IHH: Boosting Overseas Presence

IHH Healthcare Bhd says the group is considering a bid for Australia’s Healthscope Ltd. 

IHH, Asia’s largest hospital operator seeks to expand its presence overseas and boost current bed capacity to 9,000 beds by 2017.
“Something like Healthscope, obviously we have looked at,’’ IHH’s corporate services executive director Ahmad Shahizam Mohd Shariff told reporters at the Invest Malaysia 2014 conference yesterday. “But whether we will actually seriously consider it depends on whether it fits with our strategy. The price has to be right and make sense for the business that we run.”

IHH had been linked to a possible bid for Healthscope, which owns 44 private hospitals in Australia and pathology operations in Australia, Singapore, Malaysia and New Zealand.
A Reuters report earlier this month said Healthscope’s owners – private equity giants TPG Capital Management LP and Carlyle Group – would decide by as early as this month to sell the company or list it on the stock exchange.

Shahizam said Healthscope’s business model was different to what IHH is currently doing.

“We don’t have as strong an ability to drive the business (in Australia) the way we do in emerging markets,” he said.

IHH currently runs 37 hospitals in Malaysia, Singapore and Turkey with a combined capacity of around 6,000 beds.

Shahizam said IHH was actively looking into expanding its presence in markets such as China, India, South-East Asia and Turkey. It currently has a hospital and a chain of clinics in China.

On the looming implementation of the 6% Goods and Services Tax (GST) on April 1, 2015, Shahizam said it might bring hospital charges up correspondingly as the industry would have to pass the costs through.

He said that because of the way healthcare services were classified under the GST framework, IHH would have to pay GST to its suppliers but could not reflect this in its patient bills because it was GST-exempt.

“This will potentially result in higher hospital bills because it has to be passed through somewhere,” he said, stressing the need to review how private healthcare services were classified under the framework.
/theSTAR 11-06-2014

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