By AltG Research On Behalf Of Poornima Vardhan & Taponeel Mukherjee
The Indian healthcare sector is experiencing a surge in investments, marked by eye-catching valuations in recent high-profile deals. While the current landscape focuses on major hospital chains and top 100 hospitals, AltG is building in the smaller hospitals space, targeting the vast market of 40,000 establishments. The strategy involves an "Investor-Operator" platform approach, aiming to provide affordable and accessible healthcare to a billion Indians while generating IRRs north of 40%.
Key Investment Themes:
Hospital Revolution: Beyond the Top 100
Market Overview: The current trend concentrates on major hospital chains, but AltG proposes a paradigm shift by targeting smaller hospitals, which make up the majority in India.
Investment Play: The focus on buying, operating, and investing in the 40,000 smaller hospitals provides significant value creation opportunities, especially when emphasising accessibility and affordability. The potential for 10X returns lies in the unique "Investor-Operator" platform approach.
OPCO versus PROPCO Theme: Unlocking Asset Value
Market Opportunity: Regulatory greenlight for smaller REITs with reduced minimum asset values unlocks significant value for hospital assets.
Investment Play: Leveraging varied balance sheets and separating equity and fixed-income components enables platforms of smaller hospitals to scale efficiently, presenting an opportunity for substantial returns.
Group Purchase Organizations (GPOs): Navigating Changing Dynamics
Market Dynamics: The evolving customer landscape, with insurance companies becoming the primary clients for hospitals, necessitates innovative solutions.
Investment Play: GPOs in consumables and insurance spaces can thrive by offering negotiating leverage to smaller hospitals, which lack the bargaining power of larger chains, thus creating a window for value creation.
Technology-Driven Customer Acquisition: Adapting to Urban Competition
Market Shift: Shifting consumer dynamics demand new methods for customer acquisition, especially in highly competitive urban areas.
Investment Play: Deploying technology-driven models such as external OPD units and telehealth platforms can help smaller hospitals attract new customers, fostering a transition from outpatient to inpatient services.
Demarcation between Larger and Smaller Hospitals: Specialisation for Survival
Market Trend: Smaller hospitals with fewer than 100 beds will transform into specialised ambulatory centers to compete effectively.
Investment Play: Differentiation and participation in platforms become critical for smaller hospitals to thrive in a transforming landscape, creating opportunities for strategic investments.
Common Denominators Driving India's Healthcare Markets:
Insurance Focus: A significant shift toward insurance-focused customers over cash-paying ones.
Favourable Regulations: SEBI's approval of smaller REITs with a reduced minimum issue size of $6.2 million.
Favourable Trends: Smaller cities offer better profit margins compared to larger cities, presenting growth opportunities.
We at AltG are capitalising on the untapped potential of smaller hospitals, leveraging regulatory changes, embracing technology, and adapting to evolving market dynamics to unlock hidden value in India's healthcare sector, providing not only accessible healthcare to a billion Indians but also generating market-beating investment returns.
Disclaimer: In the article "The Future Of Indian Healthcare Investments In The 21st Century" above - Any views, comments or communication (above or in the past) should not be construed to be investment advice by Alternative Growth (hereafter referred to as “AltG”) in any form whatsoever. AltG does not make an offer to sell or solicit to buy any securities.