Now hiring: Raffles Med’s staff costs to shoot up amid expansion

Its new hospital in Shanghai plans to hire 100 doctors.

Expect staff costs to dominate the healthcare firms’ earnings as it embarks on its momentous expansion plans across the region.

According to analysts from UOB Kay Hian, for its new hospital in Shanghai alone, it plans to have at least 100 doctors/specialists when it opens.

Against this background, UOB Kay Hian said staff costs as a percentage of revenue are likely to be a notch above 50% from this year onwards.

Meanwhile, contributions from its new facilities, such as medical centres at Shaw Centre and Holland V medical centre, may need at least a year to kick in.

“Other than new hires, wage pressure for nurses remains high given the global shortage of nurses and higher pay for government nurses,” UOB Kay Hian said.

On the other hand, as for its new China JV, foundation works have begun, with a target of completion at 1H18.

“The group's cash balance declined from S$150.2m to S$86.1m (S$0.09/share) as at Dec 15 due to capital expenditures for its Raffles Hospital extension, payment of interim dividends (1H15) as well as the construction of Raffles Holland V. Its cash flow generation remains strong, with circa S73$m net cash from operations generated in 2015,” UOB Kay Hian said.