Healthcare race

by DORIS DUMLAO-ABADILLA, Feb. 10, 2017

Since its debut in the healthcare business some 10 years ago, the group of businessman Manuel V. Pangilinan, aka MVP, has now built a network of 13 hospitals, the latest component of which is Dr. Jesus C. Delgado Memorial Hospital (JDMH) in Kamuning Road, Quezon City.

This means that not a year passes by that at least one new hospital hasn’t been added to its portfolio, all by means of acquisition rather than building any new structure from scratch. After all, there are many medical centers out there founded and run by families or groups of doctors in need of fresh equity and change in business model to unlock efficiency.

Metro Pacific Hospital Holdings Inc. (MPHHI) headed by executive Augie Palisoc now has a portfolio of 3,000 beds—of which 2,000 are in Metro Manila and the remaining 1,000 in the provinces. JDMH thus becomes MPHHI’s eighth hospital in Metro Manila, joining Makati Medical Center, Asian Hospital, Cardinal Santos Medical Center, Manila Doctors Hospital, De Los Santos Medical Center, Our Lady of Lourdes Hospital and Marikina Valley Medical Center. Outside Metro Manila, MPHHI has five hospitals, namely: Davao Doctors Hospital; Riverside Medical Center in Bacolod; Central Luzon Doctors’ Hospital in Tarlac; West Metro Medical Center in Zamboanga, and Sacred Heart Hospital in Malolos, Bulacan.

The portfolio also includes a primary care clinic, Megaclinic in SM Megamall, and two healthcare colleges—Davao Doctors College and Riverside College in Bacolod.
One could say that the group has met the scale it targeted years ago to justify an eventual initial public offering.

Three years ago, sovereign wealth fund Government of Singapore Investment Corp. has committed to come in as strategic partner in Metro Pacific group’s hospital business where it was given the option to acquire an interest of as much as 39.9 percent.

But healthy competition is likewise arising as far as the acquisition of existing hospitals is concerned. In several instances in the recent past, we heard that MVP’s group faced stiff competition with another group that is likewise building a chain of healthcare hubs and is also backed by a group with strong financial muscle. It’s not the Ayala group, which has taken the greenfield route in developing its chain of healthcare centers in partnership with the Mercado medical group and has also gone down to the communities by putting up retail clinics combining pharmaceutical and medical services under the brand “Family Doc.”

The competitor we’re talking about is the Campos family’s Mount Grace Hospital Ventures Inc., which—according to the grapevine—has beaten MVP’s group in the bidding war for some hospitals up from grabs. We’ve also seen Mount Grace testing the government’s public-private partnership framework a few years ago with its interest to bid for the Department of Health’s Orthopedic Center project (eventually won by the lone bidder, a consortium led by Megawide group).

Mount Grace, of course, draws synergy from the pharmaceutical business of its principal investor, the Campos family. The Unilab group is now a leading pharmaceutical company in Southeast Asia with annual revenue exceeding $3 billion, including those from its overseas production sites. The pharmaceutical giant is a growing Filipino multinational corporation, now with at least six factories in the Philippines, two in Indonesia, and one each in Vietnam and Thailand.

We heard that Mount Grace is working on a further synergy-building or prospective unified promotion/branding for its chain of healthcare centers. There are now 10 under the Mount Grace umbrella: Medical Center Manila (Manila Med), Tagaytay Medical Center, VRP (Victor R. Potenciano) Medical Center, Westlake Medical Center, The Good Samaritan Hospital System Inc., Mary Mediatrix Medical Center, Health Serv Medical Center, Mother Theresa of Calcutta Medical Center, Grace General Hospital and Fe del Mundo Medical Center.

So next time that a fairly sizeable hospital is on the block, we can expect who the bidders will be.