Chennai’s healthcare brands expand, get battle-ready

CHENNAI: The action-packed healthcare sector is witnessing consolidation with several players reporting good progress. Chennai, the healthcare hotspot, in particular, has been undergoing changes that are notable.

Private equity investments, digitalisation, doctor-turned-entrepreneurs managing hospitals, acquisitions, expansion are some of the positive developments that are visible on the healthcare landscape. While top brands such as Apollo Hospitals, Kauvery, Dr Agarwal’s and MGM have continued to expand, players from Tier I locations such as Madurai and Coimbatore too have been upping their presence in Chennai.

Coimbatore’s Kovai Medical Centre and Hospital (KMCH) has already acquired a property on OMR, thereby marking its expansion plans. It is apparently coming up with a 200 to 300-bed hospital on 2.2 lakh sq ft area. Likewise, another well-known healthcare player from Madurai is the Vellamal Group, which is setting up a multi-speciality hospital in Poonamallee, Chennai.

Harish Manian, CEO, Baby Memorial Hospital Group (a KKR-managed healthcare platform), says all the major healthcare players have been doing well and also seeing good margins. “There is a heightened awareness about health among people, which has especially got a boost post-COVID. Even the average revenue per occupied bed per day has been growing in Chennai, matching other cities such as Delhi and Bengaluru,” he said.

As per a Crisil report, average revenue per occupied bed/day from Rs 31,000 in FY22 is pegged to hit Rs 38,000 in FY25. Interestingly, the Indian healthcare market is expected to reach Rs 8.6 lakh cr size in 2027. Even the investments by startups in healthcare and related technology has been upwards of 19 per cent.

Players such as MGM and Apollo have continued to expand their growth with the latter announcing its intent to add 3,512 beds across 11 locations in India (including a 600-bed hospital on OMR) over the next four years. Apollo has earmarked Rs 6,100 crore capex towards this expansion exercise. Apollo operates 9,363 beds, including 7,942-owned beds. MGM’s expansion plans at Alwarpet for starting a 450-bed multi-speciality has been slow from an acquisition point of view.

Meanwhile, Manipal too, with an eye on entering Chennai, was in the race to acquire Fortis Vadapalani facility, which finally went to Kauvery Hospitals that raised $70 million from private equity managed by IIFL AMC, in 2023.

BG Menon, spearheading consulting entity ACME, is also upbeat about the healthcare ecosystem of Chennai. Calling it a “golden sector,” he said the returns have been good with insurance acting as a prime driver. Increasing penetration of insurance and the growing importance of Ayushman Bharat have expedited the ramping up strategy of healthcare players. Also, the emphasis on digitalisation is gaining momentum and it is only a matter of time when it is made mandatory, he said.

Another interesting development is the corporate social responsibility aspect which has led entities such as Zoho and Equitas Bank to foray into healthcare. While Zoho’s 250-bed hospital in Kattankulathur has already soft-launched its OPD, the 100-bed cancer care facility of Equitas Bank in Gowrivakkam, Tambaram, has become functional.