Bangalore Hospital Report

7/27/2019 Bangalore Hospital Report

1/26

BANGALORE HOSPITAL REPORT

MAY 2010

NORTHBRIDGE CAPITAL


2/26

BANGALORE HOSPITAL REPORT ANALYST: NITI BUTALA

PH:912265262307

FAX:912266756249E MAIL:[email protected]

Northbridge Capital is an Investment Bank(Category I Merchant Bank) regulated by the SEBI

Sebi Registration: INM000011500

Page

2

TABLE OF CONTENTS

PARTICULARS PAGE NO.

EXECUTIVE SUMMARY 3

GOVERNMENT POLICY AND TAX BENEFIT 4

DEMAND V/S SUPPLY 5

GAP ANALYSIS 13

DEALS 15

EXPANSION PLANS 17

PROJECTED GROWTH IN THE NUMBER OF

BEDS

18

PROFILE OF THE HOSPITAL CHAINS 20

ABOUT NORTH BRIDGE 25


3/26


PH:912265262307




Page

3

EXECUTIVE SUMMARY

Bangalore, the "Silicon Valley of India", officially Bengaluru, is the capital of the Indianstate of Karnataka with a population of around 7 million making it a 3

rd

most populous

city and 5th

most populous urban agglomeration.

It is known for its supremacy in the field of Information Technology and is spearheadingtowards to become a centre of excellence for healthcare mainly because of the influx of

a lot of healthcare professionals to Bangalore. Bangalore will be the healthcare hub for the whole of South East Asia in the next five

years.

The beauty of the health department of Karnataka is that it is one of the few states toprivatize primary and secondary healthcare. Karnataka is the first state to have Task

Force on Health to enforce changes in healthcare.

The cost of treatment in Bangalore hospitals is 1/5 th of the cost in Europe and USA. Bangalore is finding a place in the global map for advanced spinal surgery due to the

growing number of spinal surgeons in the Bangalore.

Every month, Hosmat Hospital attends 2-3 patients - mostly from Malaysia, Sri Lanka,Pakistan, Maldives, Bangladesh and Africa.

Rentals in Bangalore have fallen by 30% and this will reduced the expenditure borne bythe hospitals.

Though Bangalore has hospitals catering to all specialties but it lack burns unit. A privateburn centre is required to meet emergencies, which could be a viable option.

ICU beds are at times not reachable mostly due to economical reasons. Approximately 60% of the nursing homes are not doing well. Hospital beds are not fully

utilised Average occupancy ratio for private hospitals is 70-90%. 75-80% of households prefer to use private sector treatment in Bangalore for minor and

major illnesses.

With bed strength of 200 beds, the average number of out-patients visiting thehospital/day is about 290, and the number of in-patients admitted/day is 140.


4/26


PH:912265262307




Page

4

GOVERNMENT POLICY AND TAX BENEFIT

To encourage investment in the health care sector, government of India has allowed 100% FDI

under the automatic route

Government has also accorded the infrastructure status to the hospitals and has announced

Lower tariffs (between 58 per cent) on medical equipment and devices.

In a move that would benefit the corporate hospital chains expanding in urban areas, thegovernment has decided to extend its provision of tax relief to new hospitals with over 100

beds in metros and other urban agglomerations, which had been deprived of such benefits till

now.

With a view to encouraging investment in hospitals in non-metro areas, the benefit of sub-

section (11B) of section 80-IB had been extended to hospitals located anywhere in India, other

than defined excluded area.

Sub-section (11B) of section 80-IB provides for a tax holiday for five consecutive assessment

years, beginning from the initial assessment year, to an undertaking deriving profits from the

business of operating and maintaining a hospital in a non-metro.

The tax relief would also apply to new hospitals with over 100 beds in previously excluded

area which includes the urban agglomerations of Greater Mumbai, Delhi, Kolkata, Chennai,

Hyderabad, Bangalore and Ahmedabad, the districts of Faridabad, Gurgaon, Ghaziabad,

Gautam Budh Nagar and Gandhinagar and the city of Secunderabad.

