Emergency warning: Raffles Med braces for headwinds as number of new hospitals surge

Its price gap with leading hospitals has narrowed to less than 10%.

Despite its stellar job at raising service quality for tourists, Raffles Medical still faces headwinds as the number of new private and public hospitals is expected to surge in the next few years.

According to a report by Maybank Kim Eng, the group’s efforts at raising service quality. has lifted the prices it can command for its procedures, causing its price gap with leading hospitals to narrow to less than 10%.

“Official data suggests many more private and public hospital beds could be rolled out in 2014-20, after the completion of the 220-bed Farrer Park Hospital this year, five new public hospitals and three integrated developments housing medical suites, apart from Connexion. Public hospitals could increasingly become a threat, as higher government healthcare subsidies and rising costs of living prompt more Singaporeans to turn to public healthcare services,” noted the report.

Here’s more from Maybank Kim Eng:

Official data shows the rapid rollout of new private and public hospital beds in 2014-20, after the completion of the 220-bed Farrer Park Hospital this year and five new public hospitals. In addition, a slew of private medical suites will be completed in the next few years. They are currently being marketed.

Other than Connexion, which we have been flagging, at least three other integrated developments housing medical suites are being built. These are Farrer Square (42 strata units) next to Connexion at Farrer Park, Royal Square in Novena (171 strata units), Vision Exchange in Jurong East (53 strata units) and Mediplex@SBF Centre (48 strata units).

Management has always assured investors that it has room to raise prices, given Raffles Hospital’s (RH) 20% price gap with the leading private hospitals. However, with its improving quality, that price gap has narrowed to less than 10%, according to the latest data from the Ministry of Health. With this, its room for further fee hikes may be curtailed.