Healthcare lobby group Nathealth seeks REIT investment, raises financing concerns

A newly formed industry body of top hospital chains and healthcare players, Nathealth, has urged the government to allow business trusts and real-estate investment trusts (REIT) in healthcare space, which they say would help the sector access funds. The industry body modelled on the lines of Nasscom in IT space says this would enable healthcare players transform their business from asset-heavy to asset-light model.

The US law defines REIT as a corporation or trust or association that acts as an investment agent specialising in real estate or real-estate mortgage. Individuals usually can invest in REITs either by buying their shares directly on an open exchange or by investing in a mutual fund that specializes in public real estate.

"It can help healthcare players monetise their assets better and enable business to focus on core expertise segregating infrastructure from operations," says Rana Mehta, leader, healthcare practice, PwC.

Besides leading hospital chains such as Apollo Hospitals Fortis Healthcare, Max India, Manipal Health Enterprises and Medanta The Medicity, the industry body also sees participation from medical technology, diagnostic players and health insurance companies.

Healthcare lobby group Nathealth seeks REIT investment, raises financing concerns "We are urging the government to set up a healthcare infrastructure fund, on the lines of what it did for core infrastructure in the form of India Infrastructure Finance Company Ltd (IIFCL)," said Anjan Bose, secretary general of Nathealth, which in its first two years would be led by the promoters of the two largest hospitals chains.

Prathap Reddy, chairman, Apollo Hospitals, is the president while Shivinder Mohan Singh, executive vice president of Fortis HealthcareB is the vice-president of Nathealth.

For this fund to be meaningful and relevant it should have an initial corpus of atleast 15,000 crore, Nathealth suggests, which can be raised through bilateral investment treaties and long-term pension funds.

The fund's government-appointed management should handle investment allocation, portfolio, and fund management, with a core mission to spur investment in healthcare through lead investment (equity and long term debt) and provide viability gap funding for projects aligned with the government's long-term healthcare goals.

Additionally, the industry body would work on making reimbursements in government-run schemes transparent and pricing viable, feasible public private partnership models in healthcare, said Bose. The growth of PPPs in the roads sector has benefited from the transparent master guidelines, and concession agreements with standard collateral and exit clauses that have enabled long-term funding.

While World Health Organization recommends that there should be atleast 3.5 hospital beds for every thousand people, India currently has a dismal bed to population ratio at 1.3 per 1000 people.

To raise this to 1.7 by 2017, the country needs to add 6,50,000 beds in next five years, with an investment of 1,65,000 crore, according to a PwC estimate.



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