Manipal Hospitals Enterprises Pvt Ltd, a healthcare chain, recently acquired Columbia Asia Hospitals as part of its ambitions to a pan-India footprint. In an interview with Moneycontrol, Dilip Jose, MD and CEO, outlined his vision for the hospital and revenue growth, challenges of the pandemic and the steps that the government should take to meet the new threat arising from Omicron. Edited excerpts:
What are your expansion plans for the next few years? What are the strategies that you have outlined for the expansions? Which part of India would you be focussing on?
Acquisitions of Columbia Asia’s network in India as well as Vikram Hospital in Bangalore earlier this year have grown Manipal Hospitals to being the second largest healthcare chain in the country. Our network with 27 facilities and over 7,600 beds is now present across 15 cities.
The way we think of expansion is two-fold – firstly, to deepen our presence in existing geographies and secondly, to enter new territories. As an example for the latter, we are very keen to be present in Kerala, where Manipal is a household name owing to its deep roots in education. Similarly, the eastern part of India is still quite under served in high quality healthcare we would like to explore opportunities there. We would also like to augment our presence in Maharashtra as well as NCR. With a consolidation phase that the entire healthcare sector is now witnessing, owing in part to the consequences of the pandemic, we are optimistic about brownfield expansions that fit in well with our plans.
How are you targeting to grow organically?
We currently have three greenfield hospitals in the pipeline – one in Pune and two more in Bangalore. While the former would get operational in early 2022, the latter two would be about 18 or 20 months after that. These would together add about 800 beds to our network.
The IPO market in India is booming like never before and COVID-19 has turned the focus on the pharma and healthcare sector in terms of valuations. Your northern rival Medanta has filed papers for an IPO? By when do you plan to list on the domestic bourses?
A decision to list would need to have broader rationale than just the current market dynamics. While an IPO is certainly an option available for consideration, we have not begun work on that.
The WHO has categorised Omicron, first detected in South Africa as a “variant of concern”. The jury is out on the extent of effectiveness of vaccines against this new threat across countries. What are some of the safeguards which you think the government should keep in mind?While information on Omicron is still coming in, the fact that WHO rapidly termed it as a variant of concern is very significant. Available information about its high R0 value as well as likely immune escape features are causes for concern. One would hope that the severity of the disease is less if a vaccinated person gets infected. In the meanwhile, our priority should be to further increase the pace of inoculation across the country, especially targeting regions that are low in coverage. Reaching the vaccination goals of the nation in as short a time from now is the best step that can be taken. We should also continue to encourage, indeed insist on, COVID appropriate behaviour including masking and social distancing.
How did your hospitals tackle the pandemic? What were the main challenges? Post COVID, what are the main changes in your hospitals and have you returned to pre-COVID levels of occupancy and growth?
The highest impact in terms of patient footfalls was during the first wave, on account of fear of the virus as it was a novel one and treatment protocols were still not clear. Also, there was no vaccine in sight. This was compounded by the strict lockdown that restricted all travel. That situation of course impacted financial performance and the first half of FY21 was a tough period for all hospitals, as indeed it was for all segments of the economy. Since then, with progress made in treatment options as well as significant strides in vaccination, the negatives have eased off.
Keeping our frontline team safe was a key challenge, especially during the first wave, as very few defences to the infection were available at that time. While most other sectors could work from home and that formed a key element to preventing the spread, it was not an option available to hospitals that were in the frontline of the battle against the virus. Devising appropriate protocols and strict implementation of those helped us in ensuring safety of our people. There were certainly many operational as well as financial challenges too which had to be overcome.
Are there any diversification plans up the sleeve? Do you propose to stretch the health services outside India? Which area of health will be your priority for 2022?
Our core ability is in delivering tertiary and quaternary care of world class standards and that would remain our primary focus. However, as patients’ expectations and behaviours change, especially related to healthcare outside of a hospital setting – say in preventive or promotive areas, or in alternate routes of accessing care such as digital pathways, we have to be agile in responding to those. In some of these instances it is about investing in building capability internally and in some it would be preferable to collaborate with firms working in such niche segments. We are therefore pursuing both these options. We do not have any plans at present to expand our health services outside India.
What kind of revenue graph are you looking at for 2022 and can you tell us which segments of your operations are seeing highest growth?
After the second peak of COVID eased a few months ago, the healthcare sector has seen a quick recovery, especially with the return of patients who have been postponing treatments in the last 18 months owing to a variety of constraints, besides the fear of the pandemic. If domestic travel is not hit again due to Omicron and also if international flights resume, allowing medical value travel to commence, then the sector should get back to the pre-pandemic growth trajectory-in the range of 16 to 18%.
What is the status of your brand integration?
The brand integration was completed in early November with all our 27 hospitals coming under one umbrella. Although the acquisitions were completed over 6 months ago, we wanted the integration to be a carefully planned and calibrated exercise that takes along all stakeholders - particularly our people. With 4,000 doctors, 11,000 employees and about 5,000 persons on outsourced rolls, we are a 20000 strong organisation. In our minds, the priority was of course the harmonisation of the teams, ensuring that there is a meeting of minds, an aligned vision and a clear roadmap ahead that is visible to everyone in the combined organisation. We have been able to achieve that and with the unified brand now in place, the integration exercise has been smooth.
While the big cities are armed with good hospitals, the remote and tribal areas in India still suffer because of lack of health amenities. How do you propose to plug this gap?
The adverse skew that our rural areas face in healthcare delivery is a matter of concern. Much of the high end healthcare infrastructure as well as clinical talent is concentrated in large cities and towns. While, of late, there are hospitals getting set up in small towns, the pace is not nearly adequate. Often times, even when the infrastructure is ready, there is difficulty in attracting professionals to such locations. We would have to expect that it would be only in the medium term that we might see a significant improvement in correcting the skew. In the meanwhile, technology could play a role with tele-consults, remote monitoring and similar systems to address some of the issues, albeit in part. The options of that would improve as highspeed communication networks get rolled out to more areas.
Lastly, medical treatment can cut a deep hole in the wallet. Have you thought on ways to reach out to the poor and needy in terms of affordable treatment, procedures and surgeries?Out-of-pocket expenditure for medical treatment is indeed a major concern for large sections of our society, although recent reports show that there is a reduction in its quantum. Universal Health Coverage that is robust, affordable, easy to access and integrated end to end would be the answer.
While a good beginning has been made, the road ahead is long given the size of our population, current health status and the investment required. Further, it is also important to recognise that tertiary care that is expensive and difficult to access would not be the solution to the healthcare needs of India. Preventive and promotive healthcare is the sustainable answer. But, that in turn is linked to many other social development goals related to sanitation, safe drinking water, primary education and women’s employment to name a few. Therefore, a comprehensive view of health and an action plan emanating from that is likely to be more successful.
Our healthcare delivery system needs a major revamp, as the experience of the last 18 months showed. However, our progress as a nation in other infrastructure sectors like power, transport or telecom gives hope that we would be able to tackle it for healthcare too.
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