancer, according to the Singapore Cancer Society. On average, 1,400 Singaporeans are diagnosed each year with the disease. FCH — which did a soft-opening last month — has already received a “surprisingly high” amount of interest from potential patients and treated a total of 70 local and overseas patients so far, says Eng.

In fact, with utilisation levels at FCH expected to hit 85% to 90% in the next nine months, Eng reckons the hospital might even achieve breakeven by year-end. “The key to our revenue is through in-patient procedures and filling our beds,” says Eng.

“The hospital was not the cheapest to set up and we also have a small base. So, we don’t have the benefit of economies of scale, but we think the hospital is feasible because, these days, people are looking for specialised services. If we are able to provide the service, the money will come.” He adds that prices for the various procedures FCH offers will be “reasonable” and “not deviate substantially from stated market prices”.

Regional expansion
More importantly, FCH will be the 76th hospital under the Fortis Healthcare umbrella as it charts a path of expansion across Asia-Pacific. Excluding FCH, Fortis Healthcare now owns 75 hospitals across 10 countries, with more than 12,000 beds, more than 580 primary care centres, 188 day care speciality centres and 190 diagnostic centres, and hires some 27,000 employees, including 4,000 doctors.

Those assets include Australia’s largest dental-services provider, Dental Corp, as well as Quality Healthcare in Hong Kong and Vietnam’s Hoan My Medical Corp. This year, revenues are expected to total at least US$1 billion (RM3.1 billion), more than half of which will come from outside India.

Officials of Fortis Healthcare aim to grow revenues beyond the US$5 billion mark over the next five years, and Eng believes a large part will come from the international business as new ventures such as FCH and recently acquired companies start adding value to the company.

In February, for instance, he bought an 85% stake in Radlink-Asia, an outpatient diagnostics and radiology chain based in Singapore. Eng is betting that the S$62.9 million acquisition will not only contribute financially to Fortis Healthcare, but also complement its other businesses in Singapore and Hong Kong.

Meanwhile, Eng will be looking at potential acquisitions or opportunities to enter countries in which the public healthcare system is overloaded with demand from a large population. One such example is Vietnam, where Fortis Healthcare already owns a 65% stake in Hoan My Medical Corp, the country’s largest private healthcare provider, with more than 700 beds across five hospitals.

“We currently see the need for specialisation in areas such as oncology and obstetrics and gynaecology in Vietnam,” says Eng, who is also eyeing opportunities to make a foray into Indonesia and Myanmar and is bidding for land in Hong Kong to further expand the company’s presence. “Over the longer term, we want to be a major healthcare provider in Asia-Pacific.”

Potential listing?
Given its aggressive plans to expand, it could only be a matter of time before Fortis Healthcare International turns to the debt or equity markets for funds. While Eng was unable to comment on the possibility of a listing of the international business, he points out that Fortis Healthcare’s balance sheet can still support several more acquisitions.

For the rest of the year, he expects to focus on maximising revenues at Fortis Healthcare International’s existing businesses. For instance, “we found that our general-practitioner chain in Hong Kong was sending patients out to get their X-rays and MRIs done, which meant that we were losing revenue. So, we have started our own diagnostics business in Hong Kong to retain patients and maximise revenues,” explains Eng.

“We were also referring patients to specialists at other hospitals, but have since began recruiting our own specialists.” Last November, Eng also spearheaded the opening of a sports and spine clinic specialising in ankle, shoulder and spine injuries as well as pain management.

He will also be opening a day surgery centre in Tsim Sha Tsui, Hong Kong by month-end and consolidating the best practices of each business so that it can be shared across the Fortis Healthcare network. Clearly, Fortis Healthcare International will be one name to watch as the regional healthcare sector awakens to demand.

The Edge

S-E Asia’s 1st colorectal hospital opens here

Above: Fortis Colorectal Hospital CEO Jeremy Lim (foreground) showing Dr Amy Khor around the hospital premises in Adam Road yesterday.

SINGAPORE – The first dedicated hospital in South-east Asia for the treatment of colorectal diseases opened its doors in Adam Road yesterday.

The Fortis Colorectal Hospital, which took in its first 100 patients in June, was set up by Indian private health-care group Fortis Healthcare, at a cost of $70 million.

