Enterprise Ltd (AHEL) is focusing on increasing its occupancy to improve growth following a decline in the year 2016-17. The hospital has an occupancy of 47 per cent. It plans to increase occupancy to 65 per cent by the end of the current fiscal year, according to senior management.
“The business plan this year is to see how we can improve our occupancy and fill up at least 400 more beds. We have a lot of vacant beds because of the new hospitals. The first plan is to see how we can fill up the new beds and increase occupancy from the current 47 per cent to around 65 per cent this year,” said a senior official. The company has crossed a total capacity of over 10,000 beds last fiscal year, through aggressive expansion programmes.
The first and second quarters of the fiscal year are usually good for the company. It is expecting the same this fiscal year also. In the last fiscal, the overall growth was nine per cent. AHEL is targeting a growth of over 12 per cent during the current fiscal year. This year, in urban centres such as Chennai and Hyderabad it would be further focusing on Centres of Excellence (CoEs) to gain further traction in four specialities — cardiac, oncology, neurosciences and orthopaedics.
AHEL is also looking at how it can increase the surgical volumes in specialities in the urban centres. It expects to continue to grow at a similar pace and make similar margins in the pharmacies, which would add to the growth. It is also considering a price hike across services this year, to improve margins. In a recent earnings call, Suneeta Reddy, managing director of AHEL, said the company has witnessed good volume growth outside its key clusters, especially Bengaluru, Mysore and Vizag.
“We are confident that we are well placed to capitalise on the rebound in the economy with new centres, new formats and stronger medical programmes. Multiple one-time developments impacted performance in FY17 are behind us,” she said. “We are confident that outstation patients will return and we can drive back performance in both the mature and new facilities on the back of augmented medical teams and strengthened speciality mix,” she added. AHEL has posted a decline of around 40.7 per cent in profit during the quarter ended March 31, 2017, at Rs 48.16 crore as compared to Rs 81.31 crore for the same quarter of the previous fiscal year on a standalone basis.
The company said that the demonetisation effect extended into this quarter as well, as outstation patients and those from neighbouring countries found it difficult to access currency for their treatment requirements. The patient flows into Chennai main after the VIP admission — that of former Tamil Nadu Chief Minister J Jayalalithaa — took some time to recover fully which also impacted the quarter.
“The impact of the above incidents resulted in a revenue drop of Rs 15-20 crore. The government regulation on stent pricing, which was with effect from February 14, also resulted in a revenue compression of Rs 8-10 crore. The standalone EBITDA (earnings before interest, tax, depreciation and amortisation) for the quarter due to the above was impacted by Rs 15–20 crore,” said the company in a statement. The fourth quarter of the fiscal was the first full quarter of operations at its Navi Mumbai Hospital, which resulted in an EBITDA loss of Rs 22 crore.