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Pricing and affordability are challenges for hospitals, says Manipal group chief

Dr Ranjan Pai, chairman, Manipal Education and Medical Group, was in Goa recently for launch of new equipment in the oncology center of Manipal Hospitals, Dona Paula. The dynamic head of the Manipal group is considered as one of the trailblazers in the Indian healthcare sector. He conceptualized the transformation of Manipal Hospitals from a single facility into a multi-specialty healthcare chain. Pai is in news for bold acquisitions and going about the group’s expansion plans with clinical smartness. In the interview, he talks on range of issues. He says to Shoma Patnaik, that, the Goa hospital is absolutely important to the group because of the family connection with the state

 

  1. While you are looking for a pan-India presence in hospitals, what are your plans for the Manipal Hospitals-Goa?

The Goa hospital is a comparatively newer hospital in our network. It started small by doing only cancer treatment. But in the last 10 years the hospital is fully transformed in terms of the latest treatment facilities. Now it is almost a comprehensive facility and just has few gaps that need to be filled. For e.g. PET-CT which is an important diagnostic tool for cancer. We are looking at installing a PET-CT in the next year or so. We are also looking at bone-marrow transplant. So we will keep adding to the facilities. The idea is to have more services so that residents do not have to travel out of the state. Hospitals need to be close to one’s home. Our vision and aim is to make sure that no Goan needs to leave the state for want of healthcare. Goans are very lucky to have a really good government hospital, the Goa Medical College (GMC). We are very confident that between us and the GMC we should be able to provide end-to-end service to the local citizens.

 

  1. How important is the hospital in your overall group plans?

Vis-à-vis the other hospitals this is a smaller hospital. Our flagship and oldest hospital is in Bangalore with 600 beds. But for most of our hospitals in future we are will be looking at 300-350 bed range. The Goa hospital is about 250 beds. We don’t go below 250 beds. Every hospital we own is important for us because it serves the community. Wherever we are we want to be sure that it is in the top three. Luckily among the private sector we are the number one in Goa.  Personally this hospital is absolutely important because of my personal connection to the state.  But otherwise also it is important which is why we are investing such a lot of money here. From the revenue perspective, the Goa hospital is still not among the top seven or eight revenue wise. Actually the revenue makes no difference. The contribution to the community is important and as long as you keep adding services the revenues will come.

 

  1. Hospitals today have changed tremendously. Are corporate hospitals the only hospitals in future?

Well consolidation is happening. Lot of single hospitals are finding it difficult to survive and not only from the economic perspective. Today you need to have volumes to get economies of scale. Right from attracting doctors to getting lower cost of medicines and consumables or to getting better pricing, it requires size. So in the hospital space like you are seeing in some of the other sectors you would be seeing consolidation. At the end there will be four-five large national chains. I am not saying there will not be any single specialty hospitals. They will be there but eventually they will get aligned to the large players.

 

  1. Given the trend of large chains where do you see the cost of healthcare going?

Healthcare is a low-margin and high capital business. The technology keeps   changing so you need to make enough money and keep re-investing. So while one is growing if you can manage to do it transparently and by providing more safety to patients you will be able to give affordable healthcare to the people. Affordable is a very subjective thing. In my view health care costs are going to keep increasing not because hospitals want to make money but because R&D costs, equipment all those cost money. And when you want the latest equipment it will cost money.

 

  1. It means that people with limited means will not be able to avail the services of large hospital chains?

It is only good that people take health insurance policy because it will at least provide a safety net for the family. In the past people could get away without taking insurance. Today even the middle class will find it difficult if there is a cancer in the family. Because it is a very expensive treatment. That is why it is very important to have health insurance for every patient. And I urge middle class to take insurance. Basic social security is a must as part of personal planning

 

  1. You were in news for the Fortis Hospital bid that did not work. Will acquisitions be a part of your expansion plans?

Fortis Hospitals was something that we liked but the deal was not easy to close. But it was a learning experience and we have moved on. There are lots of other opportunities and we are looking at few. Hopefully in the next few months we will be able to announce something. But as a group we are looking at opportunities in green-field and brown-field areas.

 

  1. What about expansion in Goa through acquisitions?

This hospital has potential to increase capacity. I think we can almost double the capacity here. So when we saturate in our present location we would look to expand in Goa.

 

  1. How does 2019 look for the hospital sector in India?

The industry is going through lot of challenges. There are headwinds but at the same time there are opportunities. So headwinds will always be there and we have to fig out how we deal with them. But I am very positive on the future given the disease burden in the country. There has to be more hospitals. Each hospital will eventually plateau. Challenges that hospitals face are in regulations, pricing and affordability. At the end of the day how do we make hospitals affordable is a big issue which we also face on a daily basis. And hospitals should get decent pricing to make sure that we get return on investment.

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