management discussion and analysis dato' amiruddin abdul satar

25 Pages·2012·0.82 MB·English

PRESIDENT & MANAGING
DIRECTOR’S REVIEW
DEAR SHAREHOLDERS, KEY HIGHLIGHTS
I AM PLEASED TO SHARE WITH 5 YEARS
YOU KPJ’S FIRST INTEGRATED REVENUE 6 9 0 2 3
2. 2. 3. 3. 3.
(RM BIL)
REPORT (IR), WHICH HAS
+4.0%
BEEN PREPARED BASED
+7.1%
ON SIX CAPITALS FOR THE +4.3%
+7.9%
FINANCIAL YEAR ENDED 2018
(FY2018), AS GUIDED BY OUR
STRATEGIC DIRECTION.
The Group operated within a Local healthcare trends saw
complex and shifting external an increase in healthcare
environment in 2018, marked expenditure driven by an
by shifts in geopolitical and ageing population, as well
macroeconomic factors, as the rising trend of non-
health regulations and communicable diseases. New
evolving trends, within an technologies and lifestyle 2014 2015 2016 2017 2018
increasingly competitive changes are triggering and
private healthcare sector. In impacting patient demands
our primary home market of and expectations. EBITDA (RM MIL)
Malaysia, the economy grew at
a moderate rate of 4.8%, and Competition increased
427.9 (2017)
this sluggish growth impacted significantly amongst private
demand for private healthcare healthcare providers, with 503.0 (2018)
services with many corporate both large networks and
PBZT (RM MIL)
employers downsizing and smaller private clinics
reducing their employees’ competing for top of mind
233.3 (2017)
medical benefits. At the same recall in stakeholders’ minds.
time, the new Government The increasing number of 266.5 (2018)
in Putrajaya unveiled a more private hospitals and clinics
healthcare centric Budget has also led to difficulties in PAT (RM MIL)
2019, with Government hiring and retaining talent in
allocations aimed at reforming the medical fraternity. 173.3 (2017)
the healthcare sector in the
189.9 (2018)
country.
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PRESIDENT & MANAGING DIRECTOR’S REVIEW
DATO’ AMIRUDDIN w
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PRESIDENT & MANAGING DIRECTOR lth
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THE STRONGER POSITION LED TO AN
EARNINGS BEFORE INTEREST, TAX,
DEPRECIATION AND AMORTISATION (EBITDA)
GROWTH OF 18%, FROM RM428.0 MILLION IN
2017, TO RM503.1 MILLION IN 2018.
GROUP FINANCIAL before zakat and tax (PBZT)
PERFORMANCE 2018 stood at RM266.5 million in
Despite this challenging 2018, compared to RM233.3
backdrop, KPJ had a year of million the previous year.
record performance, posting The Group posted net profit
our highest revenue and profit of RM186.2 million, a 12%
to date. We recorded double increase from RM166.9 million
digit growth, underpinned the previous year.
by solid overall performance.
Our key drivers have been For a complete financial
the Group’s sustained review of our performance,
improvements in operational please refer to our Chief
efficiencies and strict cost Financial Officer’s Review on
discipline. Revenue increased pages 66 to 68 of this IR.
by 4% to RM3.3 billion, from
RM3.2 billion in 2017, driven TURNAROUND OF NEW
by increased contributions HOSPITALS
from our Malaysian hospital Over the past five years, KPJ
operations. This was primarily has been expanding our
due to an increase in patient network of hospitals. This
visits, as well as growth in the includes seven new hospitals
number of operating beds in greenfield and brownfield
and surgeries performed, locations throughout Malaysia.
especially at KPJ Rawang, KPJ Achieving profitable hospital
Bandar Maharani and KPJ turnaround is not an easy
Pasir Gudang. task, and therefore 2018 was
a particularly good year for
The stronger position led to a KPJ, as two hospitals we had
Earnings before interest tax, launched in 2014 achieved
depreciation and amortisation profit turnaround, namely, KPJ
(EBITDA) growth of 18%, from Rawang and KPJ Maharani
RM428.0 million in 2017, to where each posted a full year
RM503.1 million in 2018. Profit
KPJ HEALTHCARE BERHAD 59
PRESIDENT & MANAGING DIRECTOR’S REVIEW
revenue of RM100.3 million and RM47.5
million respectively. Profit after tax for KPJ
Rawang and KPJ Maharani were RM4.3
million and RM0.6 million respectively,
denoting growth of more than 100% from
the previous year.
