Healthcare realty emerging as next big thing on horizon-II

By: Sanjay Dwivedi

Track2Realty Exclusive

Increasing population, higher expenditure on lifestyles, rising market of health insurance, Government initiatives for better medical infrastructure, and focus on Public Private Partnership (PPP) models are some of the driving factors for the growth of healthcare sector in India.

Increased options for healthcare financing are also driving the healthcare penetration and this growth is fuelling the realtors to look at better profitability in the business. Healthcare is a highest capital intensive service industry and profitability has never been as good to match others. It is all changing very fast.

The best of the systems of world are still struggling to achieve a good profitability level for healthcare. Healthcare in United States had a profitability of just above 5% in last financial year. India on the other hand, if we leave the charitable and Government hospitals aside, is witnessing a 15% to 25% profitability. This increased profitability can be attributed to many factors like increased flow of patients and higher Margins.

Then the break even for hospitals has been 5-7 years till last decade. The things started changing as the structure of hospitals moved from unorganized to the organized one. Hospitals are now able to manage their funds in a better way. Though costs have increased still they are able to maintain good profit margins on all their services.

The potential for India to become the hub for medical tourism is huge. Medical Value travel is one of the emerging global sectors grossing US$ 22 billion. With projected revenues close to US$ 450 million, India has a 2% share of the global health tourism. But all the existing healthcare delivery providers as well as the new entrants are in some or the other way eyeing that market.

Even within the country the disease profile as a whole is changing. The lifestyle diseases are now more in vogue than the traditional infectious diseases. Improvements in socio-economic conditions in the last five decades in doubling longevity from 32 to 64 yrs, steep fall of IMR, elimination of leprosy & yaws, eradication of small pox, & polio being on verge of eradication shows a major health transition.

Demographic transition reflects quantitative and qualitative changes in the population profile and the country is facing a double burden of communicable & non-communicable diseases. Communicable diseases are still persisting as major health problems but the Non-communicable diseases are doubling its incidence & prevalence. Coronary artery disease, diabetes, renal failures, stroke, cancer are on a rise as a result of hypertension, metabolic syndrome & stress.

…..to be continued