At the opening ceremony, Dr Amy Khor, Minister of State for Health, said that Fortis Healthcare’s investment in the hospital is “very timely”.

While the occurrence of colorectal-cancer cases here has been increasing steadily, the “good news” is that the number of deaths from the disease has fallen steadily, Dr Khor said.

She added: “This can be attributed to early detection, medical advancements and better management of the disease.”

The private hospital houses 31 beds, a 24-hour clinic and a wellness centre that offers screenings.


Healthcare chains explore conversion of luxury hotels into hospitals

Nivedita Mookerji & Ruchika Chitravanshi / New Delhi

At least two healthcare chains in the country are exploring an opportunity to convert a luxury hotel into a hospital in Pune, it is learnt. Fortis Healthcare and Manipal Hospitals, both keen to set up large multi-specialty hospitals in the Maharashtrian city, have shown interest in acquiring the sprawling Grand Hyatt Pune for the purpose, according to an industry source close to the development. Spread over 450,000 sq ft built-up area, Grand Hyatt Pune is still under construction.

The trend of converting hotels into hospitals or residential complexes is popular in international markets, mainly the US. In India, it is being explored only now, according to HVS, a consulting firm specialising in hospitality.

A Fortis Healthcare spokesperson said the superspeciality chain had a number of projects under discussion or underway in several cities. “However, we would prefer to speak about them only when we are ready to,” he told Business Standard.

* Fortis Healthcare and Manipal Hospitals keen to set up large multi-specialty hospitals in Pune, by acquiring Grand Hyatt hotel
* DB Hospitality, though, calls the sale buzz a ‘baseless speculation’, saying plan for the Grand Hyatt in Pune is progressing
* Analysts say the Maharashtra city already has an ‘over-supply’ of hospitality facilities
* A study says Pune has 4,691 branded hotel rooms, and the figure will rise to 5,545 in 5 years

A senior executive of Manipal Hospitals confirmed the entity was considering Pune as one of the places for a future facility. “We are exploring several options in and around Pune city,” he added.

Grand Hyatt is a project of DB Hospitality, a sister company of Mumbai-based DB Realty.

DB Hospitality, though, called the sale buzz “baseless speculation”. A spokesperson of the group said it was not planning to sell any specific assets. “All our projects are moving towards completion in a timely manner,” he noted. The execution plans for the Grand Hyatt at Pune were “on track”; the company was looking forward to opening the hotel in 2014.

On the Pune market in particular, Anshuman Magazine, CMD (South Asia), CB Richard Ellis, a global consulting firm, pointed at over-supply of hotel rooms. “It may not be feasible to have more hotels in the city. The supply of hotel rooms in Pune is far greater than the demand,” he said.

HVS Global hospitality services said Pune was a market where no more hotels should be constructed. “There is a huge oversupply,” said Kaushik Vardharajan, its managing director (consulting and valuation). According to an industry study, the existing supply of branded hotel rooms in Pune is 4,691. In the next five years, as many as 5,545 more branded rooms are proposed to be added.

If not hotels to hospitals, there have been other instances of commercial projects being changed after construction or the planning stage. Real estate consultancy firm DTZ cited the example of the 90,000 sq ft Sargod Imperial Mall in Bangalore being converted to a retail and office space now occupied by Citrix. Originally built as a mall by Tata Housing, it was bought over by private investors who were looking at leasing it as a retail multi strata venue or a single tenant, pointed out a DTZ executive.

Magazine argued often proper feasibility is not conducted, resulting in projects being changed during the course. “Market conditions and scale of projects are also hurdles sometimes. This has happened all across India including in tier-II or tier-III towns,” he told this newspaper. “There have been instances when malls have been sold to investors, but subsequently they have had to be converted into office or mixed use projects.”

Again in Bangalore, Shenoy Commercial Complex spanning 60,000 sq ft was converted into Vikram Hospitals sometime ago. “It was built for office and banks,” DTZ said. “After the leases of the initial tenants expired, the building was refurbished and entirely leased by a city-based hospital providing all facilities and services.”

Yet another example is that of a project beginning as an office building and then redesigned as a mall for DLF. Subsequently, it was sold to NetApp, which made a campus spread across 15 acres at Whitefield, Bangalore. Even a wedding hall of around 60,000 sq ft was converted to a retail outlet occupied by Reliance Mart now for a hypermarket.

