In the last newsletter, we learnt that Manipal Hospitals (MHEL) has only 170 beds/hospital in the North India. But now we'll learn that contradictory to having fewer beds in the North, it generates 18% of its revenue from them.
The 1st observation is the humongous gap in the Annual Revenue per Licensed Bed in the North Vs the South:
Annual Revenue per Licensed Bed in the North: Rs.1.36Cr
Annual Revenue per Licensed Bed in South (KA): Rs.0.70Cr
This also proves the following upon reasoning:
There is dearth of good quality hospital in NCR
There are not as many super-specialty hospitals
ARPOB is higher in North leading to higher Revenue/bed
North-Indians have a relatively worse lifestyle leading to them visiting hospitals frequently and hence higher revenue/bed in the North?
Now, before we work out the ARPOB in the North Vs the South,
lets see why is there so much gap between Licensed and Operating bed?
It is it for Brownfield Expansion later on. There is a learning for smaller hospitals here that even though you might have space for say 200bed hospital but it is always pertinent to 1st open with fewer beds say 50-80 and then gradually expand.
Relevant INSIGHTS by Doctors & HCPs:
The ARPOB gap (1.36 vs 0.70 Cr) is what stood out to me. Could this be more about patient mix than bed count? My guess is North hospitals may be handling more complex referral cases, especially tertiary/quaternary care, with fewer substitutes nearby which would naturally lift both ALOS and billing.
The "start with 50 beds in a 200‑bed facility" advice is financially dangerous. Hospital economics is non‑linear. A 200‑bed hospital has ~70% fixed costs – salaries, utilities, capital. Open with 50 beds at 60% occupancy (30 occupied beds) and your cost per bed collapses viability. Data:Viable hospitals need 60–70% occupancy and 18–25% EBITDA margins.Minimum average cost occurs at 200–300 beds (below 200 = diseconomies of scale).SME hospitals (<100 beds) run at 40–50% occupancy and 40% lower ARPOB than large chains.1,306 clinics and 444 small hospitals shut in Kerala alone over 5 years.The licensed vs. operating bed gap is strategic capacity management – license for future, operationalize incrementally. That gap preserves a 75–85% occupancy sweet spot. Below 70% you bleed; above 85% you choke.Starting at 50 beds in a 200‑bed shell means carrying fixed costs of a large hospital with revenue of a nursing home. So here’s the real question – how do you determine your exact breakeven bed threshold, predict optimal operating mix, and protect against financial failure before opening?
If you study the detailed breakup of claims subhead wise, you'll notice usage of antibiotics and consumables is more in North India than South. Call it Trend,Ethics,Need or Greed but that is the reason !! h
But what is a -
LICENSED BED?
OPERATING BED?
OCCUPIED BED?
ARPOB comparison NORTH Vs SOUTH
As per the below table, you can see that in FY24, Manipal had 42.6% Operating Beds out of the total Licensed Beds of 9,520. By Sep’26, it had 12,367 Licensed beds.
Now, assuming 50% of them became Operational (for the sake of ease of calculation), it has comes out to be 6,184 Operational beds PAN-India. So,
Operational Beds in the North: 626
Operational Beds in the South: 3,020
Considering the Occupancy of 66.19% evenly distributed in North as well as South,
Occupied Beds in the North: 414 Beds
Occupied Beds in the North: 1,999 Beds
ARPOB is avg. revenue per occupied bed per day.
So,
ARPOB South: Rs.4,249Cr/(1,999Beds*365days): Rs. 58,234/-
ARPOB North: Rs.1,702Cr/(414Beds*365days): Rs. 1,12,633/-
Hence, it is lucrative to grow in the North India given higher ARPOB of 93.4% compared to South.
Before I end this newsletter, I wanted to give you a BROADENED perspective by comparing Malaysia($4.3B) Vs India($12B): the biggest IPO in hospital sector to understand OPERATIONAL parameters Indian Hospitals lag behind or fare better. Sunway Healthcare Group Vs Manipal Hospitals (MHEL).
Sunway came up with its biggest $4.3B valuation IPO in Mar'26 while Manipal is in the process of raising at around $12B (the biggest in India).
You can read my post on my perspective on it but I felt it is self-explanatory and will help you question a few more things on your own that you can COMMENT to help others.
Relevant INSIGHTS by Doctors & HCPs
Higher doctor-to-bed and lower OPD productivity in India aren’t always signs of underutilization. They often reflect case-mix complexity, fragmented care pathways, regulatory constraints, and the absence of strong mid-level clinical support systems. In many setups, doctors absorb coordination and administrative load that should sit elsewhere.The bigger signal, in my view, is the licensed vs. operational bed gap and occupancy delta—this points to capital inefficiency and demand-supply mismatch, not just workforce design.If Indian hospital systems want to close this gap, the focus should be on:standardizing clinical pathways, strengthening allied health layers, and driving throughput without compromising outcomes.
One more perspective is that , in Manipal,they might have included all juniors doctors who are doing their Dnb , Drnb , fellowship etc. into this list . Also the low number of support staff is alarming . Because most of the clerical work including OT management , Rota management are loaded upon the junior doctor who don't have a voice and work for a merger salary most often less a class 4 employee.