KPJ getting ready for aged care business

KUALA LUMPUR: Although the aged care business has yet to kick off in a big way in Malaysia, KPJ Healthcare Bhd is getting ready for this potentially lucrative segment and may partner property developers to launch retirement villages.

In an interview with The Edge Financial Daily, managing director and president Amiruddin Abdul Satar did not specify where these retirement villages would be located, but said KPJ is looking at building facilities with various types of properties such as apartment units and villas.

"We are now looking to collaborate with property developers as the investment required in building such a village would be beyond KPJ's expertise. It is not our forte to be involved in property development," he said.

While the group is still studying the different ideas and concepts for the facility, Amiruddin said there will be an element of property in the aged care business as it has to cater not only for those who are highly dependent on medical personnel but those retirees who are independent and still relatively active.

"The more independent they are, the less the need for healthcare personnel and services. We are looking at two ends here, those who are dependent on the assistance of doctors and nurses and the old but relatively healthy ones.

"The latter will require more activities — they may want to do some exercises, go on excursions or travel overseas ... basically activities that suit their lifestyle after retirement. This has to be combined with healthcare facilities at hand to satisfy their needs when the time arises," he said.

Currently, contributions from this segment are negligible as the group's present facilities in Sibu are still small and a planned centre at its old Tawakkal Building in Setapak will only be ready in 2014, subject to the approval from the health ministry.

“What we have now is a home for the aged, more of a place for old people to stay. But we have been studying the concept and are now trying to develop a new concept in Malaysia.

"This is definitely a new opportunity for the healthcare business and this is something that we are looking at for the next few years," Amiruddin said.

In 2010, the group acquired a 51% stake in Australia-based Jeta Gardems Waterford Trust (JGWT) for RM19 million. KPJ's associate company Al-Aqar REIT then announced the acquisition of all the 14.75ha of properties owned by JGWT for RM134.9 million. These properties were subsequently injected into the REIT.

JGWT owns an Asian-themed retirement resort called Jeta Gardens, which houses an aged care facility, retirement homes, and apartments in Bethania, Queensland.

Amiruddin believes the market is ripe with opportunity to cash in on this segment of the healthcare industry as Malaysia's successful baby boomers approach retirement age.

"Looking at the current generation, or more specifically those approaching retirement age, these are the people with enough savings to decide, on their own, how they will spend their money in their later years.

“I believe it's all a question of timing. We need to attract this age group to buy properties with proper healthcare facilities where there are ready trained doctors and nurses should the need arise," he said.

The company is in the process of setting up hospitals in those states where it does not already have hospitals — Terengganu, Melaka and Perlis.

"In Perlis we have already started [hospital] construction while in Terengganu and Melaka, we are still looking for good locations to set up shop. So in the next three years it is our ambition to have a presence in all states in Malaysia," he said.

Amiruddin said KPJ is expected to open four new specialist hospitals in Malaysia within the next two years and plans to attract more foreign patients to the country in the future.

He said the success of KPJ largely depends on the availability of specialists and consultant doctors. He hopes the implementation of the Afta Mutual Recognition Arrangement 2015 will attract more qualified doctors to the country.

"I hope that more countries subscribe to it, and then it will be good for us as hospital operators. Our success has always been tied to our ability to secure skilled doctors at our hospitals," he said.

Amiruddin said although KPJ would like to further expand its network of specialist hospitals in the Asean region, it has not done so as it believes that it does not have the expertise in certain countries.

This article first appeared in The Edge Financial Daily, on July 15, 2013.

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