We view this as a significant achievement
and a testament of KPJ’s ability to
successfully turnaround hospitals in
greenfield locations by adopting the right
business model and optimal strategy.
It also is indicative of the depth of our
Management’s abilities in developing
strong hospital leadership teams. As
we continue to open new hospitals and
expand our hospital network to capture
greater opportunities, we are able to
sustainably develop talent for our hospital
leadership and management to ensure
we remain on track with our long-term
growth agenda. We remain committed to
continue bringing on board talented and
capable management and medical talent
as we continue with our ongoing network
expansion journey.
EXPANDING AND ENHANCING OUR The launching of KPJ Perlis Specialist Hospital by DYMM Raja Perlis
HOSPITAL NETWORK
Armed with the requisite knowledge on demand, namely at KPJ Johor, KPJ Klang, For KPJ the expansion of our hospital
how to affect successful turnarounds at KPJ Bandar Maharani, KPJ Pasir Gudang. network and services is not just
new hospitals, KPJ continued our hospital business as usual. More importantly it
network expansion strategy and opened In line with changing healthcare trends represents our commitment towards the
two new hospitals in 2018. KPJ Perlis the Group also launched new services development of the healthcare sector
opened to the public in Kangar, in the and centres during the year. Sabah’s first both within our home country of Malaysia,
northern-most state of Perlis, with 21 beds, private radiotherapy and oncology as well as within regional operations. In
six hospital services and nine specialist centre was launched at KPJ Sabah on Malaysia, the locations of our hospitals in
consultants on board. The hospital’s 9 December 2018 to provide treatment greenfield areas leads to expanding the
official launch was officiated by DYMM to cancer patients in the state. As well as access of private healthcare services to
Raja Perlis, on 1 November 2018. In the that, we also developed new acute stroke fellow Malaysians who live in suburban
southern-most state of Johor, we opened services which we will initiate at our Klang and rural areas. We are also involved in
KPJ Bandar Dato’ Onn in Johor Bahru with Valley hospitals, and then rollout to other creating jobs in the medical sector, as well
30 beds, nine hospital services and nine hospitals in our Group. as assisting in the development of local
consultants. vendors and suppliers who provide us
Regionally, the Group opened three the products and services we require to
KPJ Selangor officialy launched on KPJ Information Centres, one in Batam, manage our hospitals efficiently.
22 December 2018 in Shah Alam. The Kepulauan Riau, Indonedia; one in
new block was officiated by DYMM Sultan Palembang, Sumatera, Indonesia; and one
of Selangor. We further expanded the in Dhaka, Bangladesh. This strengthens
capacities of five existing hospitals by our regional presence and enhances
adding more beds to cater to growing our marketing efforts for our hospitals in
Indonesia and Bangladesh.
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STRATEGIC PARTNERSHIP TO patient centred, to being person centred. It
GROW OUR PATHOLOGY AND prioritises the active participation of patients w
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DIAGNOSTICS BUSINESS and their families throughout a healthcare w
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A key partnership we concluded in process that emphasises partnership, pjh
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early 2018 was the sale of 49% of compassion, transparency, inclusion and a
equity shares in our diagnostics unit, quality. lth.c
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Lablink (M) Sdn Bhd to Singapore- m
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based private equity firm, Quadria Having embarked on the project in 2013, y
Capital Investment Management Pte the Group is immensely pleased to see the
KPJ CONTINUED
Ltd, for a total of RM119.9 million. outcome of the dedicated and concerted
With the conclusion of the deal, KPJ efforts of our two hospitals on their three- WITH OUR
has retained majority shareholding of year Planetree journey. We strongly believe
HOSPITAL
51% of Lablink’s equity. that providing person centred care will form
a unique differentiator for the KPJ brand in NETWORK
Our rationale in entering this the healthcare sector, thus giving us a distinct
EXPANSION
strategic partnership is to utilise advantage over our competitors.
the injection of funds from our new STRATEGY AND
partners to expand the reach of our Person centred care requires hospital and
OPENED TWO NEW
laboratory service offerings to other treatment processes, as well as the mind sets
hospitals in Malaysia, as well as to of the people involved in the provision of HOSPITALS IN
expand our footprint regionally in the healthcare services, to focus on the person’s
PERLIS AND JOHOR
near future. We will be working with needs. It is a holistic approach to healthcare
our partners to explore new growth provision which encapsulates the tagline of BAHRU IN 2018.
markets in Southeast Asia, with the “What Concerns You”.
aim of becoming one of the leaders
in the region in pathology and
diagnostics services, thus enhancing
shareholders’ value in the longer
term.
