KPJ Healthcare Berhad - Annual Report 2018

OUR BUSINESS & STRATEGY OUR PERFORMANCE AND OUTLOOK OUR RESULTS OUR GOVERNANCE APPENDICES ABOUT THIS REPORT 35 KPJ HEALTHCARE BERHAD www.kpjhealth.com.my OUR BUSINESS ENVIRONMENT income earners. Meant to come into effect on 1 January 2019, this would benefit private healthcare providers such as GPs and private hospitals. Government allocations effecting healthcare reforms were also introduced during the year, which in the longer- term are set to benefit private healthcare providers such as KPJ. These include various targeted health treatment such as RM20 million for mammogram, HPV and pap-smear, RM50 million for rare diseases, and another RM50 million to treat patients with rare diseases, Hepatitis C and other diseases. This bodes well for KPJ’s pharmaceutical procurement division, which also provides locally produced generic drugs for public hospitals. REGULATORY ENVIRONMENT IN MALAYSIA During the year, the MOH requirement to report death cases involving complications arising from dengue impacted upon physician’s acceptance of dengue cases within private healthcare providers. Zoning area regulations requiring healthcare providers to be one stop centres providing a range of treatments such as dialysis, PET scans and radiotherapy also impacted the sector. Higher tax enforcements on doctors are impacting upon their remuneration, while the rise of medico- legal cases are affecting not just doctors, but also private hospitals which are vicariously liable. TECHNOLOGY AND MEDICAL INNOVATIONS The digital healthcare market is set to boom, with an article in the New Straits Times published in March 2018 estimating it to exceed USD379 billion (RM1,478 billion) by the year 2024. The reasons behind this growth are two- fold – current healthcare infrastructure is already outdated, even as the world around us continues to innovate. Many digital transformation trends are occurring globally which are increasing the quality of healthcare services while providing added benefits to patients. These include Telehealth, Cloud Computing, Telemedicine, Cashless Transaction and Wearables. It puts the onus on private healthcare providers who intend to remain competitive to leverage on the continuous development of IT infrastructure as the key to improving healthcare diagnostics and outcomes into the future. Social media such as Facebook, Twitter and Instagram are becoming the norm of medical marketing, as it is both cost effective and easy to manage. It also caters to growing social trends where potential patients are searching online for effective treatment. As well as that, patients tend to share their hospital care experiences online, which depending on whether they have had a positive or negative experience, has its knock on effects on healthcare providers. To reduce patients’ waiting times, healthcare providers are turning more to automated patient management systems which also minimise cost. COMPETITIVE LANDSCAPE KPJ operates within an intensely competitive environment, in direct competition with both other large networks of private hospitals in the country, as well as smaller private clinics which provide cheaper alternatives for cost conscious patients. While KPJ currently leads the market with a 19% market share in the private healthcare sector, we realise the need to continue to innovate and enhance our services, while continuously growing our capacity. KEY HIGHLIGHTS Market Share 19 % KPJ LEADS THE MARKET WITH A 19% MARKET SHARE in the private healthcare sector MALAYSIA In 2018, Malaysia was recognised as the Medical Tourism “DESTINATION OF THE YEAR” for the THIRD TIME by the International Medical Travel Journal