Tax benefit is now available to hospitals which are constructed and have started or would start

functioning at any time during the period beginning the 1st day of April, 2008 and ending on

the 31st day of March, 2013.

Customs duty exemption on specific personal medical aids like crutches, wheel-chairs, walking

frames and artificial limbs.

Customs duty, excise duty and CVD exemption on specific medical devices such as talking

books, Braille computer terminals, etc.


5/26


PH:912265262307




Page

5

DEMAND V/S SUPPLY

DEMAND SCENARIO

Bangalore has the 2nd highest literacy rate (83%) and per capita income of Rs. 30,000. Sothere is better health awareness and willingness to spend on health.

Corporate provide medical insurance to their employees. This too has led to a spurt indemand for quality healthcare.

With more people buying medical insurance, the average time spent in the hospital hasgone up and are also prolonging their post-operative stay in the hospital. All this

translates into higher demand for hospital beds.

Low-cost treatment is the ultimate factor in Bangalore. Medical care costs only 1/5 th ofthe costs in the West which gave rise to medical tourism.

Only 20% of payment is done through insurance so there is a lot of demand to penetratethe insurance market and rest is through direct payment. This has led to 60% of

healthcare expenditure being financed out-of-pocket.

1. Demand for Specialty hospitals

Multi specialty hospital

Heart Surgeries

Diabetic Hospital

U.S.A.

$30,000

BANGALORE

$6,000

SURGERYCOST

U.S.A.

$2,80,000

BANGALORE

$40,000

LIVERTRANSPLA-NTATION

COST


6/26


PH:912265262307




Page

6

Growth rate is highest in Cardiac and Cancer and will grow at 14% but very less Cardiac and

Cancer centres are there in Bangalore.

2. Demand for number of beds/1000 population

Number of beds/1000 population is 2.2 and the world average requirement is 3.96

beds/1000 population but this should increase to 7beds/1000 population with the

increasing population and growing healthcare diseases.

So approximately 16,000 beds needs to be added in order to reach the ratio of 3.96beds/1000 population.

14, 17%

13, 15%

19, 22%

22, 26%

17, 20%

INPATIENT SPEND

CARDIAC

CANCER

ACCIDENTS

INFECTIONS

MATERNITY


7/26


PH:912265262307




Page

7

3. Demand for Accreditation

Apollo and Wockhardt hospitals have received the Joint Commission International (JCI)

Accreditation.

Hospitals with NABH Accreditation Narayana Hrudayalaya Sagar Hospitals Columbia Asia Medical Centre Manipal Hospital Nethradhama Superspeciality Eye Hospital

Applicant Hospitals for NABH Accreditation Wockhardt Hospitals, Nagarabhavi Wockhardt Hospitals, Cunningham Road Sparsh - Hospital For Accidents, Orthopedics & Plastic Surgery Bangalore Institute of Oncology

Hospitals are now planning to go for either JCI or NABH accreditation so as to increase medical

tourism.

4. Demand for number of patients

Average occupancy ratio for private hospitals is 70-90%.



Occupancy ratio of 60-70% is good enough to break even. So there is a demand to increase the

occupancy ratio which will increase the number of out-patients and in-patients visiting the

hospital/day.


8/26


PH:912265262307




Page

8

SUPPLY SCENARIO

1.Medical Infrastructure

2. Hospitals based on OwnershipThere are approximately 320 hospitals within the city and the total number of beds in the

city is 18,000 to 23,000 beds. Bangalore has approximately 212 private hospitals.

