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Sakmongkol ak 47

Friday 12 February 2010

How fare IJN?


Dear Friend,

I haven't written about IJN for some time. The MOF has quietly approved the management buyout of IJN by a group of doctors. The government is going to be suckered on this. Might as well say it outright at the outset.

This simply means a group of doctors, well heeled ones, ganged up together and proposes to the government, they want to take over and manage the hospital. Which means, its back to square one. Imagine that- when it was operated on something like a sendirian berhad or single business unit, the doctors made a lot of noise decrying that arrangement which basically allows a few people to dictate the running and operating of IJN as a business. They wanted a piece of the action. They didn't want to see only one person ( Yahya Awang) make a lot of money.

Envious of that arrangement, they kicked out that arrangement and put in place a management structure that would evolve IJN into something like Mayo Clinic and other well known hospitals. The doctors probably realized later, by structuring the hospital on business lines, that decision cut off a lot of profit which could go into their hands.

Hence they pestered the government to revert to the old style of a sendirian berhad. The doctors even enlisted the support of Tun Dr Mahathir to give credence to their idea.

How much did you buy IJN?

The rakyat wants to know at how much? The building and all the equipments therein were bought using government money. They even built a new wing for around RM 10 million. It has good will. It has become a brand. So we want to know for how much and the method of payment.

What's the latest news? You may remember, the doctors presented the PM a very sanitized and altruism impregnated proposal. They are looking out for the interest of the rakyat. We are doctors. We save lives. Money, not important. It's a calling.

So what's the first order of the day at its first board meeting? It was the approval of a salary increase for only 73 doctors ranging from 5% to 65%. That would cost the government what a few millions a year? Read this. This year's projected loss is RM 36 million. IJN making losses but salary of 73 doctors rise by RM 4 million a year?

That salary increase will obviously cut into the operating cost of the hospital. It's not related to productivity. Beds are empty and the number of doctors insufficient. There is a long waiting list. But the gang doesn't want to increase the number because they would mean having to share with more and ending up with less.

But what about the salary of those at the lower rung? The nurses, attendants, and other services? The 73 doctors simply put out their demand as a fait acompli- give us what we want, or we get out. Will MOF capitulate?

There go all those pretentious altruistic intentions of Hippocratic Oath taking individuals. You may well change them to hypocritical oath takers.

This is a government hospital. So if we throw out the management model that could turn IJN into a center of excellence, why not place it under MOH? Doctors at IJN earn astronomical salaries, those working at government hospitals earned paltry sums. If so, why not turn every government owned hospitals into something similar to what IJN is currently doing? That is, allow a group of doctors at each hospital to propose taking over and managing their respective hospitals as a single business unit. So that, at their first board meeting, they too can approve a handsome salary increase.

But beyond these tantrums and antics, what is actually happening at IJN? You are turning it into a single business unit susceptible to takeovers in the future. Or you are turning IJN into as single business unit that confers on the doctors planning such a business structure, an exit opportunity. Thus in future, if the gang of doctors find the running difficult, they can always cash out to a deep pocket corporate player. What's stopping Sime Darby for example; to offer the doctors at a later stage some very enticing offers? Because the doctors have already shown at its first board meeting, they want to earn more money.

Where do they learn this kind of tricks? Maybe they took to heart (no pun intended) the corporate exploits of one Tseu Fui Loong. Now who on earth is this bloke? Never heard of him?

Well he was the owner of Sabah Medical Center. One day, SMC built Hospital LIkas in Sabah. SMC built it on a design and build concept. After completion, SMC sold hospital Likas for RM 250 million or so to MOH. Why didn't MOH build a hospital itself?

The government bought it through MOH. Why MOH bought this hospital from SMC, we don't know. It doesn't know the business in Sabah. In order to keep it as a viable buy, SMC rented back from MOH 2 floors at Hospital Likas. That probably saved MOH's business venture. Remember, TFL ha already sold Likas to MOH at ¼ billion Ringgit. He then sells 51% share of SMC to Kumpulan Perubatan Johor( KPJ). He is in business of building and selling hospitals.

You see, the doctors at IJN are probably learning from TFL. He is their hero. Turn IJN into as a single business unit. Sell to a buyer later. Or sell to the government. Or maybe sell some portion to Sime Darby, some to MOH and some to KPJ. Each shareholder makes a lot of money and can even work as a salaried doctor under a new organization co owned by deep pocketed corporations and MOH.

What's the deal with IJN and SMC and TFL? That my friend is another story.


eddy 12 February 2010 at 11:14  

Dato', the history of private hospital management in Malaysia will tell us that Doctors are very good at treating sick people and make them better, but never good at Management of Hospitals to ensure profitability. So obvious of their inept financial management skills that immediately give pay rise to the 73 doctors, which will later obviously be balanced by higher charges.

So the rakyat who holds the IJN in esteem will suffer due to higher cost. They will complain and Government will tell IJN not to raise the price too much, so the doctors will follow and in the end suffer losses as the "OUTs" does not match the "INS". Inevitably its like a self-fulfilling prophecy that the IJN will be bought over by good hospital managers the likes of KPJ, Sime Darby or even a MOH/ Government buy back.

IJN Doctor/wannabee Managers untung tapi orang ramai tidak untunglah. I guess money makes the world go round and make some doctors forget their oath.

kuldeep 12 February 2010 at 12:09  

MOH can't build hospitals cos it takes them years to get it completed (Pandan?JB?) and it costs a bomb (RM 1.67m /bed)...

Even when the buildings are completed after all the delays..they still haven't organised the eqpt/ppl to get it operational...

But lets do it the simple way..get Khazanah,the whizz kids to do a review and strategise the way fwd.

Like paying 58 times earnings for a 10% stake..
O selling low and buying back a non controlling stake high in an established name..

Bro...give me the IJN doctors any day and god bless them if they make a liitle bit of retirement money..

mohd ali ismail 12 February 2010 at 12:36  

Datuk,Despite of bitter objections by all quarters on this issue,I am bewildered as to how this transaction could take place without public's knowledge.I am sure there is more than the eyes could see.It looks like that we are heading back to the age feudalism.Sorry for the have nots!

Donplaypuks® 12 February 2010 at 14:48  


It it's going to be a fait accompli, then why not an open tender as promised by PM Najib when he took office and talked about future privatisation projects? At least that way, the Rakyat will get market price.

In any event, I think the decision, if true, stinks to high heaven!! Once in a while, the Govt should call these doctors' bluff. Our way or the Highway! We'll see how quickly they will fall in line. You think oveseas non-pensionable limited contract period jobs are that easy to get?

I guarantee you they will undervalue the assets and within a short period IJN will be injected into a Plc (remember Mokhzani and Fomema?) giving an instant windfall profit of several hundred million $ to these doctors who owe their subsidised education, training, scholarships and pensions to the Taxpayer!

I also suspect that these are the last of the opportunities for many to 'make money' before the boom falls in GE 2013!! So, our crown jewels will be hocked for a pittance!

We are all of 1 race, the Human Race

Anonymous,  17 August 2010 at 16:29  

ijn doctors,
if wanna be rich, just resign..
become bussinessman..
making millions, but no one making noise at u...
doctors job is just to serve people and become kuli..
not making money..

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