What Were the Businesses of Kpj Healthcare Berhad
By: sitiaisah85 • Essay • 2,088 Words • April 21, 2015 • 956 Views
What Were the Businesses of Kpj Healthcare Berhad
Question 1
What were the businesses of KPJ Healthcare Berhad?
KPJ Healthcare Berhad is the leading private healthcare provider in Malaysia with about 20 hospitals and over 2,500 beds. KPJ is a part of Johor Corporation, which is a corporate linked to the Johor State Government. KPJ is the leading private hospital operator in Malaysia by number of hospitals, beds, and number of affiliated doctors. It had been proved when the KPJ Group was the largest Healthcare services provider had been listed in Bursa Malaysia on 29 November 1994 and it was the first healthcare company to be listed on the Main Board of Bursa Malaysia.
KPJ discloses its segmental business by:
- Hospital Income (38.6%),
Hospital Income grew by 22% p.a over 2000-2010 to MYR638m in 2010 from MYR84m in 2000. This was driven by an increase in number of hospitals to 21 in 2010 from two in 2000. The number of inpatients rose to 222,758 in 2010 from 28,484 in 2000, growing at 23% p.a.
- Consultation income (29.6),
Consultation income grew by 28% p.a. over 2000-2010 to MYR490m in 2010 from MYR40m in 2000. This was mainly attributable to an increase in number of medical consultants from 95 in 2000 to 750 in 2010; and growth in number of outpatients by 24% p.a. over the period.
- Sale of Pharmaceutical, Medical and Surgical Products (30.7%),and
Revenue from the sale of pharmaceutical, medical and surgical products increased to MYR507 min 2010 from MYR5m in 2002, growing at 58% p.a. over 2002-2010.
- Other hospital income. (1.1%)
The other hospital income segment includes income from clinic rental, laboratory test fees, investment income and others. Other hospital income grew by 39% p.a. over 2000-2010 to MYR19m in 2010 from MYR1m in 2000.
Question 2
What was the approach taken by the KPJ in internationalizing its services?
Traditionally, services have been thought of as locally produced solutions, and service firms have been considered local establishments. Although services still, to a large extent, are produced by small and local firms, service businesses have become more international. Therefore the service sector is expanding over national borders.
For KPJ Healthcare Berhad, by 2013 the company had already operated hospitals in all major cities in Malaysia and with many hospital operations in the country; the competition had heated up amongst the healthcare providers. In encountering this situation, the KPJ group had pursued a number of acquisition projects in Australia, Indonesia and Thailand. Expanding internationally might also resolve some issue of stiff competition from other local players.
KPJ expended its services to overseas, beginning with Indonesia and Bangladesh. In 1995, KPJ provided management services to Rumah Sakit Selasih Hospital, Padang and RSM Permata Hijau, Jakarta, Indonesia in 1996. According to company this acquisition served the goal of the company to expand in the region. It would also develop synergistic relationship with the KPJ Group existing hospital in Jakarta.
In 2005, KPJ Group acquired 75 percent of its first foreign hospitals and in 2007, KPJ penetrated into the Middle Eastern market by signing a five-year hospital management service contract with two private hospitals (Jeddah Clinic Hospital and Jeddah Clinic Hospital Kandarah in Saudi Arabia.
In 2009, the government of Nigeria had proposed a partnership with KPJ Grop to manage its hospital. By 2010, KPJ group bought more than 50 percent stake of an Australia retirement village, Jeta Gardens Waterfront Trust. By being directly involved in operating the Jeta Gardens would enable the company to acquire the knowledge and know-how in the provision of retirement care.
In 2012, KPJ Group acquired 23.37 percent of Vejthani Hospital in Bangkok, Thailand for RM60.53 million. KPJ Group stated that this acquisition will enable the company to leverage on the knowledge and experience of Vejthani Hospital in serving medical tourists in Thailand. There are two categories of patients that sought medical treatment in Thailand which are those who come from developed countries because of prohibitive costs of medical services in their own country, and people from developing countries which certain medical services were not available. KPJ Group believed that its experience in Thailand would support the group to further develop its own medical tourist business in Malaysia.
Question 3
What were the strategies of KPJ internationalization up to end of 2012?
Country | Strategy | Reason |
Australia | Narrow | For penetrating Australian market their strategy is narrow because they just entered a small portion of their market. It is actually a global expansion through international strategic alliances. Whereby, it is also a multi-domestic strategy because in each country they have to follow their standardization. |
Thailand |
| At the beginning, Thailand medical tourist venture are used a narrow strategy and direct entry strategy. Whereby there acquisition would enable the company to leverage on the knowledge and experience in serving medical tourists. But in future they want to practice this experience in other countries like Malaysia and Indonesia. Therefore, it means that in the future they will be a prospector in Malaysian and Indonesian markets. |
Indonesia |
| For Indonesia the scope of their strategy is broad because as mentioned in the case, Indonesia have plan for insurances for all middle and low income people. Also Indonesia is encouraging private sector and has a 15% grow by 2012-2018. Affluent segment of customers which seek their medical cares in foreign countries are potential customers so the market scope for KPJ is broad. I think they will use Analyzer strategy for Indonesian market and direct entry strategy whereby from the venture it give the partner a new growth opportunities. |