Unprecedented Healthcare In 2022, Tenable Trajectory In 2023
The post-pandemic financial year of 2022 has seen normalcy return to the shores of healthcare institutions, the big and small hospitals chains alike witnessed an upsurge of patients tapping the doors with health issues which were overshadowed by the Covid-19 pandemic in the previous financial year of 2021, leading to a flat line growth trajectory in FY21.
The healthcare industry pundits opine that the sector grew by 25 to 26 per cent in the year 2022 over the base year 2021 powered by the return of the pre-pandemic footfalls and post-pandemic attitudes. The organised players in the healthcare sector saw dramatic growth owing to several factors that underpin this growth story beginning with the comeback of elective surgeries, a change in consumer behaviour leading to better health insurance coverage, rising burden of diseases and consumers choosing premium and branded healthcare institutions and services over nursing homes and smaller healthcare setups.
The sector experts put it this way that the “buyer is already aware”, meaning the healthcare consumers are making an informed choice and selecting facilities not by price but by value, understanding that the latter brings better outcomes.
The market maestros believe that increasing penetration of health insurance and consumers buying policies with bigger premiums coupled with the pandemic’s lesson that health comes before wealth is driving this informed change in behaviour among the people.
Describing the four growth factors mentioned above, Kaustav Ganguli, Managing Director, Alvarez and Marsal said that in the year 2022, corporate healthcare players subsuming the large corporate hospital chains, either pan-India or regional ones, experienced an unprecedented growth year when compared with the growth trajectory of the last three to four years or even the decade before with improved returns profile and unit economics standing as a testament to their growth story.
“Consumers opting for higher or new insurance coverage during the pandemic and subscribing to premium healthcare services in hospitals resulted in faster value growth. Value growth was further enhanced by improved case mix specialisation. In summary, improvements in both speciality mix and channel mix had a positive impact on break-out growth of ARPOB (average revenue per operating bed) and topline of organised hospital chains,” stated Kaustav Ganguli, Managing Director, Alvarez and Marsal
However not all was rosy in healthcare in 2022 said the experts, as healthtech remained a mixed story, unable to fully deliver on the impetus provided by the pandemic with only a few bright segments such as the online diagnostics firms and digital pharmacies showing their metal while the others are still trying to find their place in the healthtech market.
2023, A Year of Dependable Growth
2023 is being vouched as a tenable year by the industry pundits seeing a growth rate of roughly 13 to 14 per cent over the financial year 2022, the growth would not be comparable to the previous year as 2022 had a lower base year effect with the sector utilising the one-time effect of several shining growth factors.
Growing with pre-pandemic levels, healthcare in 2023 is set to witness greater action in the consolidation space with the mergers and acquisitions activities extending with full force into the upcoming financial year. Pan-India healthcare chains as well as the private equity investment chains are expected to gain considerable ground.
“Large corporate chains are not only considering other chains as acquisition opportunities but also going after stand-alone mid-market hospital targets across town tiers with a threshold level of revenue, EBITDA and infrastructure. Corporate multi-specialty service providers as well as the corporate single specialty groups will continue to grow at the expense of the smaller, stand-alone hospital segment or the nursing home segment making the space more and more organised,” explained Ganguli.
Another tailwind expected in the upcoming year is the international medical value tourism bouncing back, adding value as well volumes for the organised corporate sector. The medical value tourism remained silent for the most part of FY2022 due to restricted travels across borders but with the travel opening up coupled with government’s Heal In India initiative, the sector is expected to render huge gains to the industry.
Union Minister for Health and Family Welfare, Mansukh Mandaviya has hinted that India will be prioritising health during its G20 Presidency tenure in 2023.
“India will prioritise health emergency prevention, preparedness and response to strengthen cooperation in the pharmaceutical sector with focus on availability and access to safe, effective, quality and affordable medical counter-measures” stated Mandaviya in his Ministerial address in Bali recently.
Mandaviya added that the nation will also focus on digital health innovation and solutions to aid universal health coverage while improving healthcare service delivery for the Health Working Groups during its G20 Presidency.
Evolving With Robotics & AI
Technology is set to advance at a faster pace in 2023 with the healthcare sector evolving with data, robotics and AI, enumerating this Jasdeep Singh, Group Chief Executive Officer, CARE Hospitals Group, stated that data-driven decision-making and healthcare automation will help in improving the quality of care and clinical productivity. Whereas metaverse in healthcare will also play a major role with the immersive experience that the metaverse provides paving the way for inclusive management and support in digital transformations.
Foreseeing the trends of next year Hari Prasad, President, Apollo Hospitals said, “2023 will redefine healthcare with a preventive and wellness-oriented approach. The year will see an upgradation of medical facilities in Tier-2 and Tier-3 cities along with upskilling of the healthcare workforce. And advances in innovation will empower us with the tools to ‘heal before there is a need to heal’ while AI-enabled clinical modules will guide the choice of the most suitable treatment.”
Technology playing the catalyst in the growth story of 2023 is set to continue to shift care away from hospitals, driving preventive as well as predictive healthcare and pushing for a more decentralised healthcare model. The new-age technologies will boost operational and financial efficiencies of healthcare institutions by fostering better clinical outcomes adding to seamless growth across the healthcare value chain.
