Unveiling India’s Hospital Sector: Exploring Cutting-Edge Healthcare

Published by Sharekhan Education | June 20, 2023

By Amit Pathak | Sharekhan Education 

Step into the dynamic world of India’s hospital sector, where growth and innovation intertwine to revolutionize healthcare delivery. Brace yourself as we embark on a captivating exploration of this evolving landscape that holds the promise of a healthier future for millions. Join us on this fascinating journey as we delve into the remarkable rise of Indian hospitals and uncover the secrets behind their success.

The Rising Wave:

Did you know that the Indian hospital sector comprises a staggering 80% of the entire healthcare market? This powerhouse industry was valued at USD 61 billion in FY17. It is projected that it will surge to USD 132 billion by 2023, boasting an impressive CAGR of around 16%-17%. Super-specialty hospital groups extend beyond metros like Mumbai, Delhi, to Tier-2 and Tier-3 cities like Indore, Nasik.

A Paradigm Shift :

Unprecedented factors are propelling the hospital business to new heights. The combination of higher life expectancy, an aging population, and the surge in demand for top-notch healthcare following the pandemic is fueling this growth. Brace yourself for an astonishing statistic—life expectancy in India is expected to surpass 70 years by CY31. This upward trajectory in longevity also increases the aging population, with an estimated 13% of the population expected to be above 60 years by CY31, compared to just 8.5% in CY11. Furthermore, India has emerged as a sought-after destination for medical tourism, offering high-quality healthcare services at significantly lower costs compared to many developed countries. In fact, the cost of treatment in India is a staggering 70-80% lower than in the USA. Patients from neighboring countries such as Maldives, Bangladesh, and Afghanistan are flocking to India for their medical needs.

Government Initiatives :

The government is keen on nurturing the healthcare sector’s growth by increasing budgetary allocations for public health spending to 2.5% of the country’s GDP by 2025. Embracing the power of collaboration, the government has been promoting public-private partnerships (PPPs) in the healthcare sector. Revolutionary government health insurance schemes like Ayushman Bharat have significantly expanded the patient base for hospitals, ensuring access to quality care. Moreover, foreign direct investment (FDI) has received a boost, with 100% FDI allowed for constructing hospitals under the automatic route for greenfield projects. Brownfield projects, on the other hand, can benefit from 100% FDI under the government approval route. These proactive measures will pave the way for a bright future for the hospital sector.

Specialized Healthcare Takes Center Stage :

Get ready to be amazed by the surge in specialized healthcare services across India. The emergence of super-specialty hospitals focusing on cardiology, pediatrics, oncology, orthopedics, and neurology has redefined the landscape. These cutting-edge medical institutions boast state-of-the-art infrastructure, advanced medical equipment, and a pool of specialized professionals, attracting patients from India and abroad.

Rainbow Children’s Medicare:

One such shining example is Rainbow Children’s Medicare (RCML), a leading chain of pediatric multi-specialty and perinatal hospitals in India. With 16 hospitals and a total bed capacity of 1,655 beds, RCML follows a hub-and-spoke business model. Intensive care, pediatric multi-specialty, and quaternary care form the hubs, while emergency care and outpatient services operate as spokes. As part of expansion plans, RCML targets adding 850 beds in Hyderabad, New Delhi, Chennai, and Bengaluru within five years. According to the ICICI Securities report, RCML projects to achieve a revenue CAGR of approximately 17% from FY22 to FY25E. They expect occupancy levels to soar to around 55% in FY25E compared to 45% in FY22, showcasing their growth trajectory. On the profitability front, RCML anticipates a strong 14% EBITDA CAGR over FY22-25E, maintaining impressive margins of 28-30%.

Conclusion :

The Indian hospital sector undergoes a remarkable transformation fueled by innovation, government support, and rising demand for quality healthcare.  As the landscape expands, specialized services and cutting-edge infrastructure pave the way for a brighter and healthier future. With unprecedented growth set, now is the time to explore endless possibilities within the Indian hospital sector.

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