VALUING THE EXPANSION PLAN OF RACHMA HUSADA HOSPITAL

• Main Author: Pinkan Anggraini, Dea
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/21602
• Institution: Institut Teknologi Bandung

Hospitals are health care institutions that provide full-scale personal health services that provide inpatient, outpatient and emergency care services. Rachma Husada hospital is a general hospital with type D that the ownership of the hospital is private hospital. Rachma Husada hospital is fully owned by Bina Mitra Husada. The study found that Rachma Husada has a plan to leveling up the type of Rachma Husada hospital which was initially type D to become type C. Type D is a hospital that provides at least 50 beds while type C is a hospital that provides at least 100 beds. Therefore, to increase the number of rooms so Rachma Husada will build new building Rachma Husada hospital in 2018 because currently Rachma Husada hospital only provide 50 beds. The aim of this study to determine the appropriate valuation for this company to estimate the increase of hospital value after expansion of a new building The research uses primary data and secondary data. Primary data obtained by depth interview with the owner and secondary data that used is financial statement of Rachma Husada hospital from 2012 until 2016, service indicators hospital, room’s utility, and master plan of the expansion. The assumption that used is based on historical data, owner’s expectation, and comparison with the same industry company This research uses discounted cash flow model as a tool and use free cash flow to the firm in calculate the value of the hospital. Based on the calculation above, the value of the hospital if do not do the expansion is IDR 139,045,605,029 and the value with expansion net of investment is IDR 239,888,382,510. It can be concluded that expansion will increase the value of Rachma Husada as much as IDR 100,842,777,480. So, the hospital needs to do the expansion for increasing additional value of net investment and give the additional value in shareholder’s wealth.