Money injection: Financiers see gold in investing

While Hyderabad’s image as an IT friendly city has seen a huge rise in the recent past, its healthcare industry has also had a huge boost in terms of infrastructure and opportunities.

Strategic partnerships and takeovers by international companies through private equity (PE) investments have made way for medical tourism to be taken up as a serious industry to invest in for the state.

In 2015, Global and Continental Hospitals were taken over by Malaysia’s Khazanah Nasional Berhad for Rs 1,000 crore and Rs 300 crore respectively.

And earlier this year, UAE’s Abraaj Group’s acquired a majority stake in Care Hospitals for a whopping '1,300 crore. In 2011, there were 29 investments in the space by PE funds — a number that shot up to 45 in 2012 and 71 in 2013.

“Healthcare is a capital intensive business. It needs long-term investors and cheaper funds,” says Dr K. Ravindranath, founder and chairman of Global Hospitals, and explains, “Partnering with Parkway of Khazanah gives us an opportunity to build a bigger hospital.

They can divert some patients who can’t afford treatment in Singapore to India. We send our nurses and doctors for training to their hospitals abroad. It will also bring the economies of scale and we will get better prices for drugs, etc.

With their help, we can access cheaper loans in Singapore as Indian loans are costly. Cheaper funds, thus, will help us in providing affordable healthcare and give us more staying power."

Improved conditions

Dr B. Soma Raju, founder of Care — that had recently been taken over by UAE’s Abraaj group — had said at the time, “These relationships will play a key role in enhancing public-private partnerships that are essential to the development of sustainable healthcare systems in India.”

And while the takeover will increase bed capacity and help scale up Care’s outreach programmes, Kasi Raju, the hospital’s COO, added that such partnerships also make sense because they still get to make the everyday decisions at the hospital.

“A strong foreign investor can put expansion plans of the hospital on the fast track and also provide healthcare at affordable prices. If you peep into our history, we have been always playing a minor role in the ownership of the company. Despite being a minor stake, we take all the decisions and monitor day-to-day management,” he explains.

Dr Sunil Kapoor, a senior cardiologist now at Apollo Hospitals, adds that it also gives doctors the opportunity to move around within the industry — “Foreign investors play significant role in the sector’s development. They are also getting large numbers of patients from all over the world, so they are trying to lure doctors with international reputations to add more value to the hospitals.”

But even though the increased investment is changing the way private healthcare is growing in the country, Dr Ramesh Kancharla, CMD Rainbow Hospitals feels, “This is nothing new, it’s the same with any other business. PE funding has always fuelled expansion and growth..”

Big news for small care

Meanwhile, smaller hospitals, too, are working hard to keep up with the corporate biggies.

Giving the reason behind the number of small hospitals coming up of late, Dr Sunil says, “Nursing homes are giving way to small hospitals with better equipment. Another reason is all these hospitals are owned by doctors. They take their specialisation from a reputed medical university and come back and turn entrepreneurs.”

“Healthcare industry requires huge sums of money to expand. If foreign investors can bring money, it will help local entrepreneurs to expand the hospital faster,” agrees A.V. Gurava Reddy of Sunshine Hospitals.

— Inputs by S. Umamaheshwar and Swati Sharma