Healthcare in India seems to finally be coming of age , came across a few very interesting business models , new ventures , which should ideally solve for existing gaps in the market. Thought would share them with you:
The Glocal Story : In a country such as ours with a population of 1.23 Billion, where 22% of the population is below the poverty line (Earning less than Rs. 33.3 (urban) and Rs.27.2 (rural)), the need for subsidized / low cost quality healthcare is quite clearly evident. To top that about 70% of our population is rural . Two ex civil servants did see this gaping hole and decided to fill it. Glocal healthcare established its first 100 bedded secondary care hospital in Sonamukhi , WestBengal in the year 2010, since then 4 more hospitals have been comisioned in 3 and 4 tier cities. Whats even more interesting is that a plan for commissioning 50 more such hospitals over the next 2 years is in the pipeline. The total bed capacity would be a whooping 5500 once the plan is executed.
That is insane but why does it work for them because they use a Basic model which they have tested over the last five years and perfected to some degree and this includes
1) Well defined catchment area a tier 3 or 4 tier city with a population of 1 lac urban and 5 lac rural
2) Well defined service mix only secondary care well defined specialities ( as per the CEO only 42 diseases account for almost 95% of the disease burden in rural areas)
3) Low project cost – An investment of only Rs. 8 Crores for the comissioning of the entire hospital including civil work, equipment and housing for doctors. (Low land cost, no frills, less area, modular approach and inhouse construction). And a total of 6- 8 months only for completion.
3) Low fixed cost – A Staff of only 100 for the 100 bedded hospital which includes 12 onroll doctors thus low fixed costs
4) Utilization of resources which a bigger corporate hospital would shy away from for example local medicos are welcomed into the hospital and made part of the care giving team .
5)Partnerships for resource development. Training provided by a partner agency to nursing aids and technicians thus filling a gap in terms of manpower scarcity.
I think this would be the gist of the model and of-course the main central proposition of quality healthcare at 20 – 40% less than the market rate.
Will the model be a success when scalled up is yet to be seen. Though there is a definite need for such healthcare, however currently the model works because it is supported by a state government insurance / Cashless healthcare provision scheme . This accounts for 55% of their business. But atleast its a refreshing new approach to healthcare.
The DaVita Nephrolife partnership – According to recent studies around 17% of the indian urban population suffers from Chronic Kidney Disease. Dialysis is a harsh reality for these patients a regular affair and no matter how dark it may sound Nephrolife has been able to see this demand. With a potential market size of $350 million growing at 20 odd % annually somebody had to get organised. With what started out as a stand alone dialysis centre in Bangalore in 2009 after their partnership with DaVita and NEA in 2011 has grown to a network of 14 centres in a short span of 2 years. Whats special about this partnership is that the partners not only infused funds in the tune of $25 million but also brought along with them experience in previous healthcare projects and for DaVita healthcare specifically experience in their chosen speciality of Nephrology and Dialysis.
The Key to success be flexible , partner, see the bigger picture and focus on the game.
1) Be Flexible – Various formats of basic business model – Stand alone Dialysis centres, Satellite Dialysis centres , Stand alone integrated Kidney care centres, Box in Box model for tertiary and secondary care hospitals (either on rental model or as a JV)
2) Partner – The flow of funds helps when establishing such a capital intensive setup. Per bed cost is estimated at around the $25 – 40000 mark, however returns are expected at an EBITA of around 20%. And along with that comes the administrative expertise and knowhow. Local partners further reduce capital burdens as well as provide stronger local networks.
3) See the Bigger Picture: The concept with DaVita Nephrolife is to provide integrated Kidney care services to build a care network , not just Dialysis but rather an entire spectrum of care ranging from prevention , diagnosis, Dialysis and end stage kidney disease management (Transplant) , be it through their centre or a partner centre.
4) Focus on the game – whats interesting is that they realise the chronic nature of most kidney disease and the importance of establishing long lasting relationships. The single speciality focus also gives them a certain degree of advantage over multispeciality centres which can at times be distracted.
Again its for time to tell whether these Healthcare ventures would succeed in the future. However its nice to see a new approach to Healthcare in India an approach based around flexibility, partnerships and real patient needs.
Disclaimer: The views expressed in this post are my own and are not meant to be derogatory to any institution or organisation. These are just my thoughts and these are open for further discussion and development. Please do comment and share and let’s get some universal cognition into this. Thank you for your patience and tolerance.