Singapore Medical Group (SMG) for instance, has more than double since last year August, when it acquired a radiology centre. It has also entered into agreements to acquire two paediatric clinics recently – marking the SMG's initial foray into a highly complementary specialist vertical. This provides it cross-selling opportunities to its Obstetrics & Gynaecology (O&G) segment.
Singapore O&G Ltd, which runs gynaecology centres on the other hand, has surged 75% in the past 12 months. Both have helped an index of nine medical-services providers worth less than a total of S$1 billion to triple the benchmark Straits Times index.
Buying private clinics to capitalise on medical tourism
In the last 12 months, at least 19 transactions have occurred, involving acquisitions of clinics by publicly-traded companies in the city states – twice as many as in 2015.
The deal count may rise for the rest of the year as more physicians are selling their practises to larger providers of medical care, according to DBS Group Research.
"There's still room for consolidation," said Ms Rachel Tan, an analyst at DBS Group Research in Singapore. "With corporatisation, doctors could look to leveraging the size and growth of a bigger medical practice and potentially prolong their practice as they approach retirement."
Analysts say that the fastest way for companies to capitalise on populations that are becoming richer and seeking better care - such as foreign patients – is through buying private clinics. While tourist arrivals are expected to decline, the demand for high-end services from foreign patients is resilient.
"Most middle-to-upper class Indonesians go to Singapore for treatment," remarked Mr Alan Richardson, a fund manager at Samsung Asset Management, who holds shares in Singapore Medical Group and Singapore O&G. "So the market is not just Singapore, but a 600-million population catchment area that is Asean."
Doctors say it means better care for patients
With such optimism surrounding the industry, stocks have risen in prices. Singapore Medical Group and Singapore O&G trade at price-to-earnings multiples that are more than double the local benchmark index.
"It's an exciting story but sometimes integration is not easy," said Mr Andrew Chow, head of research at United Overseas Bank. "The game will continue for the next six to 12 months. We need to see organic growth as well as a smooth integration a full year later."
As for doctors, Cathryn Chan, an obstetrician and gynaecologist at Astra Women's Specialists that was bought over by Singapore Medical, there was attraction in joining a hospital system.
"When there are more doctors, more people in different sub-specialties, patients are looked after well," she said. "And when you decide to retire, there will be a second generation to take over." MIMS
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