How do hospitals grow? Usually, they add more beds and specialities. Chain hospitals build or buy hospitals in more cities. They spread out to different regions. That is what all large corporate hospital chains have done in India. But not Max Healthcare. The 17-year-old hospital chain with hospitals across north India is in the throes of losing an investor. Meanwhile, it is executing an unusual strategy.

If one can get almost anything delivered at home, why not healthcare?

When a hospital spins off a home healthcare business, it just does not work. Almost every hospital chain has made peace with the unsaid healthcare strategy rule, except Max. Vaibhav Poddar, senior vice president, who heads its home healthcare business unit, admits that home health is not a natural extension for a hospital, but there was no reason to not try it.

In a long-term strategy meeting in 2015, Max Healthcare’s (MHC) board reached a decision—they were going to expand hospitals in north India by entering diagnostics, home healthcare and emergency care sectors. Two years later, their home health business unit is one of the largest players in Indian home healthcare, and their diagnostics arm is one of the largest in the National Capital Region (NCR).

The last two years were the easy part of the journey, it’s up against real challenges now. Both of Max’s new businesses—home health and diagnostics—have remained close to Max’s 14 hospitals. They need to explore new regions if they want to grow and become successful independently. But that is just one challenge. Life Healthcare Group, one of the largest private hospital operators from South Africa, which had invested in MHC four years ago, is looking for an exit. Though its parent company, Max India and its promoter Analjit Singh want to buy out Life’s 49.7% stake in MHC, the sector itself is just as attractive as it is daunting.

The market favours Max’s strategy. The home healthcare and Indian diagnostics industries, which are worth $3.2 billion and $6 billion, respectively, are growing at an estimated 20%. Further, MHC, which earned a revenue of Rs 2,567 crore ($386 million) predominantly from its hospitals in FY17, can expect the government-sponsored health insurance scheme Modicare to drive growth.

The yet-to-be-concluded deal between TPG-backed Manipal Hospitals and Fortis Healthcare may create India’s largest hospital chain soon. If it materialises, Max would face even more pressure to make sure its two new businesses perform well. This is because its diagnostics arm would compete with Fortis’ SRL Diagnostics, which would have reach across the country after the deal. And its home health unit competes with vendors such as Healthcare at Home (HCAH) and Portea Medical, who are growing fast by riding on patients from other hospital chains.


Ruhi Kandhari

Ruhi writes on the impact of healthcare policies, trends in the healthcare sector and developments on the implementation of Electronic Health Records in India. She has an M. Sc. in Development Studies from the London School of Economics.

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