Marengo Asia Healthcare In Talks To Acquire More Hospitals: Dr Raajiv Singhal
Marengo Asia Healthcare, the multispecialty healthcare provider backed by Samara Capital, Havells Family Investment Office and Godrej Family Investment Office is looking for more acquisition options and is presently in talks with a few hospitals to explore acquiring opportunities, revealed Dr Raajiv Singhal, Managing Director and Group CEO, Marengo Asia Hospitals while speaking with BW Healthcare World in an exclusive conversation.
In February 2023, Marengo Asia Hospitals acquired a 250-bed healthcare facility in Gurgaon to take its total bed tally to 1600 beds with four hospitals in Delhi NCR, Ahmedabad and Bhuj.
On being asked whether the hospital is in talks with other hospitals for acquisition, Dr Singhal replied, “Yes we are in conversation with a few hospitals and we are exploring the possibilities around that and as I said we are always in a due diligence mode.”
Edited Excerpts:
How do you think the healthcare sector is growing presently?
Post-pandemic the industry has seen a very good period of growth overall, all the hospitals have consolidated or grown their departments and their reliability on other hospitals has gone down. Hospitals are trying to cater to all the super specialities themselves.
And today people are also trying to establish regional centres of excellence so that people do not have to travel far distances. In times to come we will see more such centres, for instance earlier Chennai was considered the only transplant centre in the country but now you see that transplants are happening all over the country.
Apart from this a lot of medical tourism is also flowing in India because Covid disrupted the healthcare systems which were very fragile in a few countries. They were actually drawn back from five to ten years, they were on their journey to build the super specility network which could not happen as they lost out on money or the people or the infrastructure or their priorities had to be changed because of Covid. And India now has a beautiful chance where it can become the tourism destination of the world and the government is also taking necessary steps in promoting that.
In healthcare consolidation is expected to rise going forward, with this there is concern of rise in prices of the healthcare services as big chains acquire small and regional hospitals. What is your view on this?
I will disagree here. If you look at the recent consolidations which have taken place, these consolidations are mergers of chains where a lot of hospitals were either in tier 1 cities or tier 2 cities, and the majority of these hospitals are located around the state capitals, and they were leaders in those particular areas. So as of now, the consolidation has not gone to tier 3 cities and towns where there are smaller players who are still operating with 50-100 beds hospitals.
And further, the advantage of consolidation far outweighs the price concern, it's not about the price, as consolidation actually increases the affordability and accessibility because you get the power of a group, here the economies of scale help to push the prices down. For instance, in a group, you will be buying 50 cath labs against one of the regional hospitals. And it also standardises care and process with added benefits.
What as per you is the biggest challenge that the healthcare sector in India is facing at the moment?
The most important challenge is the manpower challenge because today we do not have adequate manpower not only to service our population but also the world is also looking at India. Today a lot of European nations and other nations have started asking for Indian nurses. Traditionally there were only a few countries where the talent migrated. So, I believe we will have to speed our efforts to create the right talent in the shortest possible time, whether these are doctors, paramedics, nurses or technicians, and also make efforts to retain them.
The average bed occupancy and average revenue bed have risen in recent times for corporate hospitals. What is the reason for this?
Average bed occupancy in the majority of the corporate hospitals is around 60-62 per cent, but most hospitals would like to keep it at more than 70 per cent and the reason for the average revenue per bed occupied (ARPBO) going up is that the complexities of cases and therapies are rising day by day, so, the case mix has changed. And post-pandemic definitely there more people taking insurance and the footfalls of insured people is also increasing and international patients are further boosting the revenue per bed.
Tell us about Marengo Asia’s healthcare performance since it was founded in 2020 and what do you plan to do next?
Marengo Asia Healthcare began its journey around two and half years back and from the date of the first acquisition, in fifteen months we have 1600 beds and the journey so to say has been reasonably well and we will continue to acquire more hospitals. So we are in due diligence mode for certain hospitals and we will continue to explore these possibilities so that we can add more beds to our platform. From a performance perspective, whichever hospital we have acquired , our focus there is to add clinical talent, infuse more capital into it to build or add on to the existing infrastructure or add on certain new therapies so that we can offer all the specialities to patients who come to Marengo Asia.
Will you continue the brownfield growth trajectory or are you also looking at greenfield projects? And are there any acquisition deals brewing up presently?
Definitely, for a year everything will be taking the brownfield route and we would like to continue that for now. And, yes we are in conversation with a few hospitals and we are exploring the possibilities around that, as I said we are always in a due diligence mode.
