Nov 19, 2009
Parkway hospital opening delayed
Move saves group $100m in building costs; green features will be added
By Jessica Jaganathan
MEDICAL group Parkway Holdings has pushed back the opening date for its hospital in Novena to make savings on construction costs and to tweak its design.
Work on the 350-bed hospital, which has yet to be named, began a year ago and was to have been completed in time for a July 2011 opening. Delaying its debut to early 2012 will save $100 million for the group, said Dr Lim Cheok Peng, the chief executive of Parkway Holdings.
The savings come from the economic downturn depressing the cost of cement and steel; overall, construction costs here have fallen by 15 per cent to 20 per cent in the past year.
The hospital which was projected to cost $700 per sq ft (psf) to build will now cost $500 psf, Dr Lim said.
Cost reasons aside, the group has delayed work on the hospital so it can work pro-environment features into its design, and be in the running for the Green Mark Platinum award given by the Building and Construction Authority.
Winning the award would bag the hospital 2 per cent more gross floor area.
The hospital's revamped design will include a solar garden and energy-efficient lighting.
Parkway raised buzz by bidding $1.2billion to secure the 1.7ha plot on Irrawaddy Road for this, its fourth hospital. Critics have speculated that with the high bid, the single-room- only hospital would have to charge higher fees and so contribute to rising health-care costs.
Dr Lim told The Straits Times that the group will keep costs in check in several ways - by proceeding with facelifts to its ageing Mount Elizabeth and Gleneagles hospitals in stages, sharing manpower across its hospitals both here and in Malaysia and offering competitive health packages in its hospitals here.
This year, for example, in response to the economic downturn, it began offering 40 fixed-price packages for procedures in cardiology, gynaecology and in general and orthopaedic surgery at its hospitals here. Priced 20 per cent to 30 per cent lower than the average cost of comparative procedures here, the packages cover in-patient care, facility and doctor's fees.
About 3,000 such packages have been sold, said Dr Lim.
Parkway's other cost-saving moves enabled it to offer these packages, he said, citing salary cuts, directors giving up their fees, the renegotiation of contracts and group purchasing.
So far, the group has saved $15 million.
'Based on that, we are able to pass savings back to the patients,' he added.
Parkway posted a revenue of $259 million in the third quarter, 8 per cent more than the July to September period last year. Salaries for its senior management will be restored by the first quarter of next year if the group's fourth- quarter numbers continue to be healthy, said Dr Lim. Meanwhile, Parkway aims to start selling the first 200 medical suites at its Novena hospital in first quarter of next year.
The first 80 will go for about $3,500 psf, which puts them between the average of $3,100 psf at the upcoming Farrer Park Hospital and the $4,803 to $5,295 psf range transacted at Mount Elizabeth Hospital last year.
Parkway is also pushing ahead with its expansion, especially in Malaysia, where it owns two hospitals and manages another nine under the Pantai group.
Aside from a 60-bed hospital coming up in Perak, it is looking at setting up one in Johor's Iskandar Development Region in five years - a rival to Singapore healthcare player Health Management International' s Regency Specialist Hospital, which is up and running there.
These Iskandar region hospitals hope to mop up Singapore's demand for health care, especially now that the Government has decided to extend Medisave coverage for treatment in accredited overseas hospitals. At home, Parkway will expand its executive health screening service for corporate clients and Parkway Shenton clinics, and open at least two to three clinics a year in newer housing estates.
Martin Koh/ Sherry Tang