Getting It Right

A guide to choosing the ideal bed strength and built up area for a hospital project

- Rita Dutta

Columbia Asia Hospitals downed the shutters of its 100-bed hospital in Ahmedabad this September, as the project had been incurring high losses ever since its inception. The hospital would go down in the annals of the healthcare industry as a project that was planned with a poor market feasibility study. While the management took the tough decision to close down the project, several mega hospitals across the country are struggling to survive and a slew of organisations are planning to exit their hospital division as well. Some of these unprofitable hospitals are mammoth-sized projects, and even had high occupancy rate once upon a time but saw a plunge in patient footfall and revenue with rapid changes in the market dynamics.

But why are hospital projects bleeding even if there is a great demand supply gap in the Indian healthcare firmament? Hospitals are gasping for survival as the manpower costs are escalating at a rate substantially over the rate of inflation, while there is huge pricing pressure from insurance companies, corporates and various Government schemes. Also, the Government has implemented controlled pricing for implants and devices and various state Governments are threatening to put in place measures to monitor and control hospital pricing, say experts. Says Dr Lloyd Nazareth, Executive Director, Asian Healthcare Holdings, the investment platform set up by TPG Growth to invest in India, “Many of these large sized hospital projects have run aground due to the fact that one has built large capacities at costs which are higher than what would make economic sense. In such a situation, the promoters are stuck with projects which are doomed to economic non-viability from day one.”