Of the takeover of hospitals & hotels by TN hospital groups

Chennai, Nov 25: The healthcare sector in Tamil Nadu is seeing a state of consolidation and expansion with major home grown groups on an acquisition spree.

And for the owners of hospitals and hotels that are not doing well financially, the exit choice is largely between hospitals and residential apartments, said a hotelier.

With the healthcare sector being in a healthy condition on the back of unhealthy, the takeover of hospitals by hospitals is logical as it largely involves change of name boards, letter heads and some heads as well.

In recent times the city saw two hospital chains acquiring two hospitals of Fortis Healthcare.

The latest acquirer was MGM Healthcare Private Ltd which was successful this time around in its acquisition attempts.

On Friday Fortis Healthcare announced that it will be selling the 140-bed Fortis Malar Hospital and related assets to MGM Healthcare for a total sum of Rs128 crore.

The business operations of Malar Hospital are housed within a listed subsidiary of Fortis Healthcare - Fortis Malar Hospitals Limited (Fortis Malar) and wholly owned subsidiary of the Company - Fortis Health Management Limited (FHML).

Further, the land and building comprising Malar Hospital and related / adjacent real estate assets concerning Malar Hospital are housed in two wholly owned subsidiaries of Fortis Healthcare namely - FHML and Hospitalia Eastern Private Limited (HEPL).

In July this year, Fortis Healthcare had sold its other hospital property here to Kauvery Hospital group for Rs152 crore.

In toto, Fortis Healthcare has encashed a couple of its properties here for Rs 280 crore.

In September this year, the city based Apollo Hospitals Group announced the acquisition of a partially built Kolkata hospital and equipment for Rs102 crore.

In a regulatory filing Apollo Hospitals said it has acquired a property comprising 1.4 acres land with a partially constructed hospital building with built up area of about 1.74 lakh sq. ft. and medical equipment in Sonarpur, Kolkata, from Future Oncology Hospital and Research Centre (Future) through an assets purchase process.

Curiously, the hospital chains not only look at rivals for acquisition but also the financially unwell hotels.

The reason?

“The hotel and hospital building structure is similar,” Ruban Das, General Manager, Hyatt Regency Chennai told IANS,

Not only the structure, there are some similarities in the operations of hotels and hospitals though the core focus of the two are widely diverse.

Be that as it may, it was the Apollo Hospitals group which first converted its three star Om Sindoori Hotels into a hospital as part of the hospital expansion.

Similarly the owner of another partially built hotel building is now rethinking about getting into hospital business instead of hospitality.

Recently, the MGM Healthcare group attempted to acquire Appu Hotels Ltd that owns Le Royal Meridien Hotel in Chennai and Le Meridien Hotel in Coimbatore but was not successful.

It was said MGM Healthcare would convert them into hospitals.

Hospital groups are recent suitors for the financial unwell hotel properties. Earlier it unwell hotel buildings went under hammers in favour of residential apartments.

Several hotels that were popular once upon a time have vanished and residential apartments have risen in their place. For instance, Hotel Oceanic on the Santhome High Road here, the famed Dasaprakash Hotel are the two notable examples.

Not long ago, an almost complete hotel building -- that was supposed to house a JW Marriott Hotel -- was demolished and a residential apartment was built instead, near The Leela Palace hotel here.

In the case of residential apartments, the promoter collects the money for building and exits -- relatively a one shot affair. But, a hotel is a rental model with added issues of competition from- rivals, standalone restaurants- maintenance and others.

“While the business for the hotels is booming now, if some hotel property owners sell out then it may be due to their companies or other business not doing well,” Das said.