In the last 10 days of September, at least four significant transactions were sealed involving hospitals.
Manipal Hospitals sealed a transaction with Kolkata’s AMRI Hospitals; Apollo hospitals bought a partly-built healthcare facility in Sonarpur; Fortis strengthened expansion plans in Kolkata with a green-signal to acquire Artistery Properties; and in the single speciality segment, Asia Healthcare Holdings (AHH) acquired a majority stake in Asian Institute of Nephrology and Urology.
Industry-watchers see this as a display of continuing interest from private equity (PE) firms or strategic operators, in the hospitals segment of healthcare.
On a parallel track though, another discussion rages on. It centres on the move to reduce the NEET-PG qualifying benchmark (to zero), ostensibly to bring more doctors into the system.
Two tracks in healthcare, though intertwined — they do not get the same dedicated attention. And for that reason, healthcare is facing possibly its steepest challenge in staffing, say seasoned industry voices.
Having overseen multiple hospital networks, Vishal Bali, AHH-Executive Chairman, says, staffing will be the single biggest roadblock in the healthcare journey.
The deals between hospitals, driven by PEs or strategic operators, signal “a continuity of interest of capital deployment in the sector,” says Bali. The funds will continue to flow into infrastructure, as it has, but the hurdle is human resource, as it takes 10 years for a freshly-minted medical professional to get into the system, he says. And post-Covid, Indian nurses are being recruited in other countries, he said, adding that nursing attrition is at an all-time high. And public and private enterprise will need to address this massive need for human resources, he said.
Visalakshi Chandramouli, Treasurer- Nathealth and Managing Partner, TATA Capital Healthcare Fund, says, Indian hospitals have been struggling with staffing issues, with key metrics such as doctor per 1,000 population estimated at 0.7 vs the WHO (World Health Organization) recommended 1 per 1,000.
“The nursing shortage is more profound with 24.5 nurses/10,000 vs WHO recommended 34.5 nurses/10,000,” she adds. And while government has addressed this with more seats and colleges for doctors and nurses — such as 157 new nursing colleges planned, “these are long-term fixes”, she points out.
The short-term challenges continue — large hospitals have high attrition rates of >30 per cent. And this has led to hospitals “embracing digital solutions more to improve the efficiency of existing staff”. Hospitals and other healthcare facilities are starting their own training programmes for para-staff, which is helping address the short-term staffing shortage, she observed.
On the NEET-PG benchmark, she said, it was “tricky”. The quality of medical education should not be compromised, she says, as the country needs good quality doctors who can deliver high standard of care to their patients.
And that becomes a critical requirement as India’s healthcare and life science sector grows. It attracted about $12 billion private capital in the last two years, the highest ever two-year period in the past decade, she says. “The sector today accounts for nearly ~12 per cent of the country’s private capital deals and ranks among (the) top three sectors in terms of deal value and volume in the country.” And this is being driven by the country’s disease burden and in-roads being made by insurance, she said.
Anurag Yadav, Chief Executive Officer, IHH Healthcare India, expects hospital consolidation to continue for a few years. Citing the telecom example from decades ago, he says, healthcare too will stabilise around key national and regional players, with scalable models. And the skill development initiatives undertaken by authorities, will support the need for trained professionals, he adds.
Recent hospital transactions have seen at least three in, or close, to Kolkata. Chandramouli points out that the healthcare demand-supply mismatch (more stark in the East) has led to hospitals expanding in the region. About 73 per cent of Indians with non-communicable diseases are estimated to be from the North-East and migrate to other States for treatments, she says.
Manipal Hospitals’ Managing Director and Chief Executive Dilip Jose points out, the skewed distribution of healthcare facilities across the country will draw institutions to underserved regions and smaller cities. Post Covid-19, several stand-alone hospitals are feeling “steady” being part of a larger chain, he adds.
But as the money comes in, and infrastructure, ICUs etc are scaled up, there is the challenge for qualified staff, he says, of the two roads in healthcare, where one is in need of a lot more attention.