PROVIDING EXCELLENT
CUSTOMER SERVICE
A key achievement we are particularly
proud of in 2018 is the Gold-Level
Excellence in Person-Centred Care
certification awarded to two of our
hospitals from USA-based Planetree
International, a non-profit organisation
that assists healthcare providers
around the world to transform
healthcare delivery services. Adding
to our achievement, the two certified
hospitals, namely KPJ Ampang Puteri
and KPJ Damansara, were also the first
two hospitals in the Asia Pacific region
to receive this prestigious certification.
The Planetree certification is
noteworthy, aimed at providing
enhanced service care levels at
hospitals, going beyond being
The launching of KPJ Selangor Specialist Hospital
KPJ HEALTHCARE BERHAD 61
PRESIDENT & MANAGING DIRECTOR’S REVIEW
THE DIVERSITY OF OUR
them with the right mind set, tools and techniques
EMPLOYEE BASE IS A KEY to conduct one-on-one mentoring and counselling
sessions for their colleagues.
COMPONENT OF OUR SUCCESS
As a fresh take on talent management, in 2018 we
AND IN 2018, WE EXPENDED
aligned our leadership and upskilling programmes
CONSCIOUS EFFORTS TO with those of our parent company, Johor Corporation
(JCorp). This move has presented us with a sustainable
RECRUIT MORE MALAYSIANS
pipeline of business leaders for the Group, which is
FROM DIFFERENT ETHNIC crucial considering our hospital network expansion
strategy.
BACKGROUNDS TO REFLECT THE
DIVERSITY OF THE MALAYSIAN Under the leadership programmes the Advanced
JCorp Leadership Programme had eight participants,
POPULATION WHOSE HEALTHCARE
and the Basic Management Programme had two
NEEDS WE ARE SERVING. participants. As for upskilling programmes, our people
participated in programmes under the auspices of the
Malaysian Institute of Human Resource Management.
These included courses for the Certification Human
Resources Manager with eight participants, the
More importantly, this is trainers. This approach
Certification Training and Development Manager
the quality of healthcare ensures consistency in our
with two participants, and the Certification Human
service KPJ Hospitals are customer service levels, as
Resources Officer with 11 participants. Within
moving towards. We target to internal trainers have a better
replicate the Planetree model grasp and understanding of
Group-wide, and provide our core vision, mission and
person centred care to drive values, and the inter-relation
the sustainable growth of of these with our hospital
our business. It may be an environments and work
ambitious goal, but one we are processes.
committed to delivering on.
Two key programmes which
You can read more on employ this approach are the
Planetree at our hospitals in KPJ Service Quality Coach
the Materiality Economic 6 : Programme and the Service
Certification, Accreditation and Quality Management (SQM)
Standards section on pages Mentoring Programme. Since
49 to 52 of our standalone inception, the KPJ Service
Sustainability Report. Quality Coach Programme
has produced a total of 60
A STRONG TALENT dedicated Service Quality
MANAGEMENT PLATFORM Coaches as at end 2018,
Throughout the years, KPJ who impart knowledge
has embedded a robust they receive from external
talent management platform, trainers to their peers through
especially within the area of regular training programmes.
