Nashik- upcoming market for Hospital Industry
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Laxmi Bhardwaj, 35, goes to seek her counsel as a good family friend and an excellent physician operating in Mumbai Naka area in Nashik, whenever she or her family members fall ill. But this is not like any regular clinic yo go to in your locality. The entire clinic has designs as per standard norms where patients are greeted by a warm welcome, with enough space to sit while waiting for your appointment and most importantly, it is mirror clean. “It is much better than average clinics, as it is clean and you do not have to wait as crowd is selective,” shares Bhardwaj.
Wockhardt Hospital would be happy to hear Bhardwaj’s response. For the last two months, the Rs. 500-crore hospital chain has been trying to perfect a formula to succeed in tier II towns like Nashik.
The Key Ingredients to build hospital like this are:
- Easy Liaison with all Agencies viz. Architects / contractors / equipment vendors / utility service consultants/ Government offices.
- Expert management of any major changes in original project plans
- Staff right from construction staff to super-specialty doctors
- Facilities for Facility Management.
Nashik today is one of the fastest growing economic cities of India with a growing demand for quality health care. It has all the above mentioned aspects, so no second thought comes to the mind of healthcare giants or investors who want to invest in Nashik.
Interestingly, our very city Nashik had been challenging environment 3 years back. But now it’s well equipped with infrastructure, the demand-supply in health care a swell as geographical accessibility. In addition to that low real estate rates and lower staff salaries can result in at least 18 percent lower cost to set up the hospital, not including land prices local hiring will add value to in it.
In Nashik Rising income levels, changing demographics and illness profiles with a shift from chronic to lifestyle diseases would propel the local healthcare industry to double in value by 2012 and multiply by 2017. This is likely to result in considerable infrastructure challenges and opportunities which the likes of Apollo, Fortis, Manipal and Sahyadri are looking to tap. To tap rural surrounding areas tele-medicine allows even the interiors to access quality healthcare and at the same time, significantly improves the productivity of medical personnel.
Fortis and Manipal too are working on targeting different segments in tier II markets and Nashik is on top of the list. Apollo announced in January that they were going to invest Rs. 10,000 crore in building 250 Apollo Reach Hospitals — smaller hospitals than the 51 they have in big cities — in tier II towns such as Nashik in Maharashtra.
Getting the Right things at Right price
As the making hospitals is costlier in metros, large chains are expanding their variation on the ‘bottom of the pyramid’ because of the profit margins that small towns can offer. For instance, land can cost you for Rs. 2 crore in a Nasik. The same land would cost Five times more (Rs. 10 crore to Rs. 12 crore) in a Mumbai, Chennai or any tier I city. This has directly related to ROI (Return on Investment and profit margins. Same for running cost also.
Investment and Usage of equipment is the critical factor. Ex. hospital may get a good MRI machine — for Rs. 60 lakh and not Rs. 1.2 cr. This will not adjustment on quality, but will defiantly add a value to get good profit margins.
Popular Business model for Tier II is as follows:
To the Point
These big hospital chains are choosing from among two segments of health pattern to pitch their services. The First segment is the family physician in which Apollo (through Apollo Clinics) and Wockhardt (through Specialty clinics) are present.
The second segment comprises one or multiple areas of specialty, such as Manvta Cure, which focusses on Cancer. Sai Baba Heart Institute, which focuses on Heart problems (both Preventive and Post disease). Dr. Prathap C. Reddy, chairman, Apollo hospitals says” Apollo Reach Hospitals will be a significant growth driver for the Apollo Group over the next few years given that there are more than 30 towns in India that offer opportunities for setting up specialty hospitals,” out of 30 Nashik Apollo hospitals has been already started.
Medical tourism market is valued to be worth over $310 million with foreign patients coming by 100,000 every year, and the market is predicted to grow to $2 billion by 2012. Due to many good hospitals and specialists Nasik have, with certainly lower rates and better quality than international hospitals; patients certainly would like or don’t mind to change three to four flights before hitting the city for their treatment.
In short it is not enough to have Health University, 3 medical colleges, 3 corporate hospitals, 2 municipal hospitals, 100 less than 80 bedded hospitals; Nashik demands 3 times more than this and has potential to grow as Next upcoming Market for Hospital Industry and most prominent Medical tourism destination for Asia.