OUE Lippo Healthcare Limited announced that its joint venture company with China Merchants Group (CMG) China state-owned company in Hong Kong, known as China Merchants Lippo Hospital Management (CMLHM) (Shenzhen) Limited has signed management agreement with other member companies of China Merchants Group to manage three medical facilities in Chongqing, Shanghai, and Nanjing.
CMLHM is joint venture company that belongs to Lippo Healthcare Limited, an OUELH subsidiary and China Merchants Group member, China Merchants Landmark Co., Ltd. As per the agreement, CMLHM will manage medical facilities for a year starting from 1st February 2019. The agreement is also extendable for one year on the same terms and conditions. During the service, CMLHM will be paid the medical fees equal to 5% of the annual revenue of each medical facility for each financial year.
CMLHM will also have the right to acquire an interest in the business of each medical facility, once the regulatory restructuring of each medical facility is completed within the management period.
According to OUELH, as per the regulations in China, the restructuring includes introducing new hospital operating company, with its own license. The joint venture will then acquire the stake in the new company.
OUELH in 2017 acquired Brainy World Holdings Limited. Since this acquisition, the strategic partnership of OUELH with China Merchants Group has kick-started and resulted in the expansion of the healthcare business in China. The partnership has also led to the development and management of an international hospital in Shenzhen.
China has emerged as the second largest healthcare market worldwide, with the total healthcare expenditure of US$ 594 billion in 2015. This is further expected to reach US$ 1.1 trillion by 2020. Growing demand for specialized and quality healthcare services along with government initiatives, the healthcare sector in China is likely offers immense growth opportunities for multinational healthcare companies.