10,000 1.27/1000

POPULATION

DOCTORS

19,000

2.3/1000POPULATION

NURSES 4,000 0.5/1000

POPULATION

PHYSICIANS

18,000

2.2/1000POPULATION

BEDS


9/26


PH:912265262307




Page

9

3. Private hospitals based on Bed Capacity

2015

212

63

HOSPITALS IN BANGALORE

Government Hospitals

Trust

Private HospitalsNursing Homes

95

5347

17

0

10

2030

40

50

60

70

80

90

100

< 50 BEDS 50-100 BEDS 100-200 BEDS > 200 BEDS

NO.OFHOSPITALS

BEDS IN BANGALORE PRIVATE HOSPITALS


10/26


PH:912265262307




Page

10

4. Hospital Chains

5. Private hospitals based on Specialty

HOSPITALCHAINS IN

BANGALORE

APOLLO

WOCKHARDT

MANIPAL

GLOBAL

METROPOLISHEALTH

SERVICES

DR. AGARWALEYE HOSPITAL

64

21

85

42

0

20

40

60

80

100

MULTI SPECIALITY SUPER SPECIALITY SINGLE SPECIALITY GENERAL PRIVATE

HOSPITALS

SPECIALITY HOSPITALS IN BANGALORE


11/26


PH:912265262307




Page

11

6. Bangalore has 2 JCI accredited hospital

Apollo Hospital

Wockhardt hospital

SINGLESPECIALITY

85

EYE 20

ORTHOPEDIC14

CARDIOLOGY13

DIABETICS 4

NEURO 8

KIDNEY 15

CANCER 11


12/26


PH:912265262307




Page

12

7. Hospitals based on Location

8. Hospitals empanelled by Insurance companies and Third Party Administrators (TPA)

There are more than 165 hospitals which are empanelled by various Insurance Companies

and Third Party Administrators (TPA).

CENTRALBANGALORE

75

NORTHBANGALORE

55

EASTBANGALORE

69

SOUTH

BANGALORE56

WESTBANGALORE

65


13/26


PH:912265262307




Page

13

GAP ANALYSIS

PARTICULARS CURRENT SCENARIO EXPECTED (2010)

POPULATION 8 MILLION 9 MILLION

BED PER 1000 POPULATION 2.2 3.96

NO. OF BEDS 18,000 34,000

GOVT. 7,200 8,500

PRIVATE 10,800 25,500

1.5

3.45

1.8

3.96

1.27

2.3

0.5

2.2

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

DOCTORS NURSES PHYSICIANS BEDS

DEMAND

SUPPLY


14/26


PH:912265262307




Page

14

Currently there are 18,000 beds (7,200 beds in the public sector and the rest inprivate) in Bangalore hospitals and another 16,000 beds will be added by 2012,

bringing bed to thousand population ratio to 3.96. Out of this total, 12,000 beds

will be added by private sector and the rest will be by the government.

The medical infrastructure market will grow at 14.5%. The total investmentneeded to reach the target of bed to thousand population of 3.96 will be

US$1,000 Million (Rs. 5,000 Crores) out of which US$750 Million (Rs. 3,750Crores) will come from the private sector.

The revenues currently generated by the private hospitals in Bangalore areUS$130 Million (Rs.650 Crores) and are likely to increase to US$230 Million

(Rs.1,150 Crores) by the year 2012 at a CAGR of 15%. Therefore the breakeven

period for hospitals is likely to shorten from 5 years to 4 years.


15/26


PH:912265262307




Page

15

DEAL STRUCTURING

The deals can be done through Equity, Debt or Hybrid instruments.

Valuation of hospitals is based on the following parameters:

Average Revenues/bed

Occupancy ratio

Location

Medical Infrastructure

Cash flow

Value of assets, etc.

Value of hospitals going for leasing is based on following parameters:-

Land and Equipment

Number of out-patients/day and in-patient/day

Previous 5 years cash flow & revenues and future cash flow & revenues

DEALSTRUCTURING

EQUITY

PROMOTER'S

STAKE

MINORITY'SSTAKE

DEBT

HTBRIDCONVERTABLE

BONDS


16/26


PH:912265262307




Page

16

RECENT DEALS

Acumen Fund invests in Bangalore based AyurVAID hospitals on 12 th June, 2008. Overthe next five years, AyurVAID will establish 50 small hospitals (15-30 beds) in urban and

semi-urban areas. The next three hospitals in the AyurVAID network, in different parts

of India, will be launched in the near future.

