CONTENTS
Metro Pacific Hospital Portfolio
Evolving Roles of CFOs
Financial Reports and Analysis
Fund Allocation
Decisions on CapEx purchases
The Evolved CFO
Characteristics of a Modern CFO
Emerging trends that causes CFOs to evolve
• About First Pacific, MPIC and MPHHI
• MPPHI’s Hospital Partnerships
• MPHHI Group Management
Presentation Outline
4
• 30 yr old investment & management co.
• Headquartered and listed in Hong Kong
• Focus: developing LT value in Asia Pacific
• Investments primarily in the Philippines & Indonesia
Mother Company: First
Pacific
5
NATURAL
RESOURCES TELECOMS
FOODS/
CONSUMER
6
UTILITIES/
HEALTHCARE/
INFRASTRUCTURE
#1 in cellular #1 in fixed line #1 in broadband in the Philippines
The First Pacific Group
Today
Water Distribution Exclusive concession Toll Roads Exclusive concessions Electricity Distribution
Exclusive franchise Largest Healthcare in the Philippines
Largest vertically integrated food company in Indonesia with largest flour mill and largest instant noodle maker in the world
Largest mining company in the Philippines 3rd largest palm oil plantations in the world with interests in sugar and rubber plantations
6
The First Pacific Group
Today TELECOM
S
UTILITIES CONSUME
R GOODS
NATURAL
RESOURC
ES
POWER
GENERATI
ON
• An investment and management company
• Listed in the Philippine Stock Exchange
• Towards Nation Building
• Focus on Infrastructure
• To make a difference
• To uplift the quality of life of every Filipino
8
Nationwide Chain
Existing
Desired
West Metro Med Center
Sacred Heart Malolos
Medical Doctors Hospital
• Now largest private hospital group in Philippines: 2,600 beds
• Mostly premier brands, the best in their areas: • Makati Medical Center Makati
• Cardinal Santos Medical Center San Juan
• Manila Doctors Hospital Manila
• Our Lady of Lourdes Hospital Manila
• Asian Hospital Muntinlupa
• De Los Santos Medical Center QC
• Sacred Heart Hospital of Malolos* Bulacan
• Central Luzon Doctors Hospital Tarlac
• Riverside Medical Center Bacolod
• Davao Doctors Hospital Davao
• West Metro Medical Center * Zamboanga
• Nationwide presence in Luzon, Visayas & Mindanao
Towards a Nationwide Chain
11
12
Makati Medical Center
Location Makati City
Management Date 2005
Investment Date May 2007
Ownership 33%
Beds 525
14
Cardinal Santos Med Ctr
Location San Juan City
Interim Lease Date Aug 2008
Long Term Lease Date Feb 2009
Ownership Lease
Beds 239
18
De Los Santos Med Ctr Location Quezon City
Management Date Sep 2011
Investment Date June 2013
Ownership 51%
Beds 138
19
Central Luzon Drs. Hospital
Net Profit After Taxes (2007 to 2012)
In P
Mn
s
MPIC Entry
Location Tarlac
Management Date Jun 2013
Investment Date Oct 2013
Ownership 51%
Beds 195
20
West Metro Medical Center
Net Profit After Taxes (2007 to 2012)
Location Zamboanga
Management Date*
June 2015
Beds 110 to 190
21
Manila Doctors Hospital
Net Profit After Taxes (2007 to 2012)
Location Manila
Investment Date Dec 2015
Beds 300
22
Sacred Heart Hospital
Net Profit After Taxes (2007 to 2012)
Location Bulacan
Investment Date Mar 2016
Beds 55 to 122
ACCOUNTING
FINANCIAL REPORTS
TREASURY
LOANS/INVESTMENT/
CASH MANAGEMENT
PRODUCT COSTING & PRICING
PURCHASING
COMPLIANCE/TAXATION
WAREHOUSING & INVENTORY
MANAGEMENT
CFO
= FINANCE
Traditional CFO
Chief Finance Officers are no longer simply responsible for a company’s
financial health. Today they make a vital contribution to the strategic direction
of the business, thus, the roles are now evolving.
CFO
FINANCE
Driver for corporate strategy along with CEOs.
