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Regulatory Changes Had A Negative Impact On Healthcare Sector: Sunil Thakur MD Quadria Capital

Private Equity and the healthcare sector have witnessed multiple ups and downs yet attractive for investors explored at BW Healthcare summit 2019.

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BW Healthcare summit and awards has been recognised as one of the most prestigious events in the segment that keeps an eye over the booming healthcare industry of India. 

Lessons from the past and an expectation of better performance are enforcing private equity (PE) firms to re-evaluate their strategies.

With 0.6 percent of GDP as market investment intensity, India has become the world's number two in overall PE investments, surpassing China and Brazil. 

The healthcare and pharma trade which used to attract around six percent of overall PE investments has become almost double with 11 percent of PE investments in the recent past.

Arising out of the same horizon, the panel discussion on 'Investments in Hospital' focussed upon private equity with a two-way approach of expectations from both hospitals and PEs.

With eminent panelists including Satyam Mehra, Partner Bain & Co (session chair); Somesh Mittal, MD & CEO, Vikram Hospitals; Sunil Thakur, MD, Quadria Capital; Sumit Nadgir, MD, True North, Arjun Oberoi, Managing Director, Everstone Capital; Abhishek Kapoor, Sr VP , Regency Hospitals and Shhyam R Singhania, Chairman, ENARR Capita shared their views with audience.    

Satyam opened the forum and informed that the healthcare system is lacking in India with at least two million beds. Also, he elaborated on the importance of investment for the sector. Satyam has also notified that profitability has declined with hospital chains.

Control in cost and directions of right investment is the key to success, added Somesh. He also focused on the importance of right management along with the right investment in the system.

Sunil started with pointing towards regulatory changes in healthcare system. It came up with negative impact on business said he, talking about regulatory changes. Sunil has focused on reaching out to tier two and three cities and tapping leakages for optimal performance. He has also informed that right model is important to bring down costs. 

He has focused more on uncertainties that an investor likes to avoid. Recent regulations made the sector very uncertain complained Sumit. Extra margins and price controls have impacted the sector a lot said Sumit. He showed a positive attitude and said: "I expect that this phase will pass very soon". He has also shared that mistakes in the system of the hospital are a legacy element.
 
 Arjun shared his views and said that investors have to be extremely selective while focusing more on catchment areas. Our recent investments had allowed us to identify that quality in healthcare is the primary catchment area. A higher occupancy in hospital is the future of industry said Arjun.

Abhishek said that prior to regulations healthcare sector enjoyed freedom. Regulations are necessary besides they must not be populist but system driven and focused on priority areas jibes Abhishek. He has also noticed that scheme like Ayushman Bharat needs a different model for proper delivery and implementation. Hospital has a major chunk of its investment in human resources said Abhishek.

Shhyam said that predominantly their hospital is more of a charity group and is serving Mumbai for the last eight decades, and earning money has never been a target. “Our 80 percent revenue comes from our 20 percent beds said Shhyam. Doing charity is our focus area, therefore, a scheme like AYUSHMAN Bharat is not new as a system for us. 

The panel concluded with unanimous consent on balance between regulations and procedures along with investment in right catchment areas for better profitability.


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