Wither New Hospitals???

wither hospitalsThe other day I was with a friend who works for a hospital in New Delhi. While we chatted, he casually mentioned that the expansion plans of the hospital chain he worked for have been put on hold. This reminded me of another former colleague of mine who had had a particularly hard time with fickle minded healthcare companies, who will hire him as their director of new projects and he will sit idle twiddling his thumbs for many months as the new projects would just not materialise. Unbelievably, this happened with him twice and each time he had to relocate to a new city with wife and family in tow!

Rewind to almost two years ago.  Some of the biggest corporate houses in the country were keen on investing in healthcare in the country. The feuding Ambani brothers of the Reliance were all set to commence their big healthcare play. Both of them had announced mega plans with billions of dollars of investments. Anil Ambani was reported to be in talks with Analjit Singh for a majority stake in Max Healthcare. The Economic Times ran a story about the proposed deal adding a certain legitimacy to the rumours . While, Mr. Singh kept strenuously denying the reports the rumours would just not go away. Fortis, the healthcare major controlled by Mr. Singh’s nephews (Shivinder and Malvinder Mohan Singh of the Ranbaxy fame) had announced a joint venture with DLF, India’s largest real estate firm. They were reported to be planning to set up hospitals across the country with an investment of USD 1.5 bn.  

The Hindujas had announced a tie up with the Dubai government backed Limitless LLC, for setting up tertiary care facilities in all the major cities of the country. The proposed investment was supposed to be in excess of USD 1 Bn and the group hoped to have 2000 beds under its belt in 2-3 years.  Columbia Asia, the Bangalore based healthcare services company had announced a tie up with the Brigade group for setting up hospitals in cities in Karnataka with an investment of USD 700 Mn. My former employers Artemis Health Sciences proposed to set up 10 hospitals across the country and had announced ambitious plans for the healthcare venture. These included a medical research facility, a medical education foray and even getting into manufacturing of medical devices. And there is the Sahara group with plans for an extensive real estate and healthcare play, which have not moved beyond a single hospital in Lucknow.

While these plans were announced in the media and they had generated headlines, nothing much has happened since. Artemis continues to run a single 250 bed hospital in Gurgaon while nothing much has been heard about the Fortis DLF venture or the Hindujas new hospital ventures. Reliance has been rolling out at a snail’s pace in sharp contrast to the legendary scale and speed of the roll out of their other ventures (notably in Telecom and Petro-Chemicals). Not much has been heard about their proposed deal with Max Healthcare (always denied by Analjit Singh, the Chairman of Max Healthcare) as well. Max on the other hand continues its steady expansion with new facilities in Delhi, Dehradun and Punjab. Columbia Asia it seems has jettisoned their JV with the Brigade Group and is steadily concentrating on secondary hospitals in Tier II towns.

So what happened? Did recession hit the supposedly ‘recession proof’ healthcare industry.

I would like to believe that because of the recession hitting the real estate players significantly, the bottom fell out of many of these JV’s. Others are just not serious about getting into healthcare. Thus Fortis and Columbia Asia are going alone sans their real estate partners. Sahara too has been facing difficult times with the real estate sector in turmoil.Reliance it seems has yet not made up their minds about getting into healthcare in a serious manner and it is still wait and watch for them. Artemis flounders because the parent Apollo Tyres has not put in any fresh investments and is waiting for the hospital in Gurgaon to stabilise.

The big guns in healthcare with perhaps the exception of Fortis and maybe Max Healthcare continue to be silent. This does not augur too well for Corporate healthcare in India.

Pic courtesy http://www.flickr.com

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