KPJ not spared from Covid-19, MCO impact

KPJ not spared from Covid-19, MCO impact

During the MCO period, KPJ remained fully operational as hospitals needed to comply with nursing ratios as per Ministry of Health requirements.

During the MCO period, KPJ remained fully operational as hospitals needed to comply with nursing ratios as per Ministry of Health requirements.

KUCHING: KPJ Healthcare Bhd (KPJ) has not been spared from the negative impact of Covid-19 and Movement Control Order (MCO) period, with analysts revising the group’s financial year 2020 and 2021 (FY20-21) forecast downwards by 18 per cent-13 per cent in view of the outbreak .

The research arm of Hong Leong Investment Bank Bhd (HLIB Research) saw that during the MCO period, KPJ remained fully operational as hospitals needed to comply with nursing ratios as per Ministry of Health (MOH) requirements.

“We foresee short term headwinds as patients are delaying non-urgent treatment,” HLIB Research said.

“As we understand, even before the MCO started, KPJ has suggested patients to delay non-urgent treatments and only come in for urgent ones; resulting in a noticed drop in occupancy.

“Whilst healthcare tourism has come to a halt with foreign tourists being banned from entering the country, this is the least of their problems, as KPJ’s healthcare tourism accounts for circa five per cent of total revenue (FY19).

“The first three weeks of MCO has brought KPJ’s occupancy to drop to 25 per cent from its average rate of 65 per cent (FY19).”

Whilst the MCO period was initially for 1.5 months (but was recently extended again to May 12), HLIB Research opined that its impact may be more profound than that, as the research arm felt people will still be stigmatised to be near hospital compounds if not necessary.

On another note, HLIB Research highlighted that KPJ has started performing Covid-19 testing since the beginning of March; in fact it is one of the first few private hospitals to do so.

“To date currently KPJ has 13 hospitals that are equip to do Covid-19 testing, this is inclusive of eight drive thru testing.

“Other KPJ hospitals are only able to take swab testing, but tests will then be sent to Klang Valley hospitals to be processed.

“For KPJ’s Klang Valley’s hospitals, it will take on average just 24 to 48 hours to obtain the results.”

The research arm further highlighted that at the initial stages, KPJ started the Covid-19 testing from RM630 per test and since it has scaled up testing capacity (from 150 tests per day to 1,000 tests per day); thus, it has managed to bring down the cost per test to RM388.

“As we understand, public hospitals are very stringent with the criteria to be tested for Covid-19; one must be in contact with a Covid-19 positive patient then only be able to be tested.”

In assisting the government, HLIB Research noted that KPJ has loaned 25 ventilators to various public hospitals across the country for free.

“While Covid-19 cases are solely dealt by public hospitals, KPJ has prepared 200 beds to accommodate non-Covid-19 patients should the need arise.

“Apart from that, there may be potential arrangements to allow surgery scheduled by the public hospitals to be done in private hospitals.

“KPJ would be more than ready to assist to free up capacity for the former; margins would be thin though.”

Looking ahead, HLIB Research projected that first quarter (1Q) results are likely to chalk in decent numbers (minimal impact of MCO which started mid-March) but 2Q could likely be weak, bearing the most brunt of the MCO or Covid-19 impact (significant drop in non-critical patient volume).

“In addition, the scheduling of opening of new hospitals in Kuching and Kluang has now been deferred to 3Q20.”

As a result, the research arm tweaked its earnings FY20-21 forecast downwards by 18 per cent-13 per cent in view of the Covid-19 outbreak, by lowering our inpatient and outpatient assumptions.

It noted that this takes into account the direct MCO impact as well as the indirect ones such as non-critical patient aversion to hospitals.

Source: Borneo Post Online

Social media & sharing icons powered by UltimatelySocial

Malaysia Healthcare Chronicles
(Industry Report)

Download Here