Ageing population a double-edged sword for IHH Healthcare

It’s struggling with dwindling bed supply.

15% of Hong Kong’s population is over 65 years old, and this fact strikes both ways for the healthcare company. 

On one hand, as the significance of the elderly should not be discounted, an elderly person has a 42% probability of being admitted into a hospitalised, therefore intensifying the demand for healthcare services, according to analysts from CIMB.

On the other hand, IHH Healthcare has been struggling with total bed capacity.

“In numbers, one Hong Kong bed sees an average of 62 inpatients p.a. (this is 40% higher than the average of 44 inpatients in Singapore). Put together, stress on bed supply and pent-up demand should translate to higher medical costs,” CIMB said.

Meanwhile, IHH Healthcare hopes to replicate its local success in Hong Kong.

“Excluding IHH’s international operations, Singapore only contributes ~920 beds or 16% of total bed capacity. However, Singapore made up 45% of 1H15 core net profit. The similarities in terms of demographics and economic prosperity between Singapore and Hong Kong lead us to believe that the 500-bed Gleneagles HK will form a significant portion of group earnings going forward,” CIMB said.

The affluence of Hong Kong’s residence is also a bonus for the healthcare firm, boosting premium private healthcare demand.

“Adjusting for purchasing power, per capita income in Hong Kong is among the highest in Asia and 42-44% above the OECD average,” CIMB added.