UAE healthcare major mulls new strategy for future Gulf expansion after pandemic blow

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UAE-based healthcare major Aster is looking at changing tack on its expansion plans in the GCC with an asset light model with buildings being constructed by third parties.

Aster, which currently runs about 350 healthcare facilities across seven countries, will also scout for opportunities for O&M (operate and manage) models of hospitals for its long-term growth plans in the region.

“The onset of the pandemic led to a dip in business which is why we have had to postpone some of our pipeline projects. Now that we are slowly witnessing a recovery, we shall continue to explore our expansion plans (in the GCC region) with an asset light model with buildings being constructed by third parties,” Dr Azad Moopen, founder chairman and managing director, Aster DM Healthcare, told Arabian Business.

He said Aster has been re-negotiating rentals of its facilities across the UAE and other markets in the GCC in the aftermath of the pandemic which hit non-coronavirus treatments and procedures hard at hospitals and clinics in the early months of the outbreak.

The group has also closed down some of the mall-based clinics and pharmacies in the Middle East region in the recent months.

“With the onset of the pandemic, we saw a fall in the number of patients visiting some of our clinics and hence decided to close down a few. Instead, we are redirecting our focus on key units and channeling our efforts to increase footfalls and patients there, while focusing on newer areas where our customers are based.

“We are looking at asset light models wherever possible and also looking at opportunities for O&M models of hospitals,” Moopen said.

Some management consultancy firms have recently been advocating the need for healthcare companies to adopt well-organised and capable O&M models to improve their profitability and growth in the wake of increased competition in the sector.

Moopen, however, said the group’s plans to control its capital expenditure plans will not affect its projects that are in an advanced stage of completion in the GCC or India.

“Our hospitals in Sharjah and Oman as well as the one in Whitefield in Bengaluru are underway. The final phase of Aster Hospital, Sharjah, is underway and it is expected to be commissioned in the first quarter of the next financial year,” he said.

On the increasing trend of hospitals/healthcare players opting for leasing of high cost and advanced machineries and equipment, Moopen said Aster will be looking at revisiting this if it fits with the group’s proposed capex light model.

“Every organisation has its own growth and expansion model based on its long term goals and objectives. For us at Aster, the priority remains to provide top quality service using the best equipments and technology.

“Equipment rentals and pay per use are models which we have used earlier. If there are cost effective lease models available, we shall be happy to look at this as it again helps to farther the capex light model,” he said.

https://www.arabianbusiness.com/healthcare/456552-uae-healthcare-major-mulls-new-strategy-for-future-gulf-expansion-after-pandemic-blow