Chennai-based hospital network Apollo Hospitals said it is on track to improve hospital occupancy to 70% by the end of FY24 and unlock margins by revenue and cost optimisation. Currently, it has an occupancy rate of 65% and the company has, in terms of inorganic expansion, made significant progress in implementing plans to add 2,000 beds at an outlay of around `3,000 crore over the next four years in key metros. The company expects to improve its share of international patients to 10%, from the current 7%, which will help it achieve the targeted occupancy level.
Suneeta Reddy, MD, Apollo Hospitals, said the company will add a new hospital every year into the system as part of the plan to add 2,000 beds by 2027.
“Every year, we’ll add a new hospital into the system and close to around 700 new beds after 2024. We continue to look at brownfield and we continue to look at acquisitions,” she told an earnings call.
Reddy said the company should set its targets high and has the potential to achieve the 70% occupancy level by quarter four of this fiscal. “We are working on these initiatives, including improving our international patient mix. And with this, we should be able to get 70% occupancy by the fourth quarter,” she said.
Elaborating on the measures to achieve the occupancy goals, Reddy said that it is recruiting new doctors across the system apart from looking at what the company’s network funnel is going to bring to the table.
“We have started getting patients from Apollo 24/7, and we believe that we have created a strong funnel. We will have to look at how we leverage our corporate relationships. Currently, our payer mix is 45% retail and another 45% through private insurance. So that is really going to contribute to an increased occupancy. And finally, for the tier 1 cities, as far as international patients are concerned, currently we are at about 7%. We are moving this to 10%, so that should add another 3% in terms of occupancy,” she said.
She said the company has reported a very strong fourth quarter with the healthcare services business witnessing a robust 18% year-on-year growth in Q4FY23, driven by growth in volume and supported by pricing and case mix gains.
On the FY 24 outlook, she said for the healthcare services, the company is looking at 15% growth coming from higher occupancy and, therefore, a better Ebitda. “This quarter, we showed an increase in Ebitda margin by 249 basis points. We believe that we can improve this by another 100 basis points,” she said.
About the pharma business, she said that the company witnesses over 7 lakh footfalls a day in the offline pharmacies. “Over 15% of revenue in this vertical now comes from private label and generics. We are, therefore, making sustained efforts to increase this number consistently,” she added.