PETALING JAYA: Bed occupancy rates (BOR) in the healthcare sector are expected to improve through 2021, while Malaysia has significant room for additional hospital beds, according to AmResearch.
The research house said the average pre-pandemic BOR for private institutions is 70%.
“We believe that a return to such values within 2021 is improbable, as some form of movement restriction will likely remain until the end of the year. However, significant improvement is expected as restrictions are expected to loosen gradually.
“This is based on positive vaccination effects and the government’s ability to contain Covid-19 cases at a manageable level. Our projections are based on past BOR values during the MCO, RMCO and CMCO periods,” AmResearch said in a report on Wednesday.
In 2019, Malaysia’s bed-to-total population ratio (BPR) stood at 1.98 beds per 1,000 residents, growing at a rate of roughly 1.1% a year in the past five years. In contrast, Organisation for Economic Co-operation and Development health statistics for 2019 state that average BPR for member countries stood at a much higher 4.70 in 2017.
AmResearch said: “We estimate that local BPR will grow to 2.02 and 2.05 in 2020 and 2021 respectively. These values exclude beds at quarantine and low-risk treatment centres.
Pandemic-related construction delays and expansion cancellations may have provided some downward pressure to BPR growth in 2020 despite the significant demand for hospital beds.
“Despite an expected increase in healthcare spending by the government, we are not expecting the BPR rate to rise significantly within the next couple of years, given the muted status of the current private hospital pipeline.”
Overall, AmResearch has maintained its ‘overweight’ call on the healthcare sector, based on: recovering patient volumes as pandemic restrictions loosen; significant room for additional hospital beds; and a shift in focus by healthcare providers from greenfield hospital development to quicker-yielding, lower-cost alternatives.
“Our sector pick remains IHH Healthcare Bhd with a buy call and an unchanged fair value of RM6.26 a share. On the local front, we view its push to develop centres of excellence, outreach attempts to the middle-class population and cluster-strategy benefits as positive drivers to growth. The international outlook is also positive, given the strong recovery in patient volume and encouraging performance of Gleneagles Hong Kong,” it said.
Meanwhile, the research house pointed out that the hospital pipeline is muted, with only three new hospitals slated to open within the next three years. KPJ Healthcare Bhd reached the closing stage of its more aggressive expansion phase, switching its focus to upgrading bed capacity in pre-existing hospitals as well as setting up ambulatory centres.
“We believe that IHH is following a similar route as it is more in line with its pursuit for organisational efficiency. Only Sunway seems to be pursuing for greenfield hospital expansion, with six hospitals mentioned in its expansion plans. The expected completion dates for three of these hospitals have not been fixed yet.
“Going forward, we are expecting to see more ambulatory care centres (ACCs) set up in the next couple of the years, given its advantages of narrower range of services; advances in medical technology; lower space requirements and development periods; and rising hospital outpatient numbers,” said AmResearch.
ACCs involve any same-day medical procedure performed in an outpatient setting. Thus, it does not involve a hospital or facility that requires inpatient admission.
