Healthcare sector there is nascent, but is growing under the state's support of private, even foreign, participation.
THREE factors are going to drive healthcare demand in India: an enormous supply-demand gap of speciality hospitals, rising occurrences of lifestyle diseases, and the emergence of medical tourism.
And this is good news for Religare Health Trust (RHT), which owns 12 hospitals and operates two more across 13 states in India, CEO Gurpreet Singh Dhillon told The Business Times in a recent interview.
Currently, its facilities provide quaternary and tertiary healthcare - that is, more advanced levels of medicine that are highly specialised and not widely accessible.
For this reason, they tend to be in Tier 1 cities such as Kolkata, Bengaluru, Chennai, Mumbai and New Delhi - where most of its patients, who fall within the top 40 per cent bracket in a national population of 1.2 billion, tend to reside.
Mr Dhillon sees a wide supply-demand gap in speciality hospitals, and a great opportunity for the private sector - even foreign companies like itself - to fill that gap.
In India, healthcare is severely under-funded by the government, which spends about 4 per cent of its gross domestic product (GDP) on the sector, a far cry from the global average of 10 per cent, according to World Bank data.
In fact, the private sector accounts for almost three-quarters of India's total healthcare expenditure, and owns three-quarters of the country's hospitals.
Healthcare is one of the few sectors where 100 per cent foreign direct investment is allowed under the automatic route, without needing prior approval from the regulators in India.
This is significant given how protectionist India has been considered in its trade policies due to its restrictions on foreign ownership in sectors like telecommunications and insurance.
Things may be improving. In its latest budget, the Indian government announced that it would provide health insurance of up to 100,000 Indian rupees (S$2,047) per family. Some 3,000 generic pharmacies will also open across the country to tackle the shortage of drugs in rural areas.
The government is also encouraging public-private partnerships in the healthcare sector, acutely aware that it may be doing its maximum already while sticking to a fiscally responsible budget and deficit targets.
The private healthcare sector, therefore, has taken the lead.
Meanwhile, rising affluence and a burgeoning middle class have led to a huge rise in what are termed "lifestyle diseases" - cancer, diabetes, heart and liver diseases - ailments that result from lifestyle choices.
"As a country develops from a rural-based economy towards a more sedentary lifestyle, every time there is a big jump in middle class, there is always a big jump in lifestyle diseases," Mr Dhillon pointed out. "This is a shift from communicable diseases like malaria and dengue, which used to be predominantly what most hospitals in India were focused on for the past 10-20 years."
This creates a need for more speciality hospitals, wholly focused on either oncology, or cardiology, or several of these specialisations housed under the same roof.
Besides Fortis Healthcare and Apollo Hospitals Group, which began operations in 2001 and 1983 respectively, healthcare in India is still a very nascent industry with a lot of room to grow.
Fortis is the sponsor for the trust and currently the only operator of the trust's hospitals, although RHT is on the lookout for more operators to reduce its single operator risk.
Fortis also fully owns the trust manager. RHT is also working with Fortis to introduce oncology as a speciality to its major hospitals at BG Road, Bangalore, and in Shalimar Bagh, Delhi.
At its Mohali hospital which RHT acquired in May 2014, a new oncology wing was also recently completed.
The third growth driver is the slow but sure emergence of medical tourism in India. While medical tourism in the country has not been as prominent as in Singapore and Thailand, major Indian hospitals have been seeing their revenue growing steadily from this slice of the pie.
Three years ago, big hospital chains used to get 5-6 per cent of their turnover from medical tourists; nowadays it's SHARE COMMENTS about 8-9 per cent.
According to India Brand Equity Foundation, Indian medical tourism is expected to grow from around US$3 billion to US$8 billion from 2015 to 2020 at a compound annual growth rate of 20 per cent.
India is gradually building up an ecosystem of not just more hospitals, but also a broader support system from airports to an insurance system for foreign tourists.
Meanwhile, even though its number of doctors and nurses as a ratio to population falls far short of the world median, a "reverse brain drain" is occurring, Mr Dhillon said.
"For the first time, very interestingly, you are seeing doctors head back to India from the US or UK, which is a reverse brain drain never seen before in the last 10 years, a sign that maybe they see optimism in this sector."
As for the trust, it plans to add about 550 beds in the next two to three years. It currently operates about 2,600 beds. The total capacity its portfolio can reach is about 5,500 beds.
For now, brownfield expansion has proven to be a more yield-accretive option over acquisitions, despite the trust's advantage of low gearing. This is because of the dearth of Grade A healthcare assets in India, Mr Dhillon added.
The trust is also doing some greenfield development, such as a mother-and-child facility it is erecting in Ludhiana, North India.