“Apart from better opportunities & the scope to build on it, the demographic trends like rising birth rates in pockets of North East will aid these growth areas of the future.”
Dr. Ramesh Kanchalra, founder, Rainbow Children's Hospital. (Source: prhandout)
Hyderabad-headquartered Rainbow Children’s Medicare, a leading chain of 21 children’s hospitals across the country, has for long been seen a rapidly expanding brand but one that has a southern stronghold. It has just announced a Rs 171 crore deal to acquire a majority stake in Pratiksha Hospital in Guwahati
The move, according to leading analysts is significant since it marks a move out of its core cluster of South India and also a different market segment than the traditional tech-sector dominated clientele of the southern states of the country. So, how does this venturing outside its core cluster region (most of its 21 hospitals across eight cities are in South India) into Guwahati add up to being a strategic fit for Rainbow? Dr Ramesh Kancharla, the founder, chairman and managing director of the hospital chain, says the factors that guide Rainbow’s expansion strategy are “led by two considerations: 1, where we can find better opportunities and 2, where we can leverage these opportunities and be able to build on them. Other elements like EBITDA aggregation it is a short-term play.”
He says, both these factors were found in the latest acquisition, apart from a cultural fit, and it is not as if Rainbow has not been exploring other geographies in the country. Dr Kancharla says, “We have been looking at several regions in the country, including the West, but we have been closely looking at the north east for some time now and instead of building a hospital on our own, we opted to align with a reputed hospital in North East.”
And apparently there is more to come. “We see a huge untapped potential for Rainbow Hospitals in North and in East and see these geographies as the growth areas for the future,” says the doctor. A paediatrician himself, Dr Kancharla is a member of the Royal College of Physicians of the United Kingdom.
From a long-term perspective, a seasoned healthcare expert, who has looked at the trends in healthcare footprint but did not wish to be named, adds another dimension that is attracting healthcare providers to the East Indian region: The trends in the fertility rates/birthrates in the country.
Interrogate the internet for data from the Sample Registration System, which looks at the national demographic numbers, and it shows the southern states of the country witness declining birth rates as compared to the national average. The case is reversed in parts of the North East where the birth rates have been rising.
“Apart from better opportunities & the scope to build on it, the demographic trends like rising birthrates in North East will aid these growth areas of the future. We also cannot ignore the fact that today, people from the Northeast are heading to Chennai, Vellore or Bengaluru for most of their healthcare needs. We should be there and find in this an opportunity to build speciality care,” says Dr Kancharla.
On the approach thus far by Rainbow to build a hub and spoke model around a tier 1 city like Hyderabad, Bengaluru, Chennai, Dr Kancharla, who describes some of these metro cities as competitive and mature markets, sees no difference in Rainbow’s approach to Guwahati. “it is a tier I city for North East and therefore an important hub. Also, the public sector investment in infrastructure growth is phenomenal in North East.”
On Rainbow’s appetite for more acquisitions, since it still has cash on its books to do more, Dr Kancharla does not see inorganic growth as the key driver or the only growth option the company and points out that of the 21 hospitals under its fold, there are only two acquisitions (one each in Guwahati in Assam and Warangal in Telangana).
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