IN Russian weddings, there is said to be a custom for the groom's friends to 'steal' the bride. When he starts to look for her, he usually has to pay a ransom to get her back.
Parkway Holdings must be feeling like a much coveted bride right now, highly valued by Khazanah Nasional and Fortis Healthcare - two of its major shareholders who could potentially engage in a tussle for control of the homegrown hospital operator. Just what is at stake? Apparently, a very big medical tourism market.
According to a 2008 report by Deloitte Center for Health Solutions, there were 750,000 Americans who travelled abroad for medical care in 2007. By this year, the number would grow to 6 million, driven by rising healthcare costs at home and greater awareness about options in medical tourism hubs like Singapore, Thailand and India. The report was done before the global financial crisis, which has since led to more Americans tightening their belts. And with huge budget cuts planned for the Medicare scheme under the US healthcare reforms, payments for services under the system will be more restricted. Medical tourism could fill the gaps. And that is just the situation in the US. Many individuals from Asia and the Middle East travel to foreign lands in search of quality treatments too. Singapore's private hospitals receive 30-60 per cent of its patient pool from foreigners. Including the volume seen at public hospitals, the country welcomes about 400,000 medical tourists a year.
Over in Malaysia, the number of health tourists has grown to 375,000 and revenues in the sector multiplied five times over the last five years. With Singaporeans and PRs now allowed to use their Medisave at selected hospitals in Malaysia - including those of Parkway's - the number will only climb.
In India, the medical tourism market is estimated to be worth US$350 million in 2006, according to a joint study by the Confederation of Indian Industry and McKinsey. And this could potentially grow to US$2 billion by 2012.
Yet in the highly fragmented healthcare market, Parkway is the only Pan-Asian medical care provider with a network of 16 hospitals in Singapore, Malaysia, China, India, Brunei and the Middle East. Over two decades, it has developed a brand that is associated with quality healthcare, marked by exceptional clinical outcomes.
If there is anyone interested in a healthcare group with a presence in multiple sites in Asia, Parkway is probably the only candidate. A network like this can exploit synergies on a larger scale. Patient referrals to India? No problem. Want to explore a nursing career in China? Sure. In one fell swoop, the buyer has his regional footprint all laid out.
The majority shareholder would get to call the shots in galvanising the synergies across related businesses. Because of its background, Khazanah - should it gain a controlling stake - is likely to implement a strategy that is geared towards its Malaysia operations. Meanwhile, Fortis' stronghold lies in India where it is competing with Apollo Hospitals Enterprise, a group that is 12.2 per cent-owned by Khazanah.
So far, Parkway's substantial shareholders have largely existed in an amiable balance of power. But Khazanah's offer yesterday have changed all that. The question is, who will eventually get the bride? That's a billion dollar answer.