MIGUEL ISAAC KHOURY SIMAN

Mexico 2021 | HEALTH & EDUCATION | VIP INTERVIEW

TBY talks to Miguel Isaac Khoury Siman, Chief Executive Office and Chairman of the Board of Hospitales Mac, about being the youngest hospital chain in the country, the effect of the pandemic, and plans for an IPO.

What opportunities did you identify to launch your first Debt Issuance in 2020?

Hospitales Mac was established in Celaya 12 years ago, and we have grown at an annual compound growth rate (CAGR) of 25%. It is difficult to maintain these rates if you do not arm yourself with financing that is ever more attractive and competitive. The company prepared itself for this Debt Issuance for around a year. We prepared our financials to meet IFRS standards and implemented changes of Corporate Governance best practices and transparency for minority ownership. Once we were ready, we chose the BIVA stock exchange through Actinver as our underwriter. We issued our instrument on September 25, 2020. We were able to refinance our most expensive debt in order reduce our interest expenses and free cash flow to new projects in Léon, Los Mochis, and Aguascalientes. We have a program called 15/15 that aims to build 15 hospitals in the following 15 years after we were established. We are the youngest hospital chain in the country and the one with the largest potential growth and achieved.

How do you differentiate yourself from the current public market companies in your sector?

As opposed to the other Healthcare Operator in the market, we have eight units throughout the country; whereas they are concentrated in a single hospital campus which consequently gives them a high-risk concentration, geographically and strategically. We have eight hospitals in operation and three more that will blossom soon. We are the fourth largest hospital chain in the country by number of hospitals and operate in six states. This is why we believe we are less of a market risk for investors.

What has been the company's price strategy?

Even though our Hospital Units are not large, they do not lack anything. The corridors are broad because we have not exaggerated the waiting areas. We have solar panels and are seeking efficiencies, not only in construction, but also in our operation. The culture of our organization has three pillars.

  • Treat the patient fairly, kindly and with respect.
  • Outwork the competition.
  • Do more with less.

If we achieve more than our competition by generating savings, we can pass on those savings to patients. The most expensive cost for any hospital is an empty room. Our hospitals have no more than 50 beds, and we attempt to have them at 80% capacity throughout the month. Our competition does has more rooms than us but their occupancy is lower which generates excess costs of operation. All of this enables us to reduce our price to the public in a way most of our competition cannot.

What are your plans for expansion in other regions in the country?

In the north, we only have one hospital in Mexicali. We are mostly concentrated in the center of Mexico, including the Bajío region. We have hospitals in Celaya, San Miguel de Allende, Irapuato, Guadalajara, Aguascalientes, and Léon. We also have a hospital in Puebla that we opened two years ago, and it is one of the most successful hospitals for the brand. seven of our existing 8 hospitals are ours. And we are building three more, two of them are ours. We did not want to enter Mexico City until we understood how to operate in a large city like Puebla. Once we understood Puebla and generated the results we needed to expand, we acquired a hospital in Mexico City, in Periferico Sur. This is the only operation in which we do not own the Real Estate in which operate. We like to focus on secondary cities that require hospital infrastructure and where we have the capability to build our hospital from scratch. Most of these secondary cities in our country have outdated or no hospitals at all, we aim to change that with modern more equipped hospitals for these regions. Once we have expanded our Mexican operation to a size we feel comfortable with, we will like look south of our borders to continue expanding in a market that is much like our own.

How has the pandemic impacted your business?

We had time to prepare our hospitals for the COVID-19 crisis; it took three months for the pandemic to reach Mexico since it originated. Which is why we had the time to dedicate an entire floor for COVID-19 patients and keep the other floors for non-Covid patients. We also implemented a strategy to ensure our hospital staff were rightly protected and secure. We acquired ventilators, in addition to those we had, in order to tend to the incoming Covid patients. We also acquired some extra inventory in medicines and materials to protect our professionals. We employ almost 2,000 people, and none of them have been infected inside our hospitals. Those whom have gotten infected were infected at their homes.

What are your main goals for the rest of the year?

In late 2020, we will present the information of the last quarter with the clarity required according to the best corporate practices. We want to launch a capital IPO in 2022, and this issuance of certificates is our entry into the public markets. We are already in the top division because we were able to enter the market, but we have to continue training to win the championship. We must consolidate our company in order to achieve continued and prolonged growth rates. We raised MXN500 million in our first issuance, and we were authorized a program to raise a total of MXN1.5 billion. We expect to issue the remainder during 2021.
We also have a foundation that, among other activities, tends to Down's syndrome children. Many of them have heart malfunctions, so we are committed to performing surgery for many of them. We try to perform 15 such surgeries a year.