The Bangalore Hospital has acquired KVG Bangalore hospital which has a capacity of 100beds located at Bannerghatta (17 kms from Bangalore Hospital) mainly catering to rural

population. This is a general hospital which extends its facilities to the rural public at

nominal charges.


17/26


PH:912265262307




Page

17

EXPANSION PLANS

Trinity Hospital and Heart Foundation would be setting up a new multi-speciality facilityin the city at a cost of Rs.40 Crores (Approximately US $8.8 Million). The new 125-bed

healthcare centre would have extended facilities such as nephrology, and orthopaedic

care and surgery. It is expected to be launched in the next 18 months.

Narayana Hrudayalaya P Ltd (NHPL) plans to establish 5,000-bed health cities in themajor state capitals of India. It intends to reach 20,000 beds within the next five years.

The group owns three hospitals in the cities of Bangalore and Kolkata with a total bed

capacity of 2,500. It is currently expanding the 1000-bed Bangalore facility to a 5000-bed

facility.

Hosmat Hospital started out as a 350 bedded Hospital in 1991 in the city of Bangaloreand today has expanded itself up to 450 beds super-speciality hospital specialising in

orthopaedics and joint replacement. The Hospital has plans to increase its bed strength

to 500 beds in the coming future making it the largest speciality hospital of its kind in

Asia.

SBF Healthcare Pvt. Ltd, is looking to raise $5 million (about Rs24 crore) from investorsto set up a countrywide network so as to scale up an non-invasive treatment of

osteoarthritis. SBF Healthcare Pvt. Ltd is planning to set up 50 centres across India in the

next financial year.

Global Hospital has commenced operations of the 500-bed BGS Global Hospital, a super-speciality and tertiary care hospital in Bangalore which is a joint venture between the

BGS Trust and Global Hospitals, built on a 50-acre campus of BGS Health and Education

City. The total investment in the facility is about Rs 170 crore.


18/26


PH:912265262307




Page

18

PROJECTED GROWTH IN THE NUMBER OF BEDS

NAME OF THE HOSPITAL NUMBER OF BEDS IN

2010

EXPECTED NUMBER OF BEDS IN 2012

Hosmat Hospital 350 420

Koshys Hospital 100 120

Manipal Hospital 600 720

Apollo Hospital 550 660

Pristine Hospital 102 123

Shekhar Hospital 105 126

St. Johns Hospital 1200 1,440

Sagar Hospital 665 798

Vydehi Hospital 1000 1,200

Global Hospital 1700 2,040

Church of South India Hospital 220 264

Mahabodi Mallige Hospital 150 180

Indira Gandhi Institute of Child Health 180 216

Mallya Hospital 150 180

Sparsh Hospital 400 480

MVJ Medical College & Research Centre 640 768

St. Marthas Hospital 550 660


19/26


PH:912265262307




Page

19

0

500

1000

1500

2000

2500

NO. OF BEDS IN 2010

EXPECTED NO. OF BEDS IN 2012


20/26


PH:912265262307




Page

20

PROFILE OF THE HOSPITAL CHAINS

MANIPAL HOSPITAL

Manipal hospital is Indias first hospital to be ISO 9001:2000 certified for Clinical, Nursing,

Diagnostics and Allied Areas. The hospital has been declared winner of the prestigious Golden

Peacock National Quality Award 2005 in the service category. The hospital has over 44

specialties with state of the art equipments, dedicated doctors and support staff around the

clock.

