Brownfield expansion will give us 1,700 beds: Fortis Healthcare MD & CEO

Now that we have strength in our balance sheet, we can go for inorganic expansion, too, in markets where we are already present, says Dr Ashutosh Raghuvanshi, MD & CEO of Fortis Healthcare

Fortis Healthcare is set to acquire Medeor Hospital in Manesar for Rs 225 crore. Dr Ashutosh Raghuvanshi, MD & CEO of Fortis Healthcare, in an interview with Sohini Das, elaborates on his expansion plans. Edited excerpts: 

Is Fortis Healthcare now embarking on a new expansion strategy with this new acquisition in Manesar?

We were focusing on strengthening our balance sheet and improving operations. That was our main agenda from 2019 onwards when I came on board. We always had a strategy for brownfield expansion and inorganic expansion opportunistically. That strategy has not changed. Brownfield expansion will give us 1,700 beds over the next two-three years. This year, we will get 200-300 beds additional from brownfield. New blocks are getting constructed in four of our NCR hospitals, and that would add capacity over the next two and a half years. Organic growth would add another 30 per cent of beds. Now that we have strength in our balance sheet, we can go for inorganic expansion, too, in markets where we are already present.

We have done this acquisition in Manesar and it is complementary to our flagship hospital in Gurugram. It will give us 850 beds which we can take up to 900 beds in the future. We will commission these beds in Manesar over nine months in a phased manner. We will keep evaluating similar opportunities elsewhere like in Mumbai and other large metros.

What are your plans with the Arcot Road facility in Chennai? Any plan to divest that?

We started our second facility in Chennai at Arcot Road around two and a half years back. Our facility at Arcot Road has not performed optimally, so far. We are looking at how to turn it around or what could be the future of that project. We are considering all options -- whether it’s getting a partner, turning it around, or divesting it. All our facilities should do quality work and run profitably. 

Medical tourism has picked up. What is the outlook for FY24?

Pent-up demand is largely over. There is healthy growth in medical tourism. It has come back to a business-as-usual situation, and it currently accounts for 10 per cent of turnover. In absolute terms, there has been good growth in this segment in the past three-four years. Our overall revenues have also grown significantly during this time. We continue to see 5-6 per cent growth in international patients coming to our hospitals.

Are you open to a model of having smaller centres for smaller towns?

We won't go for 50-100 bed facilities in smaller towns. For quaternary care, scale is very important. So having at least 300-beds is something that is economical to have for imaging equipment and medical equipment. That will remain our focus. We are not looking at going into smaller geographies with smaller facilities. We are open to collaborations with small hospitals in smaller cities where our doctors can consult and help develop those facilities. Our bone-marrow transplant centre at FMRI has given advice to several public sector hospitals.

What is the revenue and margin forecast for FY24 for Fortis and also the corporate hospital sector?

The margins would remain at the current levels, and we see low teen growth for revenues. We have a 17 per cent margin now, and it will be better in the coming years.