This article first appeared in The Edge Malaysia Weekly on January 17, 2022 - January 23, 2022

SELGATE Corp Sdn Bhd, a subsidiary of Perbadanan Kemajuan Negeri Selangor (PKNS), could be one of the larger private healthcare operators in the country by end-2026, as it plans to complete and operate seven hospitals, with a total capacity of more than 800 beds, over the next five years.

Selgate CEO Noor Hisham Mohd Ghouth says the Selangor government-linked company will become the fulcrum of the state’s healthcare industry, specialising in healthcare management and including hospitals, clinics and pharmacies.

“Through our engagement with the Selangor government, there are still many areas that are underserved in terms of access and affordability, such as general practitioners and dental clinics. We are trying to fill the gap in this market with affordable quality care,” Hisham reveals Selgate’s ambitions in an interview with The Edge.

Selgate was established in 2016, and a year later it acquired a chain of clinics that it rebranded under The KL Clinics and Selcare Clinics. To date, Selgate has 16 clinics and the plan is to add more so as to provide affordable primary healthcare to the public.

The clinics have been profitable since the first year of operations, chalking up a marginal profit after tax of RM777,275 in 2016. By 2020, PAT had shot up to RM11.08 million.

Still, Hisham says the ultimate goal for Selgate is to function in a similar manner to KPJ Healthcare Bhd for the Johor government and TDM Bhd for the government of Terengganu. This means operating private hospitals all over the country.

Johor Corp, the state government’s investment arm, is the largest shareholder of KPJ with a 36% stake. Its counterpart, Terengganu Incorporated Sdn Bhd, the Terengganu government investment arm, owns almost 60% of TDM.

KPJ operates 28 hospitals all over the country with 3,230 beds. It also operates two hospitals in Indonesia with a 100-bed capacity and one hospital each in Bangladesh and Thailand. In Australia, KPJ operates a senior and assisted living care centre.

Apart from hospitals, KPJ also operates one university college and four senior and assisted living care centres in Malaysia. The group also runs a nursing college in Bangladesh. As at last Thursday, KPJ was valued at RM4.7 billion.

Unlike KPJ, which is focused on healthcare, TDM is also in the oil palm plantations business and operates only four hospitals with 394 beds. As at last Thursday, the group’s market capitalisation was RM413 million.

Selgate’s first hospital is expected to be completed this year — in Rawang with 95 beds in the first phase, to be expanded later to 230 beds.

Next year, a second hospital will be opened in Sepang, followed a year later by three hospitals in Johor Baru, Johor, Setia Alam in Shah Alam and Kuala Selangor in Selangor.

A high-end hospital in Mont’Kiara, Kuala Lumpur, is slated to be completed in 2025, and a year later a hospital in Shah Alam, says Hisham.

But how will Selgate fund all these hospitals as it costs an estimated RM1 million per bed to build? Selgate will not have to invest almost RM1 billion to build up its healthcare portfolio as it has partners.

“We are not going to build; we have partners for that. The partners are going to build for us, they have the land ... We are going to sign lease agreements with them — long lease agreements of at least 15 years.

“We are going to run and operate the hospitals. We are going to focus on healthcare management,” says Hisham.

As the most developed state in the country, Selangor already boasts a big private healthcare industry that includes hospitals under IHH Healthcare Bhd’s Pantai, Ramsay Sime Darby Healthcare, Sunway Bhd, Columbia Asia and, of course, KPJ.

As such, Selgate will have to carve out a share in an already crowded market where the private players are well established and experienced in managing private hospitals, and have deep pockets.

Hisham says Selgate will position itself as a player that offers quality healthcare at affordable rates to all, and that charges will be comparable with Columbia Asia hospitals. Columbia Asia is partly-owned by Hong Leong Group.

Another aspect of Selgate is its insurance arm, Selcare Insurance — a service started by the Selangor government to provide basic healthcare treatment at private clinics for the B40 citizens in the state, with an allocation of RM500 per person per year through Skim Peduli Sihat.

This culminates in the Skim Insurans Peduli Sihat, which provides benefits such as RM5,000 per person in the case of death or permanent disability, RM5,000 per person coverage for treatment of critical illnesses as well as RM1,000 funeral expenses.

Hisham says Selcare Insurance is now also available to private organisations for group insurance and state civil servants are covered under a scheme that allocates RM10,000 a year per worker.

“That is what we are trying to create for Selangorians, so that they can go to private hospitals with at least an allocation of RM10,000 a year,” says Hisham, sharing his vision for Selcare Insurance.

“For instance, every year the state government has allocated a budget of RM42 million for the B40 under Skim Insurans Peduli Sihat. This is for the GP clinics.

“Later on, we intend to get everyone in Selangor insured. We are also in the insurance business; we have Selcare Insurance PCC Ltd, which is incorporated in Labuan — that’s for medical insurance.

Apart from the healthcare business, Selgate is also in the digital business through the Selangkah app. Started as a contact tracing app because of the Covid-19 pandemic, Hisham aims to turn Selangkah into a super app, given that it has seven million registered users.

Even so, with so many super apps in the market, Hisham concedes success will hinge on how well it grows the apps ecosystem.

Selangkah already has the following functions: e-wallet, Covid-19 booking system, self-quarantine home assessment tool, pre-registration system for the Covid-19 Assessment Centre, a mental health screening function and registration for Covid-19 vaccination.

Time will tell if Selgate is able to replicate the success of KPJ in the healthcare sector and whether it can become a source of revenue for the Selangor government.

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