Tuesday, 18 August 2009

MetroPac in final talks to buy hospital

Miguel R. Camus
Business Mirror

THE hospital unit of Metro Pacific Investments Corp. (MPIC) is close to acquiring one more provincial hospital before the end of this year as part of the Pangilinan-led conglomerate’s goal to build the largest network of medical institutions in the Philippines.

In a telephone interview with the BusinessMirror, MPIC executive director Augusto Palisoc Jr., who heads the company’s hospital division, said the P500-million deal will cover the acquisition as much as half of the facility’s existing shares as well as expenditures for improvements. The executive, however, declined to name the hospital as negotiations are ongoing although he noted that it is one of the biggest outside Metro Manila.

Palisoc added MPIC is also in talks with as many as five other provincial hospitals, though any potential investment will likely occur beyond 2009. At present, the hospital division owns one-third in both Davao Doctors Hospital and Makati Medical Center, while holding the right to operate Cardinal Santos Medical Center in San Juan for the next 20 years.

MPIC’s hospital unit operates a total of 1,000 beds, of which Makati Med accounts for half, with the remainder split evenly between Cardinal Santos and Davao Doctors.

MPIC plans to grow its current capacity to at least 3,000 beds in the coming years which will translate to as many as 10 hospitals, said Palisoc. He said these will likely be in large provincial centers such as Davao and Cebu City.

“There is more negotiating leverage [when operating] eight to 10 hospitals instead of one. There are synergies [in owning] a chain of hospitals—from purchasing of medicines to hospital supplies,” said Palisoc. “Eventually we would like to do some shared service and reduce costs.”

The firm also plans to spend on upgrades for its existing hospitals. Palisoc said near-term spending includes P600 million for equipment in Makati Med and another P200 million for Davao Doctors. The firm has also committed to spend P750 million for Cardinal Santos over the next 10 years as part of its operating contract.

In the case of Makati Med, Palisoc said the strategy will be to improve its outpatient facilities, or services that do not involve a patient being admitted to a hospital like blood-tests or radiology procedures. The hospital’s new outpatient facility is nearly complete, added the MPIC official.

For the first six months of 2009, MPIC’s hospital group reported better earnings.

Medical Doctors Inc, which manages of the Makati Medical Center and Cardinal Santos Medical Center, said first-semester net income rose to P175 million from P122 million after a 52-percent increase in consolidated revenues to P2.16 million. Likewise, Davao Doctors Hospital said core net income increased 27 percent to P70 million, and contributed P18 million to MPIC.

“We are the smallest part of the [MPIC] group at the moment [but] If we do succeed we would like to establish the MPIC hospital group as a very dependable group in the country,” said Palisoc.

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