In the third quarter of 2024, IHH Healthcare Bhd witnessed remarkable growth across various markets. The revenue showed a significant increase of 10% compared to the same period in 2023. This growth was driven by multiple factors such as higher patient volumes and enhanced revenue intensity. EBITDA also witnessed positive growth, with a 7% increase compared to Q3 2023. Excluding one-off items, the growth was even more substantial at 12%. PATMI saw a 9% increase when one-off items were excluded. The EBITDA margin stood at a healthy 23% for Q3 2024. The company's cash flow performance was strong, with a healthy cash balance at the end of September 2024.

Regional Revenue Growth Highlights

In Malaysia, revenue grew by 11%, mainly due to more inpatient admissions and higher revenue intensity. In Singapore, the revenue increased by 5%, while the EBITDA margins remained stable at 29%. In Turkey and Europe, the revenue grew by 17%, accompanied by a 12% EBITDA growth. In India, the revenue grew by 9%, and EBITDA grew by 32% when one-off items were excluded. Hong Kong also saw a 13% revenue growth, with an EBITDA growth of 63% and margins at 15%.

Malaysia's Performance

Malaysia's revenue growth was impressive, reaching 11%. However, margins fell by 100 basis points due to higher staff costs. Despite this, the company's overall performance in Malaysia remains strong, with a focus on maintaining its leadership position and supporting the country's medical tourism aspirations.

Singapore's Challenges

In Singapore, operations faced margin pressure due to ongoing renovations at Mount Elizabeth Orchard. This led to a reduction in the number of operational beds. However, the company is working on stabilizing these margins and is expected to see improvements by the end of 2025.

India's Growth and Challenges

India's EBITDA and EBITDA margins showed a decline of 3% year-on-year due to a one-off reversal of expenses in the previous year. But the company has implemented several initiatives such as procurement and IT cost synergies to ramp up volume and intensity at facilities. It is expected to continue its growth trajectory in the coming years.

Hong Kong's Success

Hong Kong witnessed a 13% revenue growth with an EBITDA growth of 63% and margins at 15%. This indicates the company's success in this market and its ability to drive growth and improve margins.

Interim Dividend and Financial Highlights

The company paid an interim dividend of MYR0.045 per share in October 2024. This reflects the company's strong financial position and its commitment to rewarding shareholders. The release date of the earnings call is November 28, 2024. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Acquisitions and Initiatives

The company completed the acquisition of Island Hospital, enhancing its leadership position in Malaysia. It also implemented the CDC's antimicrobial stewardship guidelines across its 80-plus hospitals, making it the largest international private hospital network to do so. These initiatives are expected to have a positive impact on the company's future growth.

Fundraising and Investor Demand

IHH Healthcare successfully raised an unrated sukuk program for RMB4 billion, which was over four times oversubscribed. This indicates strong investor demand and confidence in the company's growth prospects.

Managing Challenges

The company faces ongoing challenges with third-party payers, particularly in Malaysia, where medical inflation has been a concern. It is addressing these issues through engagement and potential premium increases. The introduction of co-payment is expected to stabilize the market. Foreign currency translation also impacts the reported financial performance, with the ringgit's depreciation affecting results. However, the company remains financially stable despite these translation effects.

Outlook for 2025

Overall, EBITDA growth is anticipated in 2025 despite the ongoing challenges. In Singapore, renovations are expected to stabilize by the end of the year, and margins are expected to remain stable at 25% due to cost initiatives. In India, the company aims to maintain occupancy in the high 60s to early 70s and will expand through brownfield projects or tactical acquisitions. While some margin volatility may occur, the strategy is to ramp up in bite-sized phases to minimize impact.

The United States is facing a critical issue as it fails to fulfill one of its main responsibilities - ensuring the health and welfare of its citizens. This has led to a dismal situation where the nation cannot accurately claim to be successful. A recent report by the Commonwealth Fund, "Mirror, Mirror 2024: A Portrait of the Failing U.S. Health System," has shed light on this problem. It reveals that despite spending the most on healthcare, the U.S. ranks lowest overall among ten wealthy countries in four out of five categories.

Unraveling the U.S. Health System's Failures

Access to Care: A Critical Shortfall

Primary care doctors in the U.S. are the worst-paid physicians, leaving medical school graduates with huge debts and a strong incentive to avoid primary care. This leads to a significant number of people being uninsured or underinsured, making it difficult for them to access timely and necessary care. As a result, many individuals delay seeking medical attention until their conditions become serious and costly to treat.In addition, the lack of an effective primary care infrastructure exacerbates the problem. Preventive screening and higher-quality disease management suffer, as there is a comparative absence of proper primary care services. This not only affects the health of individuals but also puts a strain on the overall healthcare system.

Administrative Efficiency: A Burden on the System

Current incentives in healthcare are not focused on providing the best care for patients but rather on revenue opportunities. Insurance companies and healthcare systems benefit from this, while patients are left at a disadvantage. The system is driven by short-term gains rather than long-term health outcomes, making business performance the primary metric for success.Furthermore, the consolidation of healthcare systems is driving up costs to patients. Larger systems are buying up previously independent practices, reducing competition and increasing prices. This adds to the complexity and inefficiency of the healthcare system, making it harder for patients to access affordable care.

Equity and Health Outcomes: A Disparate Picture

Health disparities are rampant in the U.S. healthcare system. Approximately 80% of health outcomes are influenced by social determinants of health, while only 20% are affected by actual clinical care. This means that factors such as socioeconomic status, access to resources, and environmental conditions play a significant role in determining health outcomes.Without adequate primary care from an early age for everyone, many individuals enter the Medicare years with chronic conditions and low health literacy. This increases costs and reduces the effectiveness of value-based care initiatives. It is essential to address these social determinants and invest in primary care to achieve greater health equity.

Pharmacists and Dentists: Part of the Ecosystem

The dysfunction in the U.S. health system extends beyond hospitals. Pharmacists and dentists also experience similar complications. Consolidation in the pharmacy benefit management and digital health spaces leads to high costs, administrative inefficiencies, and a lack of access to primary care.In dentistry, greater integration of oral health into the ecosystem would help build the bridge between oral health and overall health. Shifting towards value-based care would incentivize prevention and personalization in care, improving the overall health of individuals.

The Importance of the Patient-Physician Relationship

The one-on-one patient-physician relationship has been largely forgotten in the current healthcare model. Health systems and insurers focus on business concepts such as "productivity" and "consumer-driven wants," neglecting the importance of a trusting and mutually respectful relationship.This is especially evident in the failures of primary care. Only through such a relationship can patients safely navigate the complexities of modern healthcare. We need to incentivize primary care for both patients and physicians to ensure the best possible care.

Social Determinants and Value-Based Care

Investments must be targeted at enhancing socioeconomic factors, physical environments, and health behaviors to encourage greater health equity. Without these necessary steps, the effectiveness of value-based care initiatives is limited.Ensuring every American has access to a foundation of health knowledge and preventative care is crucial. This can help mitigate costs, reduce chronic disease burdens, and allow Medicare to better fulfill its mission for future generations.In conclusion, the U.S. healthcare system is in a state of crisis. Multiple interventions are needed at all levels to reverse this dismal track record and ensure the health and welfare of its citizens.