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.
