Hospitals see 7-8% surge in patient footfall, new investments in 2023

Jose told Business Standard that investments in medical equipment and increasing bed capacities have picked up in 2023 after a hiatus during the Covid19 period

The hospital sector saw a growth rate of 7-8 per cent this year in the number of patients seeking care, according to industry insiders.

This has spurred investment in adding beds by major hospital chains in the country.

“The growth trend should continue in 2024 as well,” said Dilip Jose, managing director (MD) and chief executive officer (CEO), Manipal Health Enterprises, which runs 9,500 beds across 33 hospitals in the country.

Jose told Business Standard investment in medical equipment and increasing bed capacities had picked up in 2023 after a hiatus.

“While the technology upgrades don’t have a large lead time, the additional beds are likely to come into stream only in 2025 because greenfield hospitals take 24-30 months of construction and commissioning time.”

Manipal Hospitals will add about 600 beds in two greenfield facilities in 12 months and a further 700 in two more hospitals the year after.

Jose said: “Health care saw a lot of mergers and acquisitions in 2023, essentially in the direction of consolidation. This too is a trend that should sustain over the next couple of years.”

Manipal Hospitals added 1,200 beds this year with the acquisition of AMRI Hospitals from Emami Group in eastern India.

Apollo Hospitals Enterprise has announced a plan to add 2,300 beds across eight locations at Rs3,400 crore over the next three financial years. It recently acquired a 225-bed hospital in Kolkata.

For FY25, Apollo has an outlay of Rs1,435 crore to add 1,170 beds. Of these, 375 beds in Gachibowli, Hyderabad, would be greenfield, and the rest are either brownfield (Bengaluru) or through the inorganic route (Kolkata and Pune).

For FY26, Apollo plans to invest Rs700 crore to add 690 beds (Gurugram and Mysore), and in FY27 another 1,000 with an investment of Rs1,300 crore (greenfield beds in Chennai and Varanasi).

Apollo manages 4,570 beds in metros and 3,195 beds in non-metros (largest by any hospital chain).

Fortis Healthcare, another leading hospital chain, aims to add 1,800 beds over the next three financial years.

Ashutosh Raghuvanshi, MD and CEO, said Fortis added approximately 250 beds in 2023.

“We have a plan to expand our bed capacity. Over the next three financial years, we aim to add approximately 1,800 beds,” he added.

Fortis Healthcare is committed to investing around Rs400 crore in adding capacity and infrastructure development. Over the next three years, the hospital chain plans to invest over Rs2,000 crore in further expanding bed capacity and infrastructure improvements.

“In this calendar year, Fortis has taken a strategic approach to expansion, primarily through brownfield projects, with the exception of an additional new greenfield facility in Ludhiana,” Raghuvanshi said.

He added the first phase of its recently acquired 350-bed facility Medeor Hospital in Manesar would be operational by April 2024.

Smaller hospital chains like Jupiter Lifeline Hospital, in western India, (which recently got listed) are also expanding.

From 1,194 beds in FY23 Jupiter is eyeing 2,500 beds in the next few years and is actively scouting for land parcels for this.

Yashoda Hospitals, which operates 2,296 beds in Hyderabad, has augmented its capacity in the city.

Amidayala Lingaiah, medical director, said it added 28 beds in Secundrabad and 16 beds in Somajiguda.

Hospitals are bullish on bed addition primarily because there has been growth in revenue with more patient footfalls.

Speaking on Fortis’ average revenue per occupied bed (ARPOB) growth, Raghuvanshi said “our strategic emphasis on diversifying specialty offers has yielded a cumulative growth rate of 13.4 per cent across our top six specialties. This is further validated by an 11.8 per cent increase in our ARPOB, which climbed to Rs2.21 crore in Q2FY24, up from the Rs1.97 crore for the same period last year”.

Similarly, Manipal indicated there had been an incremental increase of 5-7 per cent growth, essentially through the complexity of clinical procedures.

Apollo’s ARPOB grew 13 per cent year-on-year in H1FY24.

Rating agency ICRA reported the ARPOB of the nine listed companies in its database to be Rs49,089 per day for January-September 2023 as against Rs44,987 per day reported last calendar year.

ICRA said between January and September 2023, 240 beds were added by nine listed companies it tracks. Compared to this, 962 beds were added in the calendar year 2022. The addition looks slow as hospitals typically need 24-30 months for commissioning after they embark on expansion.

ICRA’s sample set includes the hospital businesses of nine listed companies: Apollo, Aster DM Healthcare (India business), Fortis Healthcare, Healthcare Global Enterprises, Krishna Institute of Medical Sciences, Max Healthcare, Narayana Hrudayalaya, Rainbow Children’s Medicare, and Shalby.