Major corporate hospitals, both listed and unlisted, have added fewer beds than ever over the past three years. Though the hospitals have added beds in Tier-II cities, the numbers are low.

While major players in the healthcare space had added up to 3,425 beds in 2016, in 2019, that number has dipped to 637 beds, a decline of over 80 per cent. A possible reason could be the bed occupancy ratio, which for all these players, has hovered around 60 per cent on average.

“Major listed corporate hospitals or even unlisted major names have added 637 beds in total in 2019. Of this, only 35 per cent additions are in Tier-I cities, while 65 per cent are in Tier-II cities,” said Karthikeyan Thangarajan, Associate Director, India Ratings and Research.

The listed entities include Apollo Hospital Enterprises; Fortis Healthcare; Narayana Hrudayalaya; Healthcare Global Enterprises; Shalby Ltd; Kovai Medical Center; Aster DM Healthcare; and the Max Healthcare Institute. The unlisted entities include Manipal Health Enterprises; Yashoda Hospitals; Ravindranath GE Medical Associates; Continental Hospitals; and the Asian Institute of Gastroenterology.

Healthcare companies are looking for expansion in Tier-II cities in a big way, because of competition and market saturation in Tier-I cities. While Narayana has expanded to Lucknow and Bhubaneshwar, Apollo is tapping Tier-II markets in Nashik, Indore, Vishakhapatnam, Guwahati and Tiruchi. Shalby is expanding operations in Jaipur, Mohali and Surat, while Max is tapping into the Tier-II markets of Mohali, Dehradun and Bhatinda. Max will also be making an entry into Moradabad soon. Manipal Health Enterprises is eyeing organic and inorganic acquisitions in Jaipur, Salem and Vishakhapatnam.

In financial year 2016, the total number of beds added in Tier-II cities by Apollo (467), Narayana (546), HCG (242) and Aster DM (1183) was 2,438. In the same period, total beds added in Tier-I cities was 987 with Apollo accounting for 190 units, Narayana 297 and Max Healthcare 500. This drastically came down in financial year 2019, with an addition of only 422 beds in Tier-II cities, with Apollo accounting for 65 and HCG 357. As many as 215 beds were added in Tier I cities, with Apollo accounting for 200 and Max Healthcare 15.

Healthcare Global Enterprises is exclusively eyeing Tier-II markets and has consistently added beds – 242 (FY2016), 90 (FY2017), 230 (FY2018) and 357 (FY2019). Shalby, too, added 145 beds in FY2017 and 747 beds in FY2018 in Tier-II cities. Fortis, on the other hand, has not added any new beds since FY2016.

“In Tier-II cities, competition intensity and real-estate costs are lower, and hence, the preference,” said Vanyasree Paila, Senior Analyst, India Ratings and Research.

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