Raffles Hospital to increase rates in 2H12: CIMB

Competitors like Mount Elizabeth and Gleneagles charge 34% and 20% more on average for their services over Raffles Hospital.

CIMB notes that rates for RFMD’s services are among the lowest in Singapore’s private healthcare space.

CIMB reports:

Competitors like Mount Elizabeth and Gleneagles charge 34% and 20% more on average for their services over Raffles Hospital. We think rates and charges at Raffles Hospital will be gradually increased, when the new Mount Elizabeth Novena Hospital leads the pack with new clinical benchmark charges in 2H12 (opened on 1 Jul).

With re-adjustments in its in-patients billings, we see ample room for RFMD to catch up with rates, albeit gradually initially (5-10% in FY12). This provides scope for Raffles Medical to close its pricing gap with competition. Coupled with scaled-up operations, we see room for margin expansion.

Additionally, to deal with rising costs, management is continually raising productivity. Initiatives include sharing a pool of support staff across doctors, improving processes to increase patient-doctor interaction and investing in technology and staff training.