Investing in medical suites from a doctor's perspective
By Feily Sofian and Esther Hoon
/ The Edge Property |
Singapore is said to be losing its lustre as a medical hub as the strong Singapore dollar and high healthcare costs are causing medical tourists to flock to cheaper places such as Thailand and Malaysia. Yet, a prominent Malaysian medical group, HSC Healthcare, is opening a medical facility in the city state next April.
The group, together with RB Capital and eight established doctors in Singapore, has purchased three levels of medical suites at the Farrer Square project in Little India. RB Capital is also the developer of Farrer Square. The Edge Property recently spoke with HSC’s group CEO Derrick Chan to gauge market sentiment on medical suites.
Paradoxically, it was Singapore’s high healthcare costs that motivated HSC to venture into the country. The group seeks to deliver the first-class medical service that Singapore is renowned for, at a reasonable cost.
As owners of the medical facility, HSC and its partners would have control over big-ticket expenses such as the rental of an operating theatre. The cost savings could then be passed on to patients.
The partners are also positioning HSC’s facility at Farrer Square as a day-procedure centre. “As a result, we do not incur the additional costs or liabilities associated with running a 24-hour medical centre or hospital. We are able to keep costs low for patients,” Chan explains. The facility will feature specialist rooms and a health screening area on level 5, a radiology department on level 6 and a day-procedure centre on level 7.
Proximity to a hotel is one of the key considerations for a day-procedure centre, says Chan. In addition to the medical suites, Farrer Square will comprise the 300-room Park Hotel Farrer Park.
The development is also a stone’s throw away from Farrer Park Hospital. The hospital is part of an integrated development named Connexion, which comprises One Farrer Hotel & Spa and Farrer Park Medical Centre; the latter also houses medical suites.
Chan: As the owner of the property, HSC and its partners would be able to keep the facility costs low for patients
Photo: Albert Chua
A value proposition?
According to caveats published by the Singapore Institute of Surveyors and Valuers, a medical suite at Farrer Park Medical Centre was sold at $4,400 psf in March 2015. In 2014, five units fetched an average price of $4,233 psf.
Prices were markedly lower than those at Gleneagles and Mount Elizabeth Medical Centres, which hovered in the $9,000 psf region in 2015, as well as those at Mount Elizabeth Novena Hospital, which found buyers at an average price of $6,700 psf last year.
The lower price at Farrer Park Medical Centre partly compensates for the smaller traffic of walk-in visitors since the neighbourhood is still maturing as a medical hotspot. On the other hand, patients could enjoy some cost savings when seeking medical services from establishments in the area.
At Farrer Park Hospital, the daily rate for a four-bedded suite is $196 per bed compared with $276 at Mount Elizabeth Orchard. Of course, there are other factors at play that account for the difference in price, such as the hospital’s reputation.
Farrer Park Hospital opened its doors on March 16. Despite its young history, the medical suites under its roof are occupied by a number of well-known practitioners who had or still maintain a presence at Mount Elizabeth Orchard or Paragon Medical Singapore.
Chan also highlights that Farrer Square is highly accessible as it is located right above the Farrer Park MRT station, a mere three-minute ride from the Dhoby Ghaut MRT station along the Orchard Road shopping belt.
HSC Healthcare is headquartered at the Menara HSC building on Jalan Ampang in Kuala Lumpur. The building also houses HSC Medical Center, a renowned one-stop medical, heart and diagnostic centre, as well as the Somerset Ampang Kuala Lumpur serviced residence, which is managed by The Ascott Ltd. The group and its partners are reported to have forked out slightly over $44 million, or around $3,800 psf, for the purchase of the three levels of medical suites at Farrer Square that have a total strata area of 11,674 sq ft.
Co-location with a hospital
It is advantageous for a standalone medical centre such as Farrer Square to be located next to a hospital, in case of an emergency. Complications can arise even in a simple surgical procedure and it would be reassuring for practitioners and patients to have access to emergency services located next door. Other standalone medical centres that are located next to a hospital include Paragon Medical Singapore and Novena Medical Centre.
Still, medical suites that are attached to a hospital appear to be the most popular choice, at least among the medical practitioners with whom The Edge Property spoke. Such centres include Gleneagles Medical Centre, Mount Elizabeth Medical Centre and Mount Elizabeth Novena. The latest project in the market is Farrer Park Medical Centre, which is attached to Farrer Park Hospital.
These medical suites can provide a wider range of medical services, including complex surgeries that require a team of experts, and special facilities such as intensive care units. Such procedures cannot be carried out in a standalone medical centre. Besides complex procedures, medical suites within a hospital can also offer other medical specialisations, such as psychiatry, dermatology and aesthetics, which are less dependent on hospital facilities. Owing to the wider range of medical services they can cater for, medical suites that are located within a hospital may enjoy higher demand.
Medical suites that are attached to a hospital can cater to a wider range of procedures, enhance patients' covenience and promote cross-referrals
Photo: Albert Chua
Complex medical procedures will continue to be the driver of Singapore’s medical sector, given the republic’s positive track record in dealing with challenging medical cases and its ageing population.
Dr Cheng Shin Chuen, a consultant surgeon in private practice and adjunct assistant professor at the National University of Singapore (NUS), says: “Singapore is still way ahead of its neighbours when it comes to performing complex procedures such as robotic surgeries, minimally invasive vascular procedures, organ transplants and cancer care.” Cheng is based in Paragon Medical Singapore and Mount Elizabeth Novena.
After the dip in 2013, revenue from medical tourism picked up again, rising 19% y-o-y to $994 million in 2014. Revenue from Indonesian medical tourists rose 37% over the same period. The data is from the latest annual tourism statistics, published by the Singapore Tourism Board in February. Data for 2015 is yet to be published.
Dr Andrew Khoo, a plastic and reconstructive surgeon based in Mount Elizabeth Orchard, notes: “An ageing population would create more demand in orthopaedics, ophthalmology, urology, cardiology, oral surgery, surgical and medical oncology, and geriatric medicine.”
Khoo says as a specialist, he prefers a medical centre over other property types, such as a shophouse or a commercial building, to set up his practice. A medical centre, according to him, has an ecosystem of specialists so that they can leverage each other’s expertise. Patients would benefit from the ease of cross-referrals and better multidisciplinary care. “For those of us who do procedures, it is a further advantage to be in a medical centre that is located within a hospital,” Khoo adds.
Another prominent doctor who declines to be named also singles out attachment to a hospital as his top criterion when selecting a medical suite. He, too, is most optimistic about complex and age-related services and procedures, such as orthopaedics, gastroenterology and oncology, and most pessimistic about general surgery.
Separately, NUS’s Cheng highlights that the supply of medical suites that are attached to a hospital remains limited.
Only time will tell whether prices of medical suites will rise further. However, there could be potential for medical suites that are attached to a hospital, especially those in less-mature locations where prices are still significantly lower than those in ultra-prime areas. Price growth will be driven by their limited supply and the provision of complex procedures that cater to both medical tourists and the ageing population alike.
As for standalone medical centres, perhaps users and investors could take their cue from HSC and its partners by going for those that are strategically located near the city centre, next to a hospital and a hotel, as well as offer an attractive entry price.
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