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Mitra Keluarga to splash out on new hospitals
Publicly listed hospital operator PT Mitra Keluarga Karyasehat is looking to spend more than Rp 1 trillion on the construction of six new hospitals to maximize profitability, as demand for its services continues to grow in spite of a slowing national economy, according to company executives
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Publicly listed hospital operator PT Mitra Keluarga Karyasehat is looking to spend more than Rp 1 trillion on the construction of six new hospitals to maximize profitability, as demand for its services continues to grow in spite of a slowing national economy, according to company executives.
Land procurement for the hospitals was underway, said Mitra Keluarga president director Rustiyan Oen, and would be finalized this year, with construction phased between next year and 2019.
'We have bought four plots of land. We are looking at two more plots ['¦] hopefully we will get them this year,' Rustiyan told reporters during a press briefing after a shareholders meeting on Wednesday. The six hospitals, he said, would be located in Jakarta and Surabaya, East Java.
'We hope to open one hospital in the fourth quarter next year,' Rustiyan said, adding that the first hospital would open in West or South Jakarta. 'We will not construct the hospitals all at once. We will install them one-by-one until 2019.'
The company will finance the construction of the six hospitals, including the land procurement, with funds it received from an initial public offering (IPO) conducted in March this year, which amounted to Rp 1.2 trillion (US$82.2 million).
'That sum would not be enough to establish six hospitals, but [we will get additional] cash that our shareholders generate every year,' Rustiyan said.
The company has used around Rp 120 billion from the IPO fund for land procurement so far and the amount will continue to grow this year as the company finishes land procurement processes. The biggest expenditure, Rustiyan said, was land procurement, accounting for 60 percent of total investment.
'The other 40 percent will go on construction and equipment procurement,' he explained.
One hospital would cost Rp 200 to Rp 250 billion, excluding land procurement, Rustiyan went on. 'As such, the six hospitals will cost us more than Rp 1 trillion in total,' he said.
The company was optimistic that the new hospitals would attract as many customers as its existing ones, he added, given the high demand for health services, especially in Jakarta.
The company booked double-digit growth this year even as the domestic economy slowed to its lowest level in six years in the first half, at 4.7 percent, with weaker purchasing power hurting firms' sales across sectors.
Mitra Keluarga is expected to maintain growth this year of 11 to 12 percent, according to Rustiyan, who admitted that the figure represented lower growth than in previous years.
'There's no doubt the sluggish economy is affecting our business, but only to a very small extent,' he said.
During the first half of this year, the company's revenues reached Rp 1.1 trillion, up from Rp 1 trillion in the same period last year, while net income amounted to Rp 327 billion, up from Rp 280 billion in the same period in 2014.
Rustiyan added that the increasing number of hospitals in Jakarta would not affect the company's sales, because demand was growing apace with hospital construction.
'Demand [for health services] exceeds [the availability of] hospitals in Jakarta,' he said.
Mitra Keluarga currently operates 12 hospitals, of which eight are located in Greater Jakarta, three in Surabaya and one in Tegal, Central Java. The company completed the construction of its 12th hospital in July.
Last year, the company's hospital treated a total of 1.73 million patients treated. It employs a total 4,900 professional medical staff, including doctors, laboratory staff and nurses. (saf)
