Barbarians at IJN's Gate

Sime darby and IJN

This is my preliminary take on the IJN- Sime Darby issue.

1. Is the agree-in principle stance by the government on the proposed acquisition of majority share in IJN by Sime Darby, part of the government’s strategy of asset rationalisation? Selling off assets to make money? But then where is the open tender process announced by the DPM?
2. What is the financial record of Sime Darby’s Medical Center at Subang Jaya.?
3. What are the book balances of IJN?
4. who is the consultant in this corporate shuffle?

A few years ago, when I was serving as a wakil rakyat, there was a boy from the village called Kampung Sri Makmur in Pekan. He was suffering from a congenital hole in the heart condition. He sought treatment from IJN. After seeing the doctors there, the father came to me and showed me the expected cost. In 2004, it was RM18,000. Imagine the horrified expression of the father, a kampong fellow scrounging a living doing kampong work

I wrote a letter to the authorities at IJN asking for a waiver of the fee and asking for a subsidy which is available for patents who are destitute. IJN came back and agreed to a nominal fee of RM 1,000. The boy had his surgery and is now doing fine. I remember another case of a boy with the same ailment staying on the 12^th mile Gambang - Kuala Lumpur road. If I am not mistaken, he came from a kampong called Taman Sriku. He got the same waiver from IJN and paid only a nominal fee.

I cited the two cases to illustrate the seriousness by which IJN took up its corporate social responsibility. It was the saviour of thousands of people suffering from various ailments related to the heart. It was able to do this because, profit motive wasn’t top on its list of priorities. Because it took its CSR seriously, it was able to accommodate these two cases. I am sure, there were thousand other cases.

Will it still be accommodating once Sime Darby takes over? The following rate schedules should be sufficiently illustrative

CHARGES	SIME DARBY’S SJMC	IJN
SINGLE BYPASS	40-50,000	25-30,000
ANGIOPLASTY	35-45,000	18-35,000

I share the same discomfort and disgust with many others at the prospects of Sime Darby taking over IJN. Everybody knows, Sime Darby is a profit seeking business entity. I am not going over the list of the cons of Sime taking over IJN. That has been done by many other bloggers.

This seems to be the modus operandi of corporate takeovers. They study a target and then present a proposal to the government. Are the powerful people who serve on the board of IJN sufficiently informed about this buying in? people can be mesmerised by numbers especially if the board members stand to gain some golden handshakes as hosts.

I thought Khazanah has its medical businesses in Apollo Health services? Suppose, as an indication of second opinion which doctors usually advise people to do, would the government invite Apollo to submit their own proposal? That would enable the government get a more informed judgement instead of (a) relying on the Sime Darby boss’s assurance. (b) a statement by the prime minister (b) a not so assuring agree- in- principle statement from the DPM.

Agree in principle means what? That you actually have agreed but for reasons of public assuaging, you come out with a hazy enough response to indicate to the people, you appear to be on their side? This response seems a callous one- even in a matter involving life and death, it is still reduced to a political shuffle. The PM’s assurance? It is just like Bush’s senior- read my lips spin of truth. The assurance from Sime Darby’s boss? Its like the promise of the fox that he will take good care of the chickens. .

IJN was established as a specialist medical facility committed to delivering the most advanced standards in cardiovascular and thoracic medicine for adult and paediatric heart patients. It has treated well over a million patients, helping save many lives in the process. IJN has since gained wider recognition as the leading Cardiovascular and Thoracic Health Centre in the region as the rising number of referrals for complicated and demanding cases and visits from foreign cardiologists so eloquently testifies. Its expansion has been so remarkable; it achieved its goal of being financially self-sustaining within a year of operations.

If it is financially self sustaining, then, why is the government inclined to accept Sime Darby’s offer? IJN has substantial cash reserves of about RM400m and makes a profit of about RM100m a year. In addition, it receives donations from the public. It’s not exactly in the red.

Sime Darby’s Subang Jaya medical centre is well known for its costly treatment, as the above Table shows. Those who can afford are usually staff of multinationals and other employer funded patients. IJN on the other hand is the saviour of last resort for millions suffering from heart disabilities. They will not be able to afford high fees.

Suppose the same number of patients seek treatment at IJN. The IJN charges 18k on corrective heart surgery. If a kampong patient like the above I cited pays only 1k, that means the government absorbs 17k. Assume now, the cost for the same disability after Sime takes over is RM25k. if the same kampong patient pays RM1k, the government subsidises RM24k. imagine now, there are 50 patients seeking similar treatment a year. The government will have to pay out RM 1.2 million a year as subsidies. At the old subsidy cost of RM 17k, the government pays RM850,000. Meaning- government subsidy payments increase after Sime takes over. Imagine further, 500 patients each subsidised at RM 24k each? That’s 12 million a year.

I think there is more than meets the eye here.