Boutique hospitals coming up in major cities

In maternity wards, the familiar smell of sanitisers and disinfectants and the bustling presence of attendants rushing expectant mothers to operation theatres have been long-standing features. However, in recent years, a new breed of hospitals has emerged, offering an experience that goes far beyond the conventional. With neonatal intensive care units, presidential suites and even baby shower rooms, this is the world of boutique hospitals.

The most recent one, which opened in upscale South Delhi last month, was born from the collaboration of Apollo Hospitals’ two arms: Apollo Spectra (specialising in surgical care) and Apollo Cradle Royale (focusing on maternal care). This 50-bed establishment, which offers state-of-the-art amenities and deluxe suites, is just one example of boutique hospitals that are cropping up in major Indian cities like New Delhi, Mumbai, Chennai and Bengaluru.

So far, India has only a handful of boutique hospitals – those that could well pass off as luxury hotels if it weren’t for the nurses, doctors and attendants scurrying around.

Boutique hospitals represent a niche segment within the healthcare industry, catering to individuals who seek a more personalised experience. Primarily centred on maternal and child care services offered through various packages, these hospitals target a high-end, affluent clientele. Most are strategically located in well-to-do neighbourhoods.

“Boutique hospitals specialising in maternity care have a business model that is tailored to providing high-end and comfortable childbirth experiences for expectant mothers and their families,” says Garima Prasad, facility director, Fortis La Femme, a subsidiary of Fortis Hospitals.

Those in the business say boutique hospitals offer the convenience of shorter stays, with patients typically being discharged within 23 to 30 hours of care. They also provide an intimate atmosphere compared to large, multi-specialty hospitals, with patients in close contact with the care team, adds Sangita Reddy, joint managing director, Apollo Hospitals Enterprise.

Prasad says the nurse to patient ratio is higher in boutique hospitals, so expectant mothers get more attention and support throughout their labour and delivery. The hospital chain did not specify the nurse-patient ratio despite queries from Business Standard. It also did not specify the treatment cost at its boutique hospitals.

Reddy maintains that the “cost to both patients and payers can be significantly less as the operating framework of these hospitals is often configured at a lower cost base across staffing, space and supplies even if the margins for healthcare providers remain the same or higher.”

Cloudnine, which also runs a chain of boutique maternity and childcare hospitals, did not wish to comment on the model.

A growing business
The Covid-19 pandemic has changed people’s preferences when it comes to maternity services. Apollo’s figures for 2022-23 reveal that its maternity care subsidiary, Apollo Cradle, experienced an in-patient average revenue per patient of Rs 1.07 lakh, reflecting a quarter-on-quarter growth of 6.68 per cent.

“The growth rate of profits in boutique hospitals usually averages around 10 per cent,” Prasad says. The patients come mostly from metros.

Reddy says in a boutique hospital, the cost per bed to the group is about 50-60 per cent of what it would be in a large multi-specialty setup. That’s because these are smaller hospitals, with fewer beds and not as much staff. For the Apollo Group, the estimated cost per square foot is between Rs 7,000 and Rs 7,500, excluding biomedical equipment.

Prasad highlights that boutique hospitals can command premium prices due to the range of amenities and services they offer, including private rooms, luxurious accommodations, and personalised care. This exclusivity and specialisation within a specific area of healthcare contributes to higher profit margins.

Mostly, such hospitals focus on pregnancy, infertility treatment, childbirth, postpartum care and IVF, and offer specialised expertise in obstetrics, neonatology, and related fields.

“Profitability is higher because in mother and child care, the gross contribution is usually more than 80 per cent since drugs and consumables used in treatment are very less,” Prasad says, adding that there are various individual models of payout that can be worked with doctors to help generate profitability.”

For instance, for à la carte services such as baby showers, photoshoots and postpartum counselling, the package would be costlier.

The newly operationalised Apollo Cradle Royale in Delhi offers automated beds, multi-cuisine dining and unlimited visiting hours, in addition to level-III neonatal intensive care units (NICU’s). The packages can include pre- and postpartum mother and child photoshoots.

Reddy notes that the comparatively lower overhead costs and the repetition of specialised procedures provides ample opportunity to optimise cost structures. The focus on specialisation also leads to reduced costs, making boutique hospitals capable of offering similar or even higher profit margins compared to their multi-specialty counterparts.

According to the Apollo Group’s annual report for 2022-23, maternal and neonatal care under Apollo Cradle generated a revenue of Rs 308.7 crore, while ambulatory services under Apollo Spectra reached Rs 259.7 crore. Both Cradle and Spectra boasted a combined in-patient average revenue per patient of Rs 2.12 lakh in Q1FY24, indicating a 2 per cent year-on-year growth.
Fortis La Femme reported a profit after tax (PAT) of Rs 8.27 lakh for 2022-23, marking a 10 per cent year-on-year increase.

On the launch of Apollo’s boutique hospital in New Delhi, Reddy said the volume of procedures at these ambulatory centres is expected to grow with consumers increasingly seeking access to affordable, competent and convenient healthcare.

“We will look at recruiting other specialties with surgical cases to provide a ‘one-stop shopping’ model, which would result in a larger multispecialty boutique hospital with imaging capabilities,” she said at the opening.

Prasad says the future holds a plethora of additions to boutique hospitals, including lamaze lessons, infant massages and gourmet dining. The baby business is clearly booming. Business Standard