STI expands medical service venture

The STI Group is expanding its venture in medical services, investing P1 billion to increase its stake and upgrade the Delos Santos Medical Center and buy small hospitals.

Eusebio H. Tanco, chairman of the executive committee of STI said that STI was encouraged by good prospects in the industry. "We want to be known in the healthcare business."

The merger, whose value and equity sharing Tanco refused to disclose, follows a four-year partnership between STI and Delos Santos College (now DLS-STI College of Health Professions) whose majority shareholding was acquired by STI in 2002. This is STI’s first joint venture in a hospital.

STI president and chief executive officer Monico Jacob said the partnership would improve the hospital’s revenues by 30 to 35 percent this year from P200 million in 2005. Net income last year was P15 million.

Tanco said with the partnership in DLS-STI Medical Center, both companies would be spending over P300 million for the expansion of the bed capacity to 200 from 150 in immediate term, setting up of a new operating room as well as the construction of a medical arts building for the doctors’ offices.

Tanco said the plan is to expand horizontally rather than vertically as other huge hospitals have bed capacity of 2,000.

Tanco said the partnership also set aside a P300-million kitty for the acquisition of small-sized hospitals (with bed capacity of 70 to 150) around Metro Manila and key cities in the provinces like Cebu and Davao. He said the company is now in negotiations with three hospitals.

Tanco said another P100 million is being budgeted for the establishment of diagnostic and outpatient clinics which would act as satellite branches of DLS-STI Medical Center. He said they would start with four to five in Metro Manila.

Jacob said DLS-STI Medical Center would act as the base for other feeder hospitals so they could bring health care to the area and is seen as the best way to expand. All these hospitals/clinics would be known as STI-DLS to promote a brand name.

Tanco said the Center would also venture into medical transcription and medical tourism to complete the cycle of medical services with investments of over P100 million each.

All these would be funded through a combination of debt and equity, Tanco said.

With the growth of hospital business, DLS-STI would have to double the number of its doctors. It now has 200 active doctors and another 200 visiting doctors.

Jacob said apart from additional facilities and infrastructure, DLS-STI Medical Center would also benefit from the expertise of STI in information technology in improving the hospital’s operations. STI would provide the hospital with human resources and marketing support.

STI said the buy-in is part of its initiatives to strengthen its enrollment-to-employment system as the new Center will serve both as training ground for STI nursing students and employment opportunities for their graduates.