Saturday, May 22, 2010

Why are international hospitals not setting up shop in India?

I would think there are a lot of hospitals in India that provide better outcomes than what is provided in developed countries. But in general there is a lot that can be done to improve management practices in Indian healthcare sector.

There are a few projects underway,where healthcare groups from US and Europe are esatblishing presence in India. However in general international providers are reluctant to set shop in India due to various reasons

US providers:
1. Many have a local and regional focus, not even expanding within US
2. Profit in dollar terms would be miniscule, unless they build scale
3. Healtchare projects have long gestation periods; medium term geopolitical risks could upset plans
4. Availability of staff in the paramedical area
5. Business models and marketing in India are vastly different from US
6. Hyper competitive due to the presence of a lot of quality providers in India
7. Many hospitals in US are barely getting by, profit margins are razor thin
8. Potenatial for PE investments other co investment models leveraging existing infrastructure/business models.

1. Since Europe in general has a public health system, the number of expert players in private sector is lesser compared to the US.
Many of the India centric issues listed above apply.
We may still see a couple make inroads in India, but would face intense competition from established Indian players.

If the financial system in Europe worsens, and senior patients struggle to find affordable public health care, we may see investments in medical tourism projects in India coming from Europe. However the first choice for such investments would be in Eastern Europe.

Middle East: Not many established healthcare brands in the Middle East.
However, we may see lot more co-investment in healthcare sector in India coming from the Middle East.