NRI billionaire Dr Azad Moopen-promoted Aster DM Healthcare plans to set up a string of budget hospitals in the GCC region, as countries there make medical insurance mandatory for all workers. GCC or Gulf Cooperation Council constitutes United Arab Emirates (UAE), Saudi Arabia, Bahrain, Kuwait, Oman and Qatar. The emirate of Dubai, part of the UAE asked all employers some time ago to provide health insurance coverage to their employees. Sponsors are also required to get insurance cover for their resident dependants. Abu Dhabi followed suit, and so did other GCC countries. Much of the workforce in GCC comprises migrant workers from South Asia. Most of them are not covered by any health insurance and have to spend out of pocket to access healthcare services, that is prohibitively expensive. Workers and their families in GCC travel back to India to get medical treatment. Now, with medical coverage, most of them will be able to access treatment. Of the Rs 6,760 crore revenues made by Aster DM in FY18, little over 80 percent is derived from GCC region alone, and around 60 percent of that is from the UAE. Aster DM says the move to provide health insurance for all workers is creating huge demand for healthcare services.
But there are challenges to tap this market. In an exclusive interview over the phone from Dubai, Moopen told Moneycontrol that insurance coverage to workers increased volumes but also put pressure on margins, as insurance companies now started pushing for steep discounts on package rates. Moopen said the other problem is there aren’t too many budgeted healthcare facilities in the region that cater to the segment that’s covered now. Moopen says budgeted hospitals typically have a capacity of 100-150 beds, built on asset light. These hospitals have shared wards and cut down on frills like giving five-course meals, they run on the hub and spoke model, and share resources and facilities. But even to set up a bed in a budgeted hospital category costs about Rs 1 crore in GCC region, almost double the cost of setting up the same kind of bed in India. Moopen said Aster DM is already building a new budgeted hospital and redesigning another sick hospital it took over as a budgeted facility. There aren’t too many budgeted hospitals to acquire, so we have to build them, Moopen said. Aster, already runs around 15 clinics under brand ‘Access’, providing affordable healthcare targeting blue-collar workers and people from the lower economic strata in UAE.
‘Access’ clinics are located in the industrial and residential areas in Dubai, Sharjah and Ajman catering mainly to the working class and their basic healthcare needs. They offer primary healthcare facilities alongside allied services including X-RAY, laboratory facilities and pharmacies. Aster which has a capacity of 5,090 beds, of which a one-fifth are in GCC and the rest in India. Out of 1,052 beds in GCC 872 beds are operational. Moopen said the company is spending about Rs 650 crore in FY19 on capex, and plan to incur about Rs 350-400 crore as it increases capacity both in India and GCC. For the nine months ended December 31, the overall occupancy ratio for the hospital chain is 61 percent, while GCC it is 57 percent. The low occupancy ratio in GCC, Moopen says is due to the seasonality nature of the business. “We generally make much of our EBITDA in the second half of the financial year. In the first half, which coincides with summer and holiday season, many people go back to their countries, even doctors and nurses go on holiday, so we run empty hospitals but keep incurring costs,” Moopen said. But despite those challenges the average revenue per occupied bed per day in GCC is Rs 157,000 or more than five times of India for the company, Moopen said. – Money Control