customer service. We believe As for the SQM Mentoring
in training our own people Programme, we have a total of
to impart their skills and 17 certified mentors as at end
knowledge to their peers 2018, who have graduated
and colleagues, instead of from a structured nine-day KPJ Damansara and KPJ Ampang Puteri Specialist Hospitals became the
exclusively relying on external programme which equips first two hospitals in the Asia Pacific to be awarded the Gold Certification
for Person-Centered Excellence by Planetree Internationa
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the Group, 17 people took part in the KPJ KPJ to focus on the adoption of Pharmacy located in Bandar Baru
Management Trainee Programme. MedTech innovations, especially Bangi, Selangor. The brand JX w
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those which can enhance the Pharmacy is wholly owned by KPJ w
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The diversity of our employee base is a key provision of healthcare services Healthshoppe, and part of our plans pjh
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component of our success and in 2018, to our patients, and improve their for its future is to expand into online a
we expended conscious efforts to recruit wellbeing. pharmaceutical prescriptions. lth.c
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more Malaysians from different ethnic m
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backgrounds to reflect the diversity of the In line with this, the Group embarked Another new niche KPJ started y
Malaysian population. As at end 2018, we on the Digital Transformation Value exploring in 2018, and which we
have added 344 people from the Chinese Innovation Platform (VIP) Programme plan to materialise in the year ahead
ethnic background, 84 from the Indian ethnic with the Malaysia Digital Economy is Ambulatory Care Centres (ACC).
background, and 56 from Bumiputera and Corporation (MDEC) in 2018. Known ACCs present a cost efficient and
other ethnic backgrounds from our recruitment as the Rainmaking Project, it focuses capital light means by which we
drive. on the digital vertical of Telemedicine can expand our healthcare network
through the DoctorOnCall.com. without undertaking the expense of
CAPTURING OPPORTUNITIES IN MEDICAL my initiative. We piloted the project building a new hospital. The ACCs
TECHNOLOGY (MEDTECH) INNOVATIONS at three hospitals, KPJ Damansara, will provide medical care on an
By 2024, it is estimated that the digital KPJ Rawang and KPJ Tawakkal outpatient basis, including diagnosis,
health market will grow exponentially, Health Centre in the area of remote observation, consultation, treatment,
fuelled by innovations in Telehealth, Cloud patient monitoring and surveillance. intervention and rehabilitation
Computing, Telemedicine, Wearables, and DoctorOnCall and KPJ is working services. Our ACCs will offer
other transformative technologies, to exceed with specialists for the latter to specialist day care services in smaller
USD379 billion. It is therefore imperative for provide online consultations in the towns or suburbs where there is
areas of oncology, rheumatology, an identified gap in the healthcare
ophthalmology, gastroenterology, market. Among the specialist services
rehabilitation, dental and speech we intend to offer are eye surgeries,
therapy. Although the pilot project dental surgery, and Ear, Nose and
is still in its early stages, we hope to Throat (ENT) services.
report on positive outcomes in the
near future. A key exercise we conducted in 2018
involved the merger between KPJ
VENTURING INTO NEW NICHES Sabah and KPJ Damai, in line with
Venturing into new healthcare niches our hospital operations restructuring
in response to healthcare trends is a plan to achieve greater efficiencies
crucial factor in keeping the Group and maximise the profitability of both
ahead of the curve. During the year, hospitals. With effect from 1 June
KPJ continued to explore new niches 2018, all operations at KPJ Damai
in our quest to drive the continuous were transferred to KPJ Sabah, and
growth of the business. KPJ Damai has been rebranded as
Damai Wellness and Care Centre,
We re-entered the retail pharmacy focused on offering niche healthcare
business with the launch of a JX services within the segments of
Pharmacy outlet in 2018. This full- Senior & Assisted Living Care,
fledged retail pharmacy represents Confinement Care and Rehabilitation
our reaffirmed commitment to Services.
expand the reach of our pharmacies,
which were previously only under the
umbrella of the KPJ Healthshoppe
brand. At present, KPJ Healthshoppe
has five retail outlets within our
specialist hospitals, while our JX
KPJ HEALTHCARE BERHAD 63
PRESIDENT & MANAGING DIRECTOR’S REVIEW
LEVERAGING ON
DIGITALISATION TO DRIVE
EFFICIENCIES
Like any other business entity,
private hospitals need to focus
on efficiencies, especially
within the area of customer
service. Since 2016, we have
been utilising an online
appointment and queue
system for the convenience
of patients. This online system
allows for patients to make
hospital appointments by
going to individual hospital
websites, and reserving
dates and times which are
convenient for them, as well
as enabling them to change
their appointment dates if
they need to. As at end 2018,
a total of 16 KPJ Hospitals are
utilising this system.
