Business Today

The Big Churn

Most leading hospitals are struggling to make profits. At the same time, new formats, specialties and technology assisted ventures are coming up with a promise of transforming the sector.

A week ago, when the Fortis Healthcare board approved the Rs 4,000 crore bid from Malaysia's IHH Healthcare, share prices of most listed hospital companies fell sharply. An investment of this scale, usually a sign of a booming sector, in this case exposed the multiple crises it is facing. The reason was simple. While a few hospital chains such as Apollo are growing revenues year after year, most are bleeding. Profits are meagre, return on capital is low and debt is ballooning for most homegrown chains. Fortis, itself, was facing an acute liquidity crunch, amid allegations of siphoning funds. Then there are cost control measures by Central and various state governments.

However, there is a bright side too. A lot

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