The clients are a property developer and a hotel operator listed on Bursa Malaysia. Malaysia has been perceived as a tourism hotspot and has ranked as one of the top medical tourism destinations globally. In view of the growing trend in medical tourism segment, the clients see the opportunity to venture into healthcare and wellness business using their idle land assets.
FULL STORY
The global healthcare and wellness spending is recorded at US$ 10.0 trillion and US$ 1.2 trillion respectively (2020), and is expected to persist and intensify over the next five to ten years. It is also observed that APAC’s CAGR for healthcare and wellness sectors are higher than global, contributing significantly to the global healthcare and wellness economy.
Built upon the promising industry outlook, the clients are aspired to jointly develop a healthcare & wellness centre on a 10 acres land situated in a tourism hotspot at West Malaysia. This centre is to be positioned at international level, focusing on targeted medical tourists only and not for general medical tourists. The primary focus should be the high net-worth personnel who has higher spending power, demanding for more specialised medical services.
With this objective, the Clients are desirous to prepare a concept business plan that will guide the business implementation and develop the optimal collaboration model between both companies. Our team and our healthcare specialist are being engaged to devise the concept business plan which chart out the key business focus, business model as well as the financial planning for the investment.
KEY OUTCOMES
We conducted a thorough review on the global and regional healthcare & wellness industry to identify emerging market trends, in particular the spending areas of patient & market share of various services. The analysis on healthcare expenditure by countries revealed that the developed countries generally spend >5% of their National GDP in healthcare spending. Infectious and parasitic diseases have accounted for the highest proportion of healthcare expenditures, accounting for 41% of total healthcare expenditures in recent years. The ageing global population which is projected to reach 62% elderly population is also indicating an urgent need to address the increasing demand for quality healthcare. The burden of chronic diseases is rapidly increasing worldwide with WHO predicted 75% of the deaths worldwide will be contributed by chronic diseases by 2020.
Further analysis on the demand for medical services revealed that the international spending on medical tourism has been on the rise at CAGR of 18.8% in the last 10 years with China and US registered the highest outbound medical tourism spending. The Chinese prefer to go to Asian countries for medical tourism and the numbers are expected to grow due to ageing population. More High Net Worth Individuals (HNWI) and Ultra HNWIs are also refocusing their investment to health-management sector and thus contribute to growing medical tourism market. There are also multiple strong key drivers which are pushing the global anti-ageing market to grow larger.
Based upon the analysis at macro-economic level, the team had dwell deeper to study the healthcare & tourism industry in Malaysia market. Malaysia offers a well-developed health care system and the government has been pushing for digitalisation and advanced technology in healthcare. The growing and ageing population alongside rising wealth accumulation are contributing to increasing spending in healthcare services.
On another hand, medical tourism in Malaysia has also witnessed significant growth over the past few years and it’s expected to continue its robust growth propelled by demographic and macroeconomic factors. There were around 670,000 patients from Indonesia in 2019, contributing revenue of around RM 1 billion to Malaysia medical tourism. Malaysia was ranked 1st in the Best Healthcare in the World category of the 2019 International Living Annual Global Retirement Index as Malaysia has its world-class healthcare services and sophisticated infrastructure. Besides that, most of the doctors in Malaysia received training in English-speaking countries such as the United Kingdom, United States or Australia, which is perfect for communication.
After establishing a good understanding of the industry at international and local context, the team started to explore the possible business ideas by conducting an international benchmarking on similar developments. The benchmarking exercise had looked at approximately ten case studies on healthcare sandbox and medical zone around the globe and synthesized key learnings on the success factors and business strategies for possible adaptation in our business planning for the Client.
Working with our healthcare subject matter expert who has deep understanding on the local healthcare sectors, we have shortlisted a basket of medical & wellness services of high potential, based on the consumers’ spending pattern in our targeted markets. Upon consulting the Client on the preferences on the business focuses, we have further curated a series of business strategies with niche focus that looked at high-end and premium medical & wellness services. With the target markets identified, we have also identified several market entry strategies for the client, outlining the pros and cons based on cost of implementation and significance of business impact.
After the confirmation of business focus, we begin to work out the physical requirement of the built assets to form a foundation for the CAPEX and revenue estimate. As the design requirement of healthcare facilities is significantly different than a typical built asset, we have leveraged on our healthcare specialist onboard to conceptualise the possible land-use scenario and built-up areas, which lead to the capacity of the built assets and revenue from the various business components. We have built a 30-year financial model with detail assumptions to simulate the financial profile for the business, providing clear indication on the cash flow and financing requirement for the investment. This had helped the Client to better plan for the cash flow and budgeting activities to ensure an uninterrupted project implementation process. Our team assisted the Client to conduct a detailed socio-economic assessment to forecast the possible socio-economic benefits for various stakeholders including the Client, local communities as well as the State Government and Federal Government.
By the end of the study, we have charted out a detailed implementation plan for the entire project, which outlined all key activities and from technical & financial feasibility study, to technical design, regulatory application, construction and engagement with healthcare operators. Various key concerns and success factors are also tabulated along the project implementation process to provide a clear guidance for the Client in executing the business plan.