Within the area of
cybersecurity, we enhanced
our IT infrastructure to better
manage our IT services and
safeguard our data security
as well as the data privacy
of our patients. In particular,
we brought a second data
CONTINUOUS BUSINESS PROCESS as well as changing the function and role
centre online, thus ensuring
IMPROVEMENT of our people in hospitals, in alignment
we now have two data
Towards ensuring continuous business with our journey towards a person centred
centres up and running at
process improvements, KPJ focused healthcare model.
two separate locations, with
on the dynamics of setting up a
both conducting real time
centralised Business Support Service OUTLOOK
backups. This is of critical
covering marketing, finance and human As we move into the year ahead, we
importance for our smooth
resource aspects in all our hospitals expect the Malaysian economy to
operations in the event of
for the year ahead. We embarked on a continue to grow at a slow pace of 4.9%,
any potential disasters, as we
Group-wide study to identify how we while inflation is projected to increase
will have up to date business
could centralise this function, and have from between 1.5% and 2.5% in 2018
critical information required to
prioritised functions and tasks related to to between 2.5% and 3.5% in 2019. The
ensure that there are not any
payroll, financial and banking services. slower pace of growth, coupled with
unnecessary time delays or
By centralising these functions, we can rising inflation may have an impact on
information gaps.
ensure that it is not duplicated, and thus both corporations provision of medical
reduce the administrative load of our staff insurance for their employees, as well as
on the ground and free up their time to consumers accessing private healthcare
focus their attention on our patients. This services, which cost more than public
will have a transformative effect on the healthcare services.
Group, both in terms of cost efficiency,
64 KPJ HEALTHCARE BERHAD
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To ensure a sustainable pipeline To KPJ’s more than 13,000 employees
of leadership talent to support the nationwide and more than 700 staff w
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management of our expanded and abroad, we are extremely grateful for their w
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enhanced healthcare network, we will dedication and commitment to providing pjh
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be focusing on effective succession the highest quality of healthcare services, a
development planning. The Group’s in line with our mission and vision. lth.c
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talent management strategies, which are Our deepest appreciation also goes to m
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aligned with ensuring that we are able to our investors, partners, media and all y
attract and retain the best people in the stakeholders. As for the Government and
sector, will continue to focus on building, healthcare regulators, we thank them for
nurturing and sustaining a performance their sustained belief in the Group, and
driven culture, in line with our business allowing us to contribute towards the
objectives. To remain as employer of healthcare and socioeconomic needs of
choice, we aim to bring about a holistic the nation.
employee experience, within a diverse,
talented and engaged workforce, whilst Most of all, thank you to our three million
embedding a culture of innovation Group- patients, for their continued faith in the
wide. KPJ brand. We reaffirm our commitment
to continue to provide the best quality
In tandem with Industry 4.0 digital of healthcare services which places our
transformations, our future focus will patients at the heart of all we do.
see us digitalising human resource,
administrative, and transactional roles
and functions to achieve efficiency and
effectiveness to drive organisational
change. As well as that, in an era where
the Internet has changed the way Dato’ Amiruddin Abdul Satar
businesses market themselves, KPJ will President & Managing Director
be employing greater focus on digital KPJ Healthcare Berhad
marketing efforts through social media,
mobile apps and websites to expand our
market reach.
Against this backdrop, KPJ remains
focused on our forward moving strategy
We remain optimistic that our focused
to create continuous growth for the Group
efforts in line with our strategy will keep us
and bring value to shareholders. Our
on track to achieve our goal of long-term
plan to develop ACCs are firmly aligned
sustainable growth for the business.
with taking on board a more muted
economy, where people seeking medical
ACKNOWLEDGEMENTS
treatments will be exploring more cost
On behalf of the Management of KPJ, I
conscious healthcare offerings. We also
would like to thank our Board of Directors,
plan to continue with our hospital network
for continuing to steer us forward with
expansions in locations where there is
our strategic objectives and goals whilst
demand, and new hospital developments
upholding the highest standards of
in greenfield areas, as part of our plan
governance, ethics and integrity. Their
to maintain our leadership position. The
industry insights and wisdom are a central
Group has allocated more than RM2
factor in the Group’s ability to sustain our
billion towards upgrading and adding
good performance.
new hospital developments and ACCs
throughout the country, with a target of 35
hospitals and 21 ACCs by 2023.
KPJ HEALTHCARE BERHAD 65