Apart from these, there have been projects being planned as retail destinations or offices, and then got converted into residential or mixed use projects across the country.

Sanjay Dutt, CEO (business), Jones Lang LaSalle India, said unforeseen demand profile realignments could happen in localities as well as project typologies. “For instance,” he added, “a location may lose its viability as an office, retail or hospitality space even while demand for residential units there remains intact.”

In other cases, a mixed-use format may turn out to be more feasible than a single-use configuration, Dutt pointed out. Satish B N, director (occupier services [South]), DTZ India, said existing developments as well as planned projects had seen their usage change thanks to the dynamism of landlords and developers as well as end users.

Read More: BusinessStandard

Fortis buys 85% stake in S’pore diagnostic chain

HOSPITAL operator Fortis Healthcare (India) said it paid S$62.9 million to buy an 85 per cent stake in RadLink-Asia, a Singapore-based diagnostic chain, sending Fortis shares up nearly 4 per cent in a weak Mumbai market.

RadLink-Asia will provide a diagnostic platform for Fortis Healthcare’s new speciality hospital coming up in Singapore, apart from giving the Indian hospital operator entry into the premium diagnostics and molecular-imaging market in the country.

RadLink operates in the diagnostic-imaging, molecular-imaging, cyclotron and general-purpose clinic segments.

Fortis Healthcare is owned by billionaire brothers Malvinder and Shivinder Singh.

The acquisition was done through Fortis Healthcare International, a wholly owned unit of the Indian company.

Shares of Fortis Healthcare rose 3.75 per cent at the open on Tuesday. The stock was up 2 per cent at 106.8 rupees (S$2.72) by 1.30pm in a Mumbai market that was down 0.32 per cent.

Mr Siddhant Khandekar, an analyst with ICICI Direct, said: “Although the acquisition is in sync with Fortis’ plans for South Asia, it will definitely put pressure on its leveraged balance sheet.”

Mr Khandekar said it was not possible to say if the deal was positive, unless the annual sales of the acquired company were known.

Fortis chairman Malvinder Singh said late last year that the hospital operator would raise US$175 million (S$219 million) in debt to acquire Fortis Healthcare International.


Fortis arm acquires Singapore’s Radlink-Asia; shrs up

Moneycontrol Bureau

Hospital chain operator Fortis Healthcare ‘s offshore subsidiary Fortis Healthcare Singapore Pte has acquired 85% stake in Radlink-Asia Pte, an outpatient diagnostic and molecular imaging chain in the south east Asian nation for 62.9 million Singapore Dollars.

Radlink has four main business segments — diagnostic imaging, molecular imaging, radio-isotopes manufacturing and GP clinics, Fortis said on Wednesday.

“The transaction provides Fortis Healthcare a strong foothold in the premium diagnostics and molecular imaging segment in one of south east Asia’s most attractive markets besides providing a complementary platform to its upcoming specialty hospital on Adam Road in Singapore,” it said.

Fortis shares were up 2.8% at Rs 107.65 post the announcement in morning trade.


India Inc’s budget wishlist: GST timeline, policy stability

With high interest costs and inflation pressuring India Inc, corporate leaders are looking to the government to come out with a balanced budget.

“I hope the budget will balance the needs of the industry, the government and the people of India,” says Malvinder Singh, owner of Fortis Healthcare. For the healthcare industry in particular, Singh believes that there is a huge opportunity for growth. “People in India need a lot more from healthcare; there is a demand-supply gap, so the industry needs to focus on creating more capacity,” he explained.

S Gopalakrishnan, co-founder and executive co-chairman of Infosys seeks policy stability for the IT industry. “Policy stability and consistent implementation of the policy is what the IT industry needs,” he said, adding that the biggest request from IT is to “reduce the challenge the industry faces in terms of implementations.”

Raj Jain of Wal-Mart India expects the Finance Minister to release a timeline for implementation of Good and Services tax (GST). “Our biggest budget expectation is a real timetable on GST because I think that reform is going to change the way business is done in India, not only for retail but a lot of sectors,” he explained. Other than that, Jain is batting for the entry of foreign investment into insurance and retail sector in India.

As part of the pre-budget consultations earlier this month, industry bodies demanded that the government continue stimulus measures for a while longer because of the fragile nature of the Indian economic recovery.

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