HEALTH NEWS

Thonburi Hospital looks to China

Thonburi Hospital Group (THG), owned and chaired by property tycoon Boon Vanasin, says that its subsidiary WJ International Hospital Management Co (WJM) is forging joint ventures for five hospitals in China this year.

Dr Boon said the move was meant to cash in on mainland growth opportunities in the healthcare industry.

He said China spent only 1% of its gross domestic product on healthcare compared with 6-7% in other developing Asian countries, 17% in the US and 90% in Europe.

"With a population of 1.3 billion and 99% of the 10,000 hospitals government-owned, the demand is there," said Dr Boon.

Healthcare is a protected industry in China due to fears of rising costs, but the government recently started allowing the private sector, especially foreigners, to invest.

Listed on the Hong Kong Stock Exchange, WJM was set up five years ago and is 50% owned by THG. It already operates three hospitals in China through joint ventures with local partners, investing 300 million baht or a million baht each.

Dr Boon said WJM has also won management contracts with two Thai hospitals - one in Phuket and the other in Bangkok.

In China, WJM signed contracts for joint investments in five hospitals this year.
One is a 20-billion-baht agreement with the United Force Group for three hospitals, in Nanjing, Suzhou and Wuxi.

WMJ will contribute 30% of the investment as sole manager.

The contract gives WMJ 2.5% of the gross revenue and 5.5% from earnings before interest, taxes, depreciation and amortisation.

The other two other hospitals will be developed in Shanghai by the American Pacific Group, which plans to become the largest healthcare provider in Asia, especially China.

WJM will contribute just a slight investment in these two but be the sole manager.

Construction on all five hospitals has begun and will take another year and a half.

About 3% of China's population or 39 million people have an average annual income above 10 million baht and can afford private hospitals, which is why everyone is trying to penetrate this market, said Dr Boon.

"The rich, who go mostly to hospitals in Hong Kong, are starting to complain about the quality of state-owned hospitals," he said.

"I've received so many requests [from hospitals in China] that I cannot keep up with all of them."

Dr Boon estimates 10% of Chinese hospitals wish to improve themselves.

He said hospital management contributes 30% of THG's revenue and will only increase in significance, with better returns than investing directly.

THG, which manages 17 hospitals, achieves annual revenue of 4 billion baht, with the two local Thonburi Hospitals accounting for half of that.

It is spending 400-500 million baht to add another 50 beds to Thonburi 2 Hospital for a total of 120.