‘Ayushman Bharat will be a boon for private hospitals’

We have some difference of opinion over the reimbursement package as the rates offered by the government will not meet the cost of super speciality hospitals like ours in providing various services. We are in the process of addressing those issues. Considering their low Capex and manpower costs, private hospitals in tier-II and III towns can play a major role in it.

Aster is trying to associate itself with private hospitals in the periphery by supporting them to install the required equipment. We are working out a model which will bring them more business opportunities.

The need of the hour is to increase the number of medical facilities. Today, the numbers of PG doctors are low and it should be enhanced by making proper changes in the rules of Medical Council of India. The high operating costs in private hospitals can be brought down by rationalizing the tax structure, reducing the rates of utilities like power, water etc.

The non-availability of good doctors, paramedical staff and the cost of retaining them are major challenges. Around 50-55 per cent of the revenue goes towards HR expenses. A relatively high capital cost for setting up hospitals poses a problem. Likewise, regulations and restrictions on tariff increase are also proving to be a bane. Being an essential sector, the government should be more considerate on the tax structure, especially for imported machines. Some sops to newly established facilities for 5-10 years will also help.

India spends only 3 per cent of the GDP on healthcare, while it is 5-6 per cent in most developing countries, 10 per cent in developed countries and 16 per cent in the US. So there are immense business opportunities.

We are in the process of adding 1,200-bed capacity in India and the Gulf region to the existing 4,925 and earmarked ₹,1000 crore for it in the next two years.

However, our business models for the Gulf and for India are different. It is the low capex model in the Gulf where the buildings are on lease, while it is high capex in India. Hence the return on investment in the Gulf is more than 30 per cent while it is much lower in India. As we invest heavily on land, it takes time to get returns on investment.

It is true that stocks of healthcare companies are not performing well in the last 2-3 years due to certain corrections happening in the sector. There was a huge demand and investors got returns.

Somehow they have lost confidence in the hospital sector. If you analyse major companies, it is found that shares of major players have reported a significant fall.

But ours is a different business model. As much as 83 per cent of our revenues and profits come from the Gulf region, thanks to a steady currency, low capex etc. It will take some time for us to catch up in India. We are very confident that the company will turnaround and the Q1 performance is an indicator.

Aster has posted a 14 per cent growth in its revenue at ₹1,789 crore in Q1 of FY19 against ₹1,565 crore of the same period last year. PAT has gone up to ₹20 crore, compared to a loss in the corresponding period.

The key factor driving the medical value travel is the availability of national and global accredited facilities.

With the rising healthcare cost in developed countries, medical tourism in India is to grow from the current market size of $7-8 billion in the next five years. Already, there has been a 10-15 per cent growth on MVT to Kerala due to this cost advantage.

However, God’s Own Country is not branded for illness but only for wellness, thanks to Ayurveda.

The State should also emerge as a destination for medical illness in modern medicine and we have made suggestions in this regard.