Outpatient – the real opportunity
What is striking across most Emerging Markets is the massive growth in outpatient facilities in all areas of healthcare. What are the lessons here?
Today in many markets, including China, India and Brazil, the focus of private healthcare has been on acute hospital care. This often goes with cultural norms. The Chinese, for instance, will almost invariably seek out a top level acute hospital in the event of sickness. Inpatient is associated with expertise, outpatient, all too frequently, with low quality and, possibly, unqualified staff.
But the hospital model has clear limits. For starters, land, particularly in India is very expensive. And then we have the long delays in building and sometimes even longer delays to get licences. Note that outpatient is very much the preferred route for TVM Capital, the canniest investor in the Gulf for precisely these reasons – read our interview here.
Small wonder that outpatient is now growing so fast. Our latest Indian survey found that many outpatient business models are achieving 30% plus sales growth. And chains of outpatient clinics are spreading rapidly. Fullerton (Singapore) and UMP (Hong Kong) plan to IPO and use the proceeds to grow international networks. In mainland China, iKang, a chain of 80 medical centres, has attracted a bid from Meinian, which with 100 centres is the largest outpatient clinic chain in China.
All this ties into the development of new payor models and web brands. Particuarly in the Far East, we think the real growth is not going to be in private medical insurance, but rather in corporate subscriptions, where employers pay a monthly subscription to give employees access to a limited basket of services. Note that Apollo, the largest Indian hospital chain has just moved into corporate subsciptions. Or you can follow the example of Mydentist in India, build a strong web presence and sell directly to the consumer.
All this brings real opportunities for external investors to roll out easily replicated greenfield site developments rather than having to buy established family-owned hospital platforms.
We would welcome your thoughts on this story. Email your views to Max Hotopf or call 0207 183 3779.
