17-12-2008: by Lim Shie-Lynn
KUALA LUMPUR: Sime Darby Bhd has expressed interest in taking over the National Heart Institute, or Institut Jantung Negara (IJN), a move that has met with objections from the ministry of health, sources said.
It is learnt that the ministry of finance (MoF), which owns IJN, has submitted a proposal for the privatisation of the hospital to the cabinet. Health industry officials are not surprised by the MoF’s move as the ministry had sent out feelers to government-linked companies to gauge the interest in such an exercise.
Sources said that both Health Minister Datuk Seri Liow Tiong Lai and his deputy Datuk Dr Abdul Latiff Ahmad do not agree to the proposed divestment.
“They do not agree to this sale unless there is a safety net for the poor and the underprivileged. Their needs have to be taken care of. And the time is not right,” said a source.
Sources said Sime Darby’s interest and the positive reception from the MoF do not in any way mean that a deal is certain.
“It’s a preliminary exploration. There is still a long way to go as there are a lot of things to be ironed out,” said one of the sources.
One of the concerns is whether IJN’s charges would increase should it be taken over by a private corporation.
Considering IJN is a quasi-government hospital, its fees are regulated by the government, offering first-class medical treatment at below market rate. Also, all government hospitals have referred their heart patients to IJN, providing it a steady stream of patients and income.
However, it is learnt that even if Sime Darby takes over the hospital, there would be conditions put in place to ensure that the charges are regulated and IJN does not lose sight of its social obligations.
“The government would still dictate the treatment price for patients. It would be business as usual for the heart centre,” the source said.
The conglomerate’s entry into the cardio centre is not necessarily a bad idea as IJN would be able to retain its team of doctors and specialists given that the centre would be backed by the cash-rich Sime Darby.
“Many of IJN’s doctors are leaving because the remuneration is not attractive enough. With Sime Darby in the picture, the doctors would be better paid and government hospitals would still be able to train their doctors there as well,” an industry source said.
According to IJN’s website, the heart centre has a staff strength of more than 1,000. There are 85 cardiologists, cardiothoracic surgeons, paediatric cardiologists and anaesthe-tists. It also has close to 500 nurses.
To manage its growing operations, IJN has embarked on an expansion plan. It is building a new wing which is scheduled for completion next year.
The new wing would give it an additional 192 beds, four new operating theatre complexes, new intensive care units and coronary care units, dialysis centre, health screening centres, cafes and shops, according to the website.
A source said it was likely that Sime Darby would be allowed to set up a private wing in IJN.
IJN, which specialises in cardiovascular and thoracic cases, was part of the Kuala Lumpur Hospital. In 2005, it was placed under IJN Holdings Sdn Bhd, which is 99.99% owned by the Minister of Finance Inc.
Sime Darby’s interest in IJN ties in with plans to expand its healthcare business. Sime Darby Healthcare’s (SDH) supervisory committee chairman and Sime Darby board member Tan Sri Wan Zahid Noordin was quoted as saying the healthcare arm was geared up to grow its business, with the focus on specialist treatment and training.
The healthcare division contributed RM20 million in earnings for FY08. SDH runs a medical centre, a specialist centre and a nursing college.
According to filings made to the Companies Commission of Malaysia, IJN posted a revenue of RM287.3 million last year, up 11.7% from RM257.5 million in 2006. However, net profit was lower at RM13.6 million against RM22 million previously.
Since its establishment, IJN has earned a reputation as a leading centre for cardiac care in the region. It has treated well over a million patients, including former prime minister Tun Mahathir Mohamad.
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