Max Healthcare Institute Limited

Yogesh Sareen

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Yogesh Sareen

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Abhay Soi

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Abhay Soi

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Abhay Soi

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Lavanya Tottala

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Yogesh Sareen

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Abhay Soi

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Abhay Soi

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Yogesh Sareen

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We like to collaborate because it decreases the construction and development risk, particularly in geographies that we are not currently present in.

— Abhay Soi

That is a net impact of 4% to 5% on the institutional part.

— Abhay Soi

For a PE to underwrite that gets very difficult.

— Abhay Soi

Q

Abhay, could you highlight what is your vision going beyond three to five years beyond what have you announced in terms of organic opportunities? And whether you would be looking at the South and the other regions in the country?

Abhay Soi

Secondly, you own around 24% stake now so would you like to increase your stake so that you can use the stock as an option in terms of acquisition, else you get diluted? So, let me start with the last one first. Firstly, thank you for the compliment. The consequence of this performance has been that three years back when we were listing the company, one of the biggest critiques of the Indian Healthcare or the Hospital sector was that there are no free cash flows and you have to keep redeploying. I think with Rs. 1,281 crore of free cash flows translating from Rs. 1,636 crore of EBITDA which sh

Q

Abhay, my first question is on your payor mix change plan. So, you mentioned we have seen upward revision in PSU tariffs etc., because of that is there any rethinking from your side to bring the institutional bed share to 15%-16%, which you highlighted earlier from 29% currently?

Abhay Soi

So, look, I think the trajectory is changing on account of two or three things. One is that we are finding marginally more capacity, we are operating at higher levels than what we were thinking of previously, so we are able to keep that business and be able to do more and you are seeing that in your margins month-on-month. The best thing is that if you can, we were pushing down that business because we wanted to accommodate our preferred channel of CTI. Now necessarily you are always going to find some elasticity towards the end, so you see the operating levers becoming higher. Secondly, we ha

Q

My first question is a kind of a clarification, when I look at the audited cash flow statement, the CAPEX incurred under the line item of purchase of property is around Rs. 335 crore whereas in the proforma numbers that we talked about in the executive summary, the company has given a CAPEX number of Rs. 208 crore. I guess there might be some technicality here. Can you please explain me why this difference in audited and executive summary? So, just to clarify that point. When we report the Rs. 208 crore spend, that spend is on the capacity expansions, on the projects. So, whatever is the routi

Nikhil Mathur

So, Rs. 335 crore is the right number to look at, when we are looking at on a proforma basis? No, that number will be around Rs. 419 crore vis-à-vis what you see is only consolidated financials, right. These consolidated financials don't have the the partner healthcare facilities (PHFs) number. The overall number, if I take the network cash flow, will be Rs. 419 crores of which Rs. 211 crore would be routine CAPEX and Rs. 208 crore will be capacity expansion. In the cash balance, there is a difference of Rs. 100 crore again in the audited and the proforma balance sheet that you have given, som

Q

I just wanted to get a clarification on these packages, so is the tariff hike only related to CGHS packages or is it something related to diagnostic business of Max also?

Yogesh Sareen

No, so right now they have not increased the diagnostics. Like Yogesh mentioned, out of only 12% of the revenues or line items that account for 12% of the revenues, price increase has happened over there and it is up to 70% increase. For balance 88%, which includes diagnostics, includes packages, and includes a lot of other things, has not happened. It is under consideration by the government and we have been told by July there may be some visibility on this. Ma'am, do not mix the CGHS price increase with the other price increase. There is 29% bed share by PSU where the tariff is given to us b

Q

You want me to describe this 87% increase impact? Andrey Purushottam: Yes.

Abhay Soi

Every line item before that? Andrey Purushottam: No, not every line. I am just saying I have identified, as I said, 3 of those factors. Could you just give us a broad sense of which are the other specific factors when you channel mix and payor mix that have additionally contributed to this 87%? It is payor mix, it is clinical mix, it is better cost management, lower consumption ratios, lower finance costs. I mean it is pretty much everything, but cost management other than payor mix and channel mix. Andrey Purushottam: Anything specific in payor mix, apart from what I have outlined --? In payo

Q

Just trying to understand this 4% to 5% price increase is limited to the 17% to 20% of the total mix, is that right?

