IJN- Induced Myocardial Infarction?

After the government rejected Sime Darby's proposal to acquire IJN, it should have created the poison pills strategy to prevent future attempts. One way is to create independent business units with cross holdings that make takeovers extremely difficult. It hasn't done that it seems. Indeed, attempts are being taken at the moment to make a new softer offer to take over IJN. I am hearing that the idea is mooted by a team of eminent physicians.

It is learnt that a version whereby IJN shall morph into a single business unit is being favorably considered. If that is so, this raises the question why the government is ok with the current idea but wasn't pleased with Sime's idea the last time? Will the government get immediate money from the current charmers? How much money will the government get? What will happen to the RM 411 million reserve? Downsizing to a bite size organization certainly makes IJN an easier target in future by some deep pocket corporations. If that happens it will certainly hasten myocardial infarction.

The eminent doctors now peddling the idea of taking over IJN have only an altruistic motive- that of making IJN a center of excellence. Jolly good my man, but there is one nagging question. The route you have chosen is by privatizing IJN. Will that be the usual Malaysian version? That of privatizing the profits but socializing the liabilities? Mayo and Cleveland and John Hopkins didn't opt for the route you are proposing to make them centers of excellence. They did it through the old fashion bricks and mortar way- carrying out excellent research, creating top notch graduate medical schools, clinical schools and creating breakthrough medical achievements.

Whats the beef actually? Its money right? Some eminent cardiologists are thinking they want to make money. How does one achieve that on current organizational basis? Only by charging high fees to patients who can afford them? In this case IJN has to rely on high net worth individuals being referred to them by other doctors in the Asean region or even elsewhere. Even then, this has to depend on IJN developing excellence in certain medical fields. It has to expand from just being a cardiology centre to one that can treat a number of diseases. Better still, it needs to develop excellence in fields of medicine that afflict the well heeled.

IJN has already achieved excellence of sorts really when they operated on Tun Mahathir the Great. Dr Mahathir is a living proof and showcase that IJN has got talents. That's why people flock to IJN. The way I see to get more excellence is to leverage on this expertise by deepening into other medical skill sets. Leave revenue generating excellence to people who excel in these fields. You dissipate doctors' talents by asking them to pedal panadol and doing other non medical skunk works. Let a hospital be known for one particular excellence- medical breakthroughs. Let the other revenue generating sources subsidize the poor and the impoverished and those you fear would be denied access to top medical treatment.

Not every doctor is a doctor Mahathir- developing a repertoire of skills beyond general practice. I am not comfortable in accepting that doctor's skills are transferable into general management, despite ceding the acknowledgment, they are indeed clever people. Now, between an altruistic motive and a quantifiable business motive, I prefer the second. The problem with altruistic motive is that you can mean whatever it is you want it to mean. Hence under the concept of the altruistic motive of making IJN a centre of excellence- it is also meant as IJN being a profit centre relying heavily on the patient referral system, it can nurture entrepreneurship( yes we can already picture the comical scone of doctors waiting at the aisles and sidewalls, selling panadol like cure all panacea.

It's like asking you to chose between a concept such as vision 2020 and a vision of say Islam Hadhari. I will choose vision 2020 because it's quantifiable and therefore accountably specific. Islam hadhari? It's too slippery a concept lending itself to mean whatever one wants it to mean at that particular time. I am having the same vibes at the concept of 1Malaysia. Not quantifiable but slippery.

IJN used to be organized on a simple basis. MOF and Federal land commissioner (FLC) own 100% of IJNSB. That was during the good old Yahya Awang days. Absolute power was vested in one person and his immediate coterie of workers. One single person decides the fate of IJN. The hospital functioned like a normal government hospital under the Ministry of health. The government subsidized everything.

Not good says the government. Too much power was concentrated in one person. One person can screw everything up and doctors are not beneath screwing things and persons. Could lead to abuse. It was also bleeding the government. To alleviate government subsidy costs, why not restructure IJN so that it can operate on a business like for profit organization? So, after 2005, with the honorable exit of Yahya Awang, MOF and FLC owned 100% of IJN holdings which in turn owned d the entire 71, 619, 211 ordinary shares of IJNSB.

IJN holdings then can own independent business operating units such as IJNSB-the hospital, IJN Capital a special purpose vehicle to procure Islamic finance, IJN College. It was also planning to create a subsidiary offering other education businesses (related to clinical studies of course and presumably hospital management), IJN services (hospital support services), a pharmacy business and an asset management company.

These are supposed to enhance entrepreneurship and business acumen of the people in white coats and surgical masks.

These business units and the reorganization of IJN along these lines were justified by the usual business proposal paper. Yes, the one normally produced by consultants, accountants and so forth. Funny, a big organization like IJN produces the same bland proposal paper like any other bank loan applications, yet because it's written by IJN, a business proposal with nothing extraordinary other than a justification to make money, is accepted as distinguished. This is bull and a lot of crap. If you look at IJN's business proposal, there's nothing outstanding there other than it being written by the same consultants writing for any other business plans. Aiyo, one would have thought IJN would come out with better finesse.

As at end 2008, IJN had an outstanding financial obligation of RM100 million under special SUKUK financial arrangement. This was the remainder of the original RM 209 million financial facility. It meant that IJN was able to pay up. Indeed at end of 2008, it had a robust liquidity profile (the term they used) of RM 411 million. It meant they had 411 million cash and can retire whatever loan they had easily.

So why want to take over a healthy organization? Simply because some people and doctors thought they can make money and want to be rich too. Mental retard politicians make tons of money, why not doctors too?

Because, doctors know IJN can make money. Sime Darby knew this all along and with fine tuning can make more money. Slime SimeDarby has the smarts to make more money.

Problem was, Sime Darby didn't enlist the right foot soldiers to extol the benefits of their take over. It was quirky accused of wanting only to make money and was painted as the evil entity that wants to make money out of people's misery. I too took potshots at Sime Darby and in particular at Tun Musa Hitam. ( Musa Hitam says Mahathir hates his guts).

The doctors at IJN say they want to develop IJN into a center of excellence like Mayo Clinic and Cleveland Clinic (established in 1921). Both have a long history and developed into centers of excellence founded on an efficiently run organization. Both became profitable as a result of private and public endowments and also due to paying patients. Patients were willing to go there because both have developed excellent medical reputation and credibility. I am willing to state that the credibility and excellence was achieved by doctors concentrating on what they do best and leaving the business side of the clinics to professional business people. There was a clear demarcation line.

This is the missing link at IJN. It doesn't yet have a long history and doesn't have the volume. It must depend on the patient referral system? What's this? Non IJN doctors referring cases to IJN? In that case, IJN wants to operate on a basis not dissimilar to the ambulance chasing system practiced by accident lawyers. They have runners going after accident victims to be represented by their lawyers.

This is an unsound system to build IJN into a center of excellence. Patients will be willing to pay for specialised expertise at IJN because of the reputation they have built- referred to or not. We all want first class medical treatment and facilities. Those who can afford will not complain about investing in their health. The government still pays for those who are referred but can't afford the fees. All patients pay fees to enter IJN.

So if it's the volume IJN wants, leave it to the professionals to create independent business units to generate other incomes. Doctors concentrate on building reputation which will be the asset that attracts volume. Business people are abler people when creating business units to generate income. Doctors do the healing.

So that makes rejection of the proposal by Sime Darby deserve a re look. Why was it turned down?