KOCHI: The healthcare sector in Kerala has been witnessing a slew of mergers and acquisitions in recent years as established players look to consolidate their presence.
While Quality Care, a PE-fund Blackstone-owned hospital platform, signed an agreement to acquire KIMSHealth Management, Caritas Hospital, promoted Knanaya Catholic Archdiocese of Kottayam, acquired Matha Hospital, and if sources are to be believed, Baby Memorial is set to acquire Chazhikattu Multi Super-Speciality Hospital in Thodupuzha.
Aster DM Healthcare, another leading healthcare company which recently separated its India and Gulf (GCC) businesses into two separate entities, has announced a Rs 1,000 crore expansion plan in India to increase its bed capacity, open new hospitals, and expand into new markets. There were also reports that Blackstone-TPG-owned Care Hospitals is in advanced talks for a merger with Aster DM Healthcare.
According to Dr M I Sahadulla, president of Association of Healthcare Providers India (AHPI), Kerala chapter, and chairman of KIMS Health, Thiruvananthapuram, the consolidation of hospitals in the state can have a positive impact, from improving facilities to providing more job opportunities.
“The acquisitions will improve the standards of service. We will be able to deliver quality care to the public by bringing better technology and doctors, and imparting training to our staff. The efficiency will improve,” he said.
Kims Health was acquired by Hyderabad’s leading healthcare entity, Quality Care India Ltd (QCIL) last year.
Improving the standards of healthcare facilities can help in meeting the expectations of the public. “People are looking for better facilities. We need to improve our infrastructure and quality of services. Also, the patients and their families respect more space and privacy,” said Fr. Paul Kareedan, director of Lisie Hospital Kochi. Lisie Hospital acquired PVS Hospital, hardly 500 metres away from it, to manage the crowd, Fr. Paul said.
According to Dr Anvar M. Ali, general secretary of Kerala Private Hospitals’ Association (KHPA), the trend has both positive and negative impacts on the public.
“These hospitals in the state are acquired by high-end hospitals or corporate bodies. On one side, it can help develop the infrastructure and provide better facilities. The quality of care provided will improve, and more departments and doctors will be available. However, on the other side, there will be cost escalation. These hospitals may not be affordable for laymen,” he said.
Dr E K Ramachandran, the treasurer of KHPA and superintendent of T M Hospital, Thrissur, said more acquisitions are happening in the sector as managing hospitals has become tougher, especially for small players. “With the increasing expenses in running a hospital and legal and other constraints, it is difficult for small and medium-scale investors to run a hospital, and therefore these facilities are taken over by other hospitals,” he said, adding that the trend may continue for a few more years.
According to Dr Sahadulla, the consolidation of hospitals can help make the state a healthcare hub and improve medical tourism opportunities.
“The trend will help the state attract foreign direct investment. It can also create better revenue and employment opportunities,” he said, adding the small to medium hospitals will continue delivering primary and secondary care and there will be a shift in tertiary and quaternary healthcare.
Financial support and revisions in the policies can help small and medium-scale hospitals sustain, according to Dr Anvar.
“Unlike other sectors—industries and IT—healthcare institutions do not receive benefits or subsidies. Also, the rules and regulations in setting up a hospital have become more strict. The small-scale hospitals will have to be closed down if the situation continues,” he added.