Yogesh Sareen

29% of the beds are occupied by the PSUs, which constitute around 17.5% of the revenue right. Now out of this 17.5% -- 17.5% in value terms, which is about 4% to 5% in terms of pricing. Yes, so I would say that if nothing else happens, then there is a 4% to 5% increase in the price. Now, we do expect price increases in the other elements because you cannot increase the room rent only for open surgery. You have to increase the packages as well. The moment you admit that the room rent has to go up that means it has to go up for the room rent component under packages as well. So, the current incr

Q

It will actually rise per bed, because of the price hike. Tushar Manudhane: No, the perspective here was that in the hospitals where we are already running up at a very high occupancy. That way we have a choice in terms of selecting the patient or distilling the patient as you pointed in the earlier commentary. So, just trying to understand is this sufficient enough to reduce that spread for EBITDA per bed through the patient payor mix?

Abhay Soi

No, it will not. But what happens is that if tomorrow I want to switch off 100 beds, yesterday I only needed to fill 40 out of those 100 PSU beds to breakeven and to make back the money that I am losing by switching off those 100 beds. So, I would get 60 more beds to work with. Now that number from 40 has gone up to say 55, tomorrow that number will go up to 70 or 80. So what happens is that it becomes marginal, but does it get to the same amount? No. So yes, I think what you are going to see is that your trajectory sort of changes, but directionally you are going in the same direction. Albeit

Q

Just wanted to find out if presently obviously the situation is great for you guys. How long do you think this supply won't come in looking at the present fantastic scenario? Like, right now the demand supply gap is huge, which is why your occupancy is what it is. So, whenever the situation is so robust, obviously new supply is going to come in – in various geographies. Not necessarily, I mean no new hospital has come up in Mumbai in 20 years, because there is no land available. No new hospitals have come up in Delhi for 12 years, maybe one, because no land is available. How do you get land in

Raj Rishi

That's right. One of the biggest plus points that we have is that we have this land in our network, in our system. And Abhay you had mentioned medical tourism going up many times by 2030. So, how do you see it, like what is the size presently and where do you see it in 2030 for the sector I am asking? You know, if you are saying 2030, there is such a massive comparative advantage that we have in India. I mean we are less than 5% of the cost of the U.S. We are less than 30% of Singapore. We are less than half of Thailand. I mean, look, it is not like rich people from the U.S. will start coming

Q

Abhay, you mentioned improvement in specialty mix quite a few times. And if I were to look at the chart maybe through the profile obviously there is improvement in oncology, a little bit in Neuro, Cardiac. So, are the beds that we are adding essentially focusing on doing more higher ARPOB work like adding more Onco beds etc. or are we seeing the kind of work that we do within Cardiac, within Neuro itself increase that is improving this specialty mix. So, how do I differentiate between the two?

Abhay Soi

I think it is a combination of the two. First and foremost, if you look at capacity spread and you look at overall ARPOB, the ARPOB that you see of Rs. 70,700 is a summation of ARPOBs. When you see our occupancy is 77%, it is a weighted average. It means there may be some hospital, which is operating at 70% occupancy. There may be another one, which is operating at 90% occupancy. Similarly, in ARPOB you will have certain departments that are low ARPOB. You will have a certain payor mix that is lower ARPOB. Yet, you are hitting the capacity thresholds. Firstly, if you are hitting capacity thres

Q

My first question is can you tell me what the price increase that we have got in by the PSUs?

Yogesh Sareen

So, Amit there are four elements where the prices have increased: one is on the ICU beds charge; second is the normal ward bed charge; third is the IP consults and fourth is the OPD consults. OPD consult has gone up from Rs.150 to Rs.350, IPD from Rs.300 to Rs.350. These are the prices changes. So, overall average if I take, it’s a 70% price hike we have got. This is after nine years; the last one was in 2014. Now the point is, this is only a small quantum of the line items that get billed to the patients in the PSU. So, we do expect that there will be further price increases by the government

Q

Abhay assuming the CARE acquisition does not go through, can you help us understand whether there are any meaningful acquisition opportunities of hospital chains left in India which fit your criteria?

Abhay Soi

Yes, plenty. And we do not have any preference on geography, right. It is just the criteria, which you have of two players being successful and you preferring a cluster approach. That is right. I mean our approach is a little more less casual than just that. We have worked out a list over 20-21 cities, but that is an important criteria. What we find is that at the umbrella level, these are the places that typically will have the demand, supply, doctors, etc. and so we will be comfortable over there. I am putting it very simplistically by saying that at least two or three of my competitors have