Retain controllership and integrate value of Business Partnership
Risk Identification and Management
Create sustainable value adding services
Must be the main example in encouraging ethical behaviour
and professionalism
*CFO should be Focused, Innovative, Decisive
Evolving Roles of CFO
FINANCIAL REPORTS – Profit & Loss
Standard Profit and Loss (PNL)
Performance vs Last year vs Budget
Percentage to Revenues
Cost of Sales
Gross Profit
Expenses
Net Income
Increasing revenue of Outpatients than Inpatients
Higher Occupancy Rate
Lower ALOS (average length of stay)
More consultants with subspecialties
Efficiently run specialty clinics
Average Bill per patient
indicator of high value procedures
are availed
rates of hospital are high so need
to revisit
Sources of revenue
indicator of where to put the trust
of marketing or where to push
indicator of where to put resources
FINANCIAL REPORTS – Profit & Loss
Standard Profit and Loss (PNL) OTHER FINANCIAL REPORTS – HOSPITAL
Census and Gross Revenues
Medical Cases
Patient Profile (Age, Location)
Payment Type (Selfpay, HMO, Corporate)
Profit and Loss per Department
Contribution Margin per procedure
FINANCIAL REPORTS – Profit & Loss
Profit & Loss Analysis
Standard Profit and Loss (PNL) GROSS MARGIN
Declining Gross Margin, Increasing Fixed Operating Expenses
= recipe of disaster
COST OF SALES
Increasing COST of SALES %
Case mix of more expensive low margin cases
Issuance of drugs and supplies not properly charged
Erroneous pricing or procedures
Profit & Loss Analysis
EXPENSES
Increasing PM poor maintenance, expensive cost to own or pilferage
Increasing Utilities Expense Office layout, machines are not energy efficient
DEPRECIATION Increasing depreciation without a reasonable increase in revenue
Overspending in CAPEX, CAPEX not maximized /non income generating
Reasonable CAPEX spend should equate to % increase of revenue
EBITDA
Increasing EBITDA would mean a good steady cash
balances to cover expansion or acquisition
FINANCIAL REPORTS – Balance Sheet
Reasonable percentage of inventory: higher
accounts trade payable means trading on
supplier credit, cash is maximized for
working capital
Ideal working capital is sourced out from
Fast TAT of AR to cash
Reasonable payable turnover
Fast TAT inventory to cash or AR to
finance operation and lower debt and debt
service cost
FINANCIAL REPORTS – Cash Flow
Purchases of CAPEX should be financed by
internally generated funds or income from
operation
CAPEX purchases should not be more than
cash from operation
Enough cash to payout dividends to
shareholders
Enough cash to fund operating requirements
Considerations in Funds Allocation
Complete the hospital offerings
Need to compete with other similar hospitals
Requests of doctors
Make a distinction or differentiation of the hospital
Allocate according to revenue generating vs. non revenue generating
Evaluate based on ROI, payback period and Cash Flow
Decision Points for CAPEX Purchases
Financing Options
Technology Advancement
1.
Operational Efficiency
2.
Technical and After-Sales support
5.
Cost to Own
3.
4.
Driver for Corporate Strategies
CFOs should:
Take active role in business
development.
Integrate financial and non-financial
information.
Ensure that business decisions are
based on solid financial criteria.
Initiate change programs that will fine
tune financial processes.
Controllership and Business Partnership
CFOs must focus on:
• Stewardship of organizational assets
• Financial Health of the Organization
• Adherence to government regulations
• Transparency on financial reports
At the same time look into:
• Careful vendor selection
• Price negotiations
• Finance talents retention
• Technological Advancement
• Competitor and Market Dynamics
CFO as Risk Identifier and Manager
CFOs must be able to:
Identify and mitigate risks on factors such as:
change in political leadership
new government regulations
natural and man-made disasters
globalization and technological advancement
employee turnover
Use and analyse various financial models and
techniques that has impact on potential investment
return
Value-Adding Services
Participate in master planning and infra
developments
Look for Purchasing Synergies to get
best terms
Understand new hospital technologies
Encourages Ethical Behaviour and Professionalism
CFOs shows:
Strong ethical leadership and good
governance
Principles of integrity, objectivity,
competence, due care, confidentiality
and professional behaviour
Effective communication with both
internal and external stakeholders
What characteristics of a modern CFO?
o Finance Expert
Have experience across in various finance functions.
o Broad Industry Experience
With significant experience with various industries
o Strong Track Record
Significant achievements in his/her career
o Hungry for growth
Never-ending satisfaction in terms of learning new skill sets
Sample emerging trends that causes CFOs role to evolve
Globalization (i.e. ASEAN Integration)
Technological Advancement (i.e. Hospitals
gearing towards non-invasive surgeries)
Tighter Competition
Regulatory changes