Singapore Medical Group in the pink of health

The Catalist-listed company today has a market capitalisation of over S$200 million, and has been profitable since FY2016.

THESE days Singapore Medical Group (SMG) barely resembles the once ailing entity that it was.

In 2013, the Catalist-listed group faced significant headwinds and losses due to the changing medical landscape in Singapore: declining medical tourism, changing economics of healthcare and growing trend of consolidation of medical practices.

The same year, SMG chief executive officer Dr Beng Teck Liang and his partners, including SMG chairman Tony Tan Choon Keat, a founder of Singapore's Parkway Holdings, acquired a controlling shareholding of SMG and set out a three-year plan to rebuild the business.

Having successfully shaken off those troubles, SMG has been profitable since FY2016. Today, the medical group has a market capitalisation of over S$200 million, a more than 10-fold increase from the S$16.5 million it was valued at when Dr Beng and his partners took over.

Speaking to The Business Times, Dr Beng said: "We have grown through a series of astute investments and earnings accretive acquisitions. We had to do that cautiously, by making difficult decisions because we had little room for error."

Dr Beng, who sees his role as more of a healthcare private equity player than a CEO, said: "We were familiar with the medical environment, the right healthcare networks and the right ideas to turn these businesses around."

Today SMG operates in four markets: primarily in obstetrics and gynaecology (O&G), pediatrics, oncology, aesthetics and diagnostic imaging.

In Singapore, it has steadily built a portfolio of clinics to be a specialist provider in women's health services.

In February 2017, it completed a S$60 million acquisition of the Astra Women's Specialist group of clinics before adding complementary pediatric clinics through acquisitions made in April and October 2017 for a total of S$33.4 million.

Hub-and-spoke model

It adopts a hub-and-spoke model with a network of 14 O&G clinics located in the heartlands as the group aims to meet the growing needs of patients who prefer convenience.

SMG also embarked on investments in synergistic specialties. To deepen its scope of coverage in women's health, it struck a partnership with South Korea's in vitro fertilisation (IVF) player CHA Healthcare in 2017.

Together, they entered the Australian IVF market in January through an acquisition of IVF specialist group, City Fertility Centre, which operates clinics in seven Australian cities.

A move into the aesthetics space followed in March, when SMG acquired an 85 per cent stake in SW1 Clinic for around S$6.5 million, complementing its women's health segment.

Understanding that patients place a high premium on the quality of the Singapore brand of healthcare, SMG found opportunities for growth in establishing a regional presence to cater to Southeast Asia's young and growing middle class.

With 35 per cent of its patients coming from foreign markets, Dr Beng said that it is also a good opportunity to bring SMG's suite of medical services to foreign markets, in particular, Indonesia and Vietnam. "The largest proportion of our overseas patients are from Indonesia and Vietnam, making it a natural step to set up base in these markets. Singapore is a well-regarded brand so we don't have to try very hard to attract them."

SMG first ventured overseas in October 2015, partnering Indonesian property conglomerate Ciputra to run an eye-centre in Jakarta but turning a profit took longer than expected.

"We gave ourselves a year to turn a profit but it took a year and a half but we are still very happy with the progress, it gave us confidence as we understand the dynamics of the market better," he said.

SMG's entrance into Vietnam followed in 2017 with the S$3 million investment in a stake in healthcare player CityClinic Vietnam.

CityClinic runs two CarePlus medical centres in Ho Chi Minh City and employs 60 doctors from a variety of medical disciplines. While it focuses primarily on providing medical screening, its profile in pediatrics and O&G coverage is growing due to an expanding younger population. Vietnam has one of the highest birth rates in the region.

Oncology services and IVF treatments will also be offered under the CarePlus umbrella.

"SMG is looking into plans to open a third clinic to keep up with burgeoning demand," Dr Beng said.

The group is also looking into expanding its premium aesthetics care provider SW1 Clinic to Vietnam.

It will open its first SW1 Clinic in Ho Chi Minh City in November. The 4,000 sq ft clinic will be home to two Vietnamese aesthetics doctors while the Singapore SW1 team of doctors will visit the clinic periodically for patients' appointments.

"This would be our first foray into taking one of the Singapore brands out there," Dr Beng said.

"We are also looking at the possibility of an SW1 Clinic in Indonesia. Because we already have a footprint here, we understand the dynamics of the market and the demand for such services there."

Harnessing technology

Dr Beng noted the technological developments in healthcare and the advent of telemedicine in recent years which have changed how medical professionals are able to provide consultation to patients. "Patients are already reaching out to us, they want a tele-consultation before coming down to Singapore for treatment and they are willing to pay for such services. We see opportunities where we have patients come to us for a second opinion," he said.

To make tele-consultation an effective avenue for both SMG's patients and doctors, it invested in IT systems like e-procurement systems and introduced fully-electronic patient records.

The next step "is trying to make sure that every single patient that walks out of SMG clinics leaves with their own electronic footprint".

"We have taken this company a long way in the last five years and it is no question that we want to leverage the best of Singapore healthcare to our fast-growing regional markets. That has been and will continue to be one of the cornerstones of our growth in the coming years."