Hospital chains prepare for big-bang expansion
Rising occupancies, insurance spur need for more healthcare infrastructure
NEW DELHI: India’s creaking healthcare infrastructure is set to receive a healthy boost of capex from private hospitals. In their first meaningful expansion since the pandemic outbreak, leading hospital chains have firmed up plans to cumulatively invest more than ₹14,600 crore over the next three to five years, adding about 17,800 beds nationwide.
Manipal Hospitals, Aster DM Healthcare, Apollo Hospitals and Max Healthcare, among several others, are working to add more beds in the coming years to meet the rising demand for healthcare.
“[Healthcare] is a fragmented sector,” said Dilip Jose, managing director and chief executive of Bengaluru-based Manipal Hospitals. There is a lot of opportunity to grow and consolidate, and we just want to continue our growth momentum.”
Analysts attributed the scramble for new hospitals to, among other things, rising insurance penetration following the pandemic, and especially the government’s PM Jan Arogya Yojana, which aims to offer free health insurance to 550 million citizens.
Mehul Sheth, deputy vice president, institutional research (pharma and healthcare) at HDFC Securities, said, “There are multiple reasons for bed capacity expansion, such as increasing cases of non-communicable diseases, insurance penetration, and also because the utilization levels for some hospital chains are reaching optimal levels of 75-80% (for example, Max Healthcare is running at 75-76% occupancy).”
Analysts expect large cities to be the main beneficiaries of the expansion plans. “Metros are expected to remain focal points for this capacity expansion,” said Mythri Macherla, assistant vice-president and sector head at rating agency Icra. “Cities such as Delhi NCR, Mumbai and Bengaluru are expected to witness sizeable bed additions in the next few years.”
Among the biggest upcoming investments of roughly ₹2,000 crore would be from Medicover Hospitals, a Sweden-based multinational specialty hospital group, which currently has 5,500 beds across in more than 21 hospitals across in Maharashtra, Andhra Pradesh, Karnataka, and Telangana. The group plans to increase its capacity to more than 10,000 beds in the next five years, the company’s chairman and MD Anil Krishna said.
“We as a country have a shortage of beds and with the population growing, there is a huge demand-supply gap,” said Krishna. “But the economy is strengthening, and the middle class is also growing rapidly; so, there is a change in dietary habits leading to an increased need for healthcare.” Krishna expects spending on healthcare to continue to increase over the next decade or so.
Then, CK Birla Hospitals is expanding in the Delhi National Capital Region over the next 12-18 months. “We are looking to expand beyond Delhi NCR as well, and this investment would be about ₹1,000 crore,” Akshat Seth, vice-chairman of CK Birla Healthcare said. “We also have an expansion planned at our Jaipur hospital. After all this, we could have more than 1,500 beds in the country.” It currently has around 1,200 beds.