Manipal Hospitals to inch north with daycare, IVF centres

Written by Soma Das | New Delhi | Updated: Sep 7 2012, 06:32am hrs
The Bangalore-based Manipal Hospitals, among top five corporate hospital chains in India with 1,600 beds in Karnataka, Tamil Nadu, Andhra Pradesh and Goa, is planning to move north with daycare centres, in-vitro fertilisation centres, dialysis centres and primary healthcare clinics in three-four years.

We have adopted a move northwards strategy, but this will pan out only in states contiguous with the four southern states where we are already present. So, we plan to enter Orissa, Maharashtra and Madhya Pradesh in this phase of growth, said Rajen Padukone, CEO, Manipal Hospitals. The hospital chain will focus on cities like Bhubaneswar, Bhopal, Indore, Nagpur, Pune and a few tier-I and those tier-II cities that are transitioning to tier-I cities.

In these cities, Manipal will first set up tertiary multi-specialty hospitals. It will also explore standalone chains for daycare, IVF, dialysis and primary health in either the seven cities where it is present or new cities where it plans to start operations. It plans to back up these ventures with a tertiary healthcare set-up.

Manipal Hospitals will more than double its bed capacity to 4,000 in three years, said Padukone. Of this, a part of expansion around 600 beds will happen by consolidation at existing facilities, while the balance will take place in the three states of Madhya Pradesh, Orissa and Maharashtra.

The only exception the group may make would be in two scenarios if it finds a suitable cluster of hospitals in a region it can acquire and create a strong presence in a state or geography in one stroke, or else it may choose to expand in some cities where the parent organisation, Manipal Group has already built formidable presence in educational sector.

To attain its goals of expansion, Manipal Hospitals plans to raise about R1,000 crore in the next three years from private equity firms. Additionally, it may raise raise debt depending on the need.These expansion plans would be a mix of long-term lease models, brownfield acquistions and greenfield projects.

The amount of investment would finally depend on the projects we zero in on, Padukone said. For instance, investing in a hospital on long-term lease may cost half of what would be required to buy a majority stake in another.

Similarly, a greenfield project may need an investment of R71 lakh per bed. Largely, this hospital group has preferred an asset light model in which it has taken most of the facilities it operates today on 25-30 years lease. Seven of its ten hospitals are on long-term lease models while the remaining three it owns.

Most of these stand-alone hospitals were in red when we took over on long-term lease. In most cases the promoters had either lost interest or looking to exit. Through our management and operations, we turned them around and made them profitable, Padukone said.