Facilities

600-bed strength

Over 275 consultants

Over 1700 well-trained support staff

Over 43 specialties

Intensive Care Units

o Medical ICUo Intermediate Care ICUo Neuro Surgical ICUo Paediatric ICUo Neonatal ICUo Cardiac ICU

Multi-Speciality Services Under One Roof

24 X 7 Hi tech Ambulance Services

24 X 7 Hi tech NABL Accredited Diagnostic Services

24 X 7 Pharmacy Free Home Delivery within 5 km Radius

24 X 7 Blood Bank

24 X 7 Accident & Emergency Services (Casualty)

24 X 7 Pediatric Emergency

Telemedicine

Valet Parking Services to Accommodate over 250 Vehicles

Out Patient Consultations on Sundays & Holidays

Evening Out Patient Consultations

Comprehensive Health Check Facility


21/26


PH:912265262307




Page

21

FORTIS

Fortis Bangalore is a state of the art 400 Bed facility hospital equipped with latest technology

and truly World class Clinical Talent dedicated to the whole range of Cardiac, Orthopedic,

Neurosciences, Minimal Access Surgery and Women & Child Services.

If Bangalore is known as Asia's preferred medical destination, then Fortis Hospital is the choice

for Super-Specialty healthcare. As Bangalore earns the tag of a multi-dimensional healthcare

city, Fortis Hospitals on Bannerghatta Road takes the big leap into a multi-disciplinary Super-

Specialty healthcare provider. Today, this new facility is undoubtedly set to be a landmark inSouth Bangalore and a milestone in the medical map of Asia.

Some of the key Clinical Departments we have at Bangalore are as follows.

Heart Care

Bone & Joint Care

Brain & Spine Care

Minimal Access Surgery

Women Care

Dental Care

Associate Specialties

APOLLO

The brand new Apollo Hospital in Bangalore is the latest addition in the healthcare scenario in

India. The medical experts in Apollo Hospital in Bangalore include a few names renowned all

over the world in their field. Add to that the state of the art diagnosis facilities.

The specialty departments in Apollo Hospital in Bangalore include:

Cardiology and Cardiac surgery

Diagnostic Services

ENT

Emergency & Trauma

Internal Medicine

Neurology and neurosurgery

Orthopaedics

Obstetrics & Gynaecology
http://www.fortishospitals.in/bangalore/departments-and-specialities/heart-care.htmlhttp://www.fortishospitals.in/bangalore/departments-and-specialities/bone-and-joint-care.htmlhttp://www.fortishospitals.in/bangalore/departments-and-specialities/brain-and-spine-care.htmlhttp://www.fortishospitals.in/bangalore/departments-and-specialities/minimal-access-surgery.htmlhttp://www.fortishospitals.in/bangalore/departments-and-specialities/women-care.htmlhttp://www.fortishospitals.in/bangalore-section/dental-care.htmlhttp://www.fortishospitals.in/bangalore/departments-and-specialities/associate-specialties.htmlhttp://www.fortishospitals.in/bangalore/departments-and-specialities/associate-specialties.htmlhttp://www.fortishospitals.in/bangalore-section/dental-care.htmlhttp://www.fortishospitals.in/bangalore/departments-and-specialities/women-care.htmlhttp://www.fortishospitals.in/bangalore/departments-and-specialities/minimal-access-surgery.htmlhttp://www.fortishospitals.in/bangalore/departments-and-specialities/brain-and-spine-care.htmlhttp://www.fortishospitals.in/bangalore/departments-and-specialities/bone-and-joint-care.htmlhttp://www.fortishospitals.in/bangalore/departments-and-specialities/heart-care.html


22/26


PH:912265262307




Page

22

Paediatrics & paediatric surgery

Plastic surgery and Cosmetic surgery

Surgical & Medical Gastroenterology

Urology & Nephrology

Oncology

More than a hundred nursing staff take care of the patients round the clock. They are available

anytime at the 24x7 helpline. Be it pre-hospital or in-hospital care, cordial services with a touch

of traditional Indian hospitality, would pamper the patients with personalized attention at

Apollo Hospital Bangalore.

Here one can find the best in the world in patient care with - 64-Slice CT Scan, Low energy &

high energy Linear Accelerators, Digital X-Ray, Holmium & Thullium Laser, 4-D Ultrasound for 4

dimensional Sonography.

The surgical infrastructure in Apollo Hospital in Bangalore deserves a special mention indeed.

Latest technology coupled with global surgical protocol and completely sterile environment vie

with the best across the world.

