Raffles Medical Group Ltd (RMG), established in 1976, is one of the leading private healthcare providers in Singapore that offers integrated healthcare services. Headquartered in Singapore, RMG ventured into Hong Kong, Shanghai and Indonesia in the earlier years and is looking into Japan market in the near future. It also maintains a network of overseas clients in Vietnam (Raffles Medical Group, 2015).
The group owns and operates a large network of family medicine clinics, a tertiary care hospital, dental, chinese medicine and insurance services, an educational healthcare institute and a consumer healthcare division (Marketline, 2015). Besides providing these services, RMG has its own Clinical Trial Units (CTUs) to develop …show more content…
In order to excel in the healthcare industry, trainings are conducted by RMG to ensure that its employees are equipped with and are constantly improving their technical skills to offer patients with quality and assuring treatments. This accentuates the technical skills of its employees in all disciplinary areas to uphold its reputation. The recent collaboration with Mayo Clinic Care Network has provided RMG the access to their medical expertise (Raffles Medical Group, 2015), thus, improving RMG’s medical knowledge and skills. Also, many foreign patients, including patients with trauma injuries are inclined to seek medical treatments in RMG. This validates that RMG’s teams have the advanced skills required to perform complex medical …show more content…
Medical technology advancements have recently sped up rapidly in relation to the increasing demand for complex medical devices and treatments (Bmichaels, 2014). As such, strong competition within the industry exposes RMG to higher risk that its ongoing internal developments may turn obsolete even before commercialisation. Therefore, it is difficult to ascertain the probable future economic benefits.
Abruptly terminated clinic trials (RafflesHospital, 2014) of RMG leading to unsuccessful developments are evidences of another situation which may reduce and eliminate future economic benefits. The lack of specification on the distinction between research phase and development phase in FRS 38 further justify that development costs incurred cannot be measured reliably and should not be capitalised.
With reference to FRS 38:17, the criteria of generating future economic benefits cannot be met due to the obsolescence of technical skills and development. As such, RMG will have to impair or write-off the intangible assets frequently. Fluctuations in the value of its intangibles to be disclosed in their financial statements will reflect badly on the company’s image. As a result, RMG’s share prices will be negatively impacted. This is unfavourable to shareholders as their interests (e.g. share prices and dividend) are