IHH Healthcare envisions ‘huge growth’ in demand for private hospitals in China

Malaysia’s IHH Healthcare is slated to open the 450-bed Gleneagles Shanghai Hospital in 2020, tapping the city’s growing wealth and bolstering its ambition to become a world-class medical destination

PUBLISHED : Sunday, 11 June, 2017, 8:48pm
UPDATED : Sunday, 11 June, 2017, 10:53pm

Malaysian hospital operator IHH Healthcare, an investor in Hong Kong’s private Gleneagles Hospital, will take a proactive approach to further expand its presence in mainland China, seeking to tap the growing appetite for private health care among the rising middle class.

Tan See Leng, chief executive of IHH, said the company would look for opportunities across the mainland, focusing on the Yangtze River Delta, Pearl River Delta, Bohai Bay and central and western parts of China, buoyed by Beijing’s ambitions to improve health care services.

“We have enough reserves to continue to fund our expansions in China,” Tan told reporters during a weekend press conference in Shanghai. “We believe this is a huge growth market.”

He wouldn’t disclose the size of the potential investments in China, but added that IHH would consider merging with existing operators or buying them outright to reinforce its foray into the market.

China will become IHH’s fifth market after Malaysia, Singapore, Turkey and India, Tan said.

He said the company aims to become a market leader in China’s foreign-funded private hospital sector, noting that the company has broken ground on a 1.36 billion yuan (US$200.09 million) hospital in Hongqiao area, Shanghai.

The 450-bed Gleneagles Shanghai Hospital, expected to open in 2020, will focus on several key specialties including cardiology, cardiac surgery, gastroenterology, urology, minimally invasive surgery, general surgery and internal medicine.

The total investment of Gleneagles Shanghai and three other hospitals, including Hong Kong’s Gleneagles Hospital in Wong Chuk Hang which opened in March, in addition to facilities under development in Chengdu and Nanjing, represent a collective investment of 8 billion yuan.

IHH teamed with Taikang Insurance Group to finance the projects.

Beijing relaxed rules on foreign investment in health care in 2014 allowing the establishment of private hospitals with 100 per cent foreign ownership.

Completely foreign owned hospitals approved for leading cities

Private hospitals generally cater to affluent mainlanders who can afford higher quality medical treatment, but they are also finding a growing demand from the nation’s affluent middle class.

About 200 of China’s private hospitals have foreign shareholders, compared to 13,000 public hospitals across the country.

Still, private hospitals face difficulties in attracting medical staff, particularly when many leading heath care professionals view their career prospects as being better served in prestigious, government-funded hospitals.

“Foreign-invested hospitals face challenges from public ones which normally enjoy advantages in geographic location and bigger talent pool,” said Cai Jiangnan, a professor of medical policy and management at China Europe International Business School.

Tan said IHH has won support from local governments to build new hospitals to improve health care services.

Gleneagles Shanghai fits with the central government’s plan to develop Shanghai into a world-class medical destination, he added.