The Dialysis Unit, equipped with stations hi-flux and low-flux transfusion compatibility and the

Flat Panel Cath Lab with 3D CA boast of advanced infrastructure.

GLOBAL

Global Hospitals is India's fastest growing chain of facilities offering tertiary level super specialty

care and multi organ transplantation services. With hospitals already functioning in Hyderabad,

Bengaluru and Chennai, the group is all set to foray into Mumbai, Kolkata, Delhi and

Bhubaneswar.

Global is a leader in India in performing liver, heart, lung, kidney, and heart-lung

transplantation, as well as bone marrow transplantation. The outcomes at Global are on par

with the best centers in the world.

Global Hospitals has become the destination of choice for all discerning patients from within

the country and abroad because it:


23/26


PH:912265262307




Page

23

Offers world-class care at affordable cost

Employs personnel with rich experience and impeccable credentials

Deploys state-of the-art equipment and technologies

Believes in multi-disciplinary teamwork

Produces results on par with the best in the West

Sets benchmarks in quality, safety and innovation

Exceeds patient expectations by going the extra mile in service

Milestones Created:

First Liver Transplant in the State

First Bone Marrow Transplant in the State

First Heart Transplant in the State

First Twin Kidney Transplant in the State

First Hospital to offer free Liver Transplantation for Children, recently performed a

Transplant on a Pakistani child successfully.

Outstanding Success rate of over 90% in the above.

Associated with Kings College Hospital, United Kingdom in Liver Transplantations

First Hospital to introduce Two-Wheeler Ambulance services (GART-Global Accident

Rescue Team)First Corporate Hospital to be recognised by Govt of India, for Research and

Development.


24/26


PH:912265262307




Page

24

DR.AGARWALS EYE HOSPITAL

Dr. Agarwal's Eye Hospital is listed as A Major Eye Centre of the World by The International

Congress of Ophthalmology

It brings advanced internationally approved eye care services to ones doorstep.

Speciality

Refractive Surgery

Squint

Vitreo Retinal

Glaucoma

Cornea

Neuro Ophthalmology

Pediatric Ophthalmology


25/26


PH:912265262307




Page

25

ABOUT NORTHBRIDGE CAPITAL

Northbridge Capital has been assisting Global companies to enter Asia for many years, whether

it is through local partnership, acquisition, merger or green field ventures.

We help companies and their founders to expand their businesses across Asia and advice on an

array of deal structures. We also assist with raising equity and debt capital, both domestically

and globally, in support of this growth.

Our advisory for unlisted companies and founder businesses include:

- Cross Border Mergers & Acquisitions across Asia

- Financial Advisory Services including restructuring etc

- Advisory on Raising Capital

Northbridge Capital has 6 Practice areas and offers buy side and sell side advice across these

areas:

- Consumer

- Technology- Financial Services

- Life Sciences

- Industrials

- Real Estate


26/26


PH:912265262307


Page

26

CONTACT INFORMATION

India Office

Ankita Mangla

Email: [email protected]

Tel: +91-22-22901715

Fax: +91-22-42643612

Northbridge Capital LtdR-501, Remi Bizcourt

Shah Industrial Area

Off Veera Desai Road

Andheri (West), Mumbai 400 053, India

Website: http://www.northbridgeasia.com

Hong Kong Office

Sam FarrimondEmail: [email protected]

Tel: +852-28628053

Fax: +852-22909154

Northbridge Partners (Asia) Ltd

22/F, 3 Lockhart Road

Wanchai, Hong Kong

DISCLAIMER

- This information is for Institutional Investors and Northbridge Capital clients only. It isnot meant for public circulation

- No transmission of this information in any form or medium is allowed without the

written authorization of Northbridge Capital

- This is not a solicitation to buy or sell any security in any jurisdiction
mailto:[email protected]://www.northbridgeasia.com/mailto:[email protected]:[email protected]://www.northbridgeasia.com/mailto:[email protected]

Documents